Indian operator Bharti Airtel has reportedly prepaid its deferred spectrum liabilities to the Department of Telecommunications (DoT). These high-interest liabilities related to spectrum acquired in the auctions of the year 2012 and 2015.
This payment, totalling Rs7,904 crore (about US$948 million) is on top of Rs8,325 crore (about US$999 million) prepaid in January this year.
India’s Economic Times news service explains that the deferred liabilities came as a part of a four-year moratorium given to telecom players by the government in September 2021 as part of a relief package we reported at the time.
By contrast rival operator Vodafone Idea (Vi) probably has more and larger debts to worry about, including money owed to network equipment companies Nokia and Ericsson and tower vendor Indus.
That said, Vodafone Idea has reportedly submitted a term loan proposal at a meeting of a State Bank of India (SBI)-led banking consortium for US$6.6 billion. The prospect of Vi putting much of this sum into improving 4G coverage and rolling out 5G networks in priority markets means vendors like Nokia, Ericsson and Indus can expect business at time when rivals Reliance Jio and Bharti Airtel are largely 5G-ready and no longer need kit.
Vi also hopes to raise money via a preferential share issue to Nokia and Ericsson to clear a portion of their pending dues. However, ownership issues (Bharti Airtel holds nearly a 48% stake in Indus) mean Vi cannot do the same with Indus.
Vodafone Idea also recently lined up around Rs24,000 crore (US$2.9 billion) of equity capital, fulfilling a key demand of lenders for extending fresh loans to the company.
However, Vi’s regulatory payouts — toward spectrum and adjusted gross revenue (AGR) liability — will rise steeply once the moratorium on these payments ends in September 2025. An annual liability of Rs43,000 crore (about US$5.2 billion) may be the result. This may worry potential lenders, though Vodafone Idea is hoping the Indian Supreme Court agrees with its plea that some correction on AGR dues may be necessary.
Some observers are suggesting that further conversions of government dues into equity in financial years 2026 and 2027 may be on the cards.
Whatever happens, unlike Airtel, Vodafone Idea has a lot of very big outstanding debts and more on the way. A boost for its 4G and 5G offering may put it on sounder footing of course, but its rivals are already ahead in both areas.
