The amount relates to the entire deferred liabilities pertaining to spectrum acquired in auctions of year 2014, 2015, 2016 and the spectrum acquired in year 2021 through trading of right to use with Bharti Airtel Limited.
Key points to note:
- The amount includes accrued interest as well.
- These liabilities were due in annual instalments from FY 2022-23 to 2034-2035 and carried interest rate between 9.30% to 10% p.a. with an average residual period of 7+ years.
- First tranche of said payment was made in October 2021 (for 2016 spectrum) and balance has been paid now.
Given the high interest rates on these liabilities, it makes perfect sense for someone like Reliance to prepay them and replace with lower cost domestic/ international debt.
As per Company, Payment is expected to result in annual interest savings of Rs 1,200 crore.