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Informist, Wednesday, Jan. 22, 2025

 

--Moody's affirms Bharti Airtel's issuer rating at 'Baa3' 
--Moody's ups Bharti Airtel rating outlook to positive from stable 
 

MUMBAI – Moody's Ratings on Wednesday upgraded its rating outlook on Bharti Airtel Ltd. to 'positive' from 'stable'. Further, it lauded the telecom company's robust financial profile and said multiple factors position it well for a possible rating upgrade to 'Baa2'. The ratings agency has affirmed its issuer rating on Bharti Airtel at Baa3.

Moody's Ratings said the upgrade in outlook reflects a significant improvement in Bharti Airtel's financial profile, steadily increasing market share boosted by the structural changes in India's fast-growing mobile sector. "Easing competitive intensity and our expectations of a relatively supportive regulatory environment also contribute to the positive outlook," Nidhi Dhruv, vice-president and senior credit officer, Moody's Ratings said in a press release. "However, the linkages with the Indian economy constrain Bharti to be rated no more than one notch above the sovereign," Dhruv said.

 

Bharti Airtel's issuer rating might be upgraded to Baa2 if there is a sustained improvement in its profitability and if there are no adverse changes in the regulatory environment in its key operating countries, Moody's said.

 

Moody's expects Bharti Airtel's adjusted debt/earnings before interest, taxes, depreciation, and amortisation to improve to 2.6x by March, helped by the company's prepayment of INR 200 billion towards spectrum liabilities in this financial year alone. "Improving earnings and scheduled debt repayments will further pave the way for leverage to improve to 2.2x by March 2026," Moody's said. The agency noted that the company's subscriber market share has increased to 37% in September 2024 from 33% in March 2020.

 

In terms of the regulatory environment, Bharti Airtel is expected to be exposed to more volatility in Sub-Saharan Africa through its operations in 14 countries. "However, the breadth of Bharti's African business and its financial discipline partially mitigate foreign exchange volatility, and regulatory and operational uncertainties in any one country," Moody's said.

 

The ratings agency said Bharti Airtel's liquidity profile is 'excellent', with around 60% of its debt maturing beyond March 2029. 

 

The outlook could be downgraded back to stable if the recent improvement in Bharti Airtel's profitability is not sustained, or if its liquidity deteriorates significantly, Moody's warned. "Material adverse changes in the competitive or regulatory environments that derail the continued improvement in profitability, cash flow and leverage, would also premise stabilisation of the outlook," the ratings agency said. 

 

Bharti Airtel had reported a consolidated net profit of INR 35.93 billion for the September quarter on revenues of INR 414.7 billion. Wednesday, shares of Bharti Airtel closed 0.3% higher on the National Stock Exchange at INR 1,631.75%.  End

 

Reported by Anand JC

Edited by Deepshikha Bhardwaj

 

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