Reliance Jio Infocomm pays Rs 30,791 crore to Department of Telecom
Reliance Jio Infocomm Ltd (RJIL) has paid Rs 30,791 crore to the Department of Telecom (DoT) towards deferred liabilities on spectrum related to the auctions in three years — 2014, 2015 and 2016 — and spectrum acquired in 2021.
RJIL in October paid Rs 10,792 crore for 269.2Mhz of spectrum acquired in 2016. The telcom arm of Reliance Industries had conveyed to the government it will not opt for the four-year moratorium on spectrum payment offered to the sector as part of a bailout package.
In a statement on Wednesday, RJIL said it has pre-paid the entire amount of Rs 30,791 crore, including accrued interest, towards the deferred liabilities on spectrum for 2014, 2015 and 2016 as well as 2021 when it acquired the right to use spectrum from Airtel. The company had acquired 585.3MHz from Airtel.
The cash-rich firm pointed out the pre-payments were made within a month of the DoT providing the telecom players the flexibility to make the payouts on any date.
These liabilities had to be paid out annually from 2022-23 to 2034-2035 and carried an interest rate between 9.30 per cent and 10 per cent per annum with an average residual period of more than 7 years.
RJIL estimates the prepayments will result in interest savings of around Rs 1,200 crores annually.
Last month, Jio's rival Bharti Airtel had cleared deferred liabilities worth Rs 15,519 crore for spectrum acquired in 2014. The company had said that this step will help it to save Rs 3,400 crore.
The liabilities were due between 2026-27 and 2031-32 with 10 per cent interest, which was the highest rate amongst deferred liabilities and borrowings. It carried an average residual life of more than 7 years.
RJIL had reported an operating revenue of Rs 18,735 crore for the quarter ended September 30, 2021 up from Rs 17,994 crore in the preceding three months. Its earnings before interest, taxes, depreciation & amortisation (EBITDA) rose to Rs 9,003 crore from Rs 8,631 crore in the same period.
Analysts at Jefferies said in a note the capex intensity in the sector was high in the previous calendar year, driven by the spectrum auctions in March. It said the spectrum auctions saw an aggregate expenditure of Rs 77,800 crore by the three operators, with Jio leading in spending.
The brokerage added that while the network capex will remain elevated, spectrum spends are unlikely to happen in 2022 as the next auctions may only take place in the fourth quarter of 2022-23 and the resultant cash outflows may occur in the first quarter of 2023-24.
“With the government extending 5G trials until May-22, 5G auctions can take place only after the first half of calendar year 2022. Also, the government has announced its intention to conduct spectrum auctions during the fourth quarter of every fiscal, which suggests 5G auctions may take place in the fourth quarter of 2022-23,’’ Jefferies said.