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Bharti Airtel pays 8312.4 cr upfront to clear four years of 5G auction dues

Over the last one year, Airtel has cleared  ₹24,333.7 crore in deferred spectrum liabilities much ahead of scheduled maturities. (Photo: Mint)Premium
Over the last one year, Airtel has cleared 24,333.7 crore in deferred spectrum liabilities much ahead of scheduled maturities. (Photo: Mint)

  • This upfront payment coupled with the moratorium on spectrum dues and AGR-related payments for four years will free up future cash flows and allow Airtel to dedicate resources to single-mindedly concentrate on the 5G rollout

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NEW DELHI: Telecom major Bharti Airtel has made an upfront payment of 8,312.4 crore to the telecom department towards dues for spectrum bought in recent auctions.

The payment amounts to four years of instalment on spectrum dues totalling 43,040 crore that the carrier is scheduled to pay over 20 years, the term of the license period.

This upfront payment coupled with the moratorium on spectrum dues and AGR (adjusted gross revenue)-related payments for four years will free up future cash flows and allow Airtel to dedicate resources to single-mindedly concentrate on the 5G rollout, the company said in a statement Wednesday.

Over the last one year, Airtel has also cleared 24,333.7 crore in deferred spectrum liabilities much ahead of scheduled maturities.

"This upfront payment of 4 years allows us to drive 5G rollout in a concerted manner given our operating free cash flow. Airtel also has access to 15,740.5 crore in capital from the rights issue which is yet to be called. With the ideal spectrum bank, best technology and adequate free cash flow, we are excited to bring to the country a world class 5G experience," said Gopal Vittal MD & CEO, Bharti Airtel Ltd.

Vittal, in an analyst call last week, had said that the carrier plans to cover 5,000 towns and cities with 5G services by March 2024, with the launch scheduled for this month.

"By March 2024, we believe we will be able to cover every single town and key rural areas. In fact, a detailed network rollout plans for 5,000 towns in India are completely in place. This will be one of the biggest rollouts in our history," Vittal said, addressing analysts and investors.

The top executive had added that Airtel will front oad its capex to prioritise 5G rollouts, which will get funded through internal cash flows. For FY22, Airtel’s total capex was 25,661 crore, up from 24,168 crore the year before.

“Our operating cash flows of the business are strong enough for us to find any requirement for capex," he added. The carrier’s operating cash flow for FY22 stood at 32,448 crore, up from 21,970 crore a year ago.

Airtel will also decide in the next couple of months on the timing of the second call for its rights issue, where 15,500 crore is pending, joint managing director Harjeet Kohli had said.

Vittal had also said that Airtel was yet to decide on pricing of 5G tariff plans adding that globally 5G had not led to incremental ARPU growth. However, he added that tariffs of existing plans must increase. In the quarter ended June, the carrier’s ARPU rose to 183, the highest among competitors.

“We are confident that we will see ARPU of 200 and eventually 300 arising out of tariff rises," he had added.

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