Airtel pays ₹8,312.4 crore covering 4 years of 5G auction dues

Bharti Airtel has paid up ₹8,312.4 crore to the telecom department as advance payment for spectrum bought in the recent auctions.

The payment amounts to four years of spectrum dues of the total ₹43,040 crore that the No 2 carrier must pay over 20 years, the term of the license period.

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 roll out, the company said in a statement Wednesday.

Over last one year, Airtel has also cleared ₹24,333.7 crore of its 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 cr 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 said in an analyst call last week that the carrier will cover 5,000 towns and cities with 5G by March 2024 and will launch 5G services 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 load its capex to prioritize 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 the previous year.

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 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 needed to rise. In the quarter ended June 2022, the carrier’s ARPU rose to ₹183, the highest amongst the competition. “We are confident that we will see ARPU of ₹200 and eventually ₹300 arising out of tariff rises,” he had added.