Reliance Jio pre-paid its entire deferred liabilities pertaining to spectrum acquisition prior to March 2021.
The company paid Rs. 30,791 crores (inclusive of interest) to the Department of Telecom as a pre-payment of entire deferred liabilities pertaining to 585.3 MHz units of spectrum acquired in auctions in 2014, 2015, 2016 and the spectrum acquired in year 2021 through trading of the right to use with Bharti Airtel Limited.
These liabilities were due in annual instalments from FY 2022-23 to 2034-35 and carried interest rate between 9.30% – 10% with an average residual period of more than 7 years. The above prepayments will result in interest cost savings of around Rs 1,200 crore annually, at the current interest rates to the company.
Department of Telecom in the month of December 2021 decided to provide the telcos the flexibility to prepay their deferred spectrum liabilities on any date. Following the notification, Reliance Jio prepaid its entire deferred liabilities in the month of January 2022 itself.
Similarly, Bharti Airtel pre-paid Rs. 15,519 crores to Department of Telecom towards deferred liabilities emanating from having acquired 128.4 MHz of spectrum in 2014 auctions, including airwaves from Telenor for a total of Rs. 19,051 crores, which was due from FY27 to 32 and carried an interest of 10%. The pre-payment will save the carrier ₹3,400 crore in interest.
Jio had executed the first tranche of prepayment in October 2021 pertaining to spectrum acquired in auction in 2016. It had then paid ₹10,792 crore to the government for 269.2 MHz of spectrum it had acquired. Now it has paid all its dues.