Contrasting debt demands for Indian operators Bharti and Vi

Contrasting debt demands for Indian operators Bharti and Vi

In an interesting illustration of contrasting fortunes in the Indian telecoms market, operator Bharti Airtel has prepaid a Department of Telecommunications (DoT) debt while rival Vodafone Idea (Vi) is gearing up for admittedly smaller payments, but payments that are part of a much larger overall debt burden.

Airtel’s payment of about 80 billion rupees (US$975.5 million) to the DoT, reportedly almost clears much of the company’s dues related to airwaves bought in the 2015 auction.

The company is quoted in India’s Economic Times as saying: “Airtel continues to enjoy access to a well-diversified sources of capital / financing, allowing it to have enhanced financial flexibility in its capital structure including optimised cost of financing using all opportunities for significant interest savings, like this prepayment.”

Vi has to find slightly less money – 43 billion rupees (US$522.7 million) – towards debt and 5G airwave instalments in the current September quarter. However, this is just part of its vast overall debt, which includes payments to Indus Towers. 

Vi owes Indus about 95 billion rupees (US$1.2 billion). That said, recent payment obligations to Indus have been met. However, licence fee and spectrum usage charge (SUC) payments to the government have recently seen delays.

Add 5G rollout, 4G network upgrade, and quite a lot of other debts, to banks and suppliers among others, and a large dose of funding would be welcome. Vi’s net debt at the end of the 2023 financial year was US$24.4 billion. Lenders and would-be investors want assurance that funding is on the way.

By contrast, Airtel’s prepayment will help it save on interest costs annually and boost cash flows as it rapidly rolls out 5G networks with national service availability targeted by December.

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