Air India Disinvestment outlook stable

Continuous improvement in operational profile, financials triggers upgrade, says the ratings agency

Ratings agency Moody's on Thursday upgraded ratings of Bharti Airtel Ltd’s (Bharti) senior unsecured debt from “Ba1” to “Baa3” on basis of the telco's continued strengthening of the company's operational metrics and stabilisation of financial profile.

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Moody's has changed the outlook on the ratings to stable from positive. Rating agency assigned  “Baa3” issuer rating to Bharti. At the same time, it withdrew the company's Ba1 corporate family rating (CFR).

Annalisa Di Chiara, a Senior Vice President, Moody’s said the company financial profile shows lower leverage levels and improving profitability. "Moreover, we expect that these improvements can be sustained given Bharti's solid market position, rising profitability at its core Indian mobile business and prudent financial management," Chiara said.

Bharti's Baa3 rating considers the company's position as one of the largest telecom service operators globally in terms of subscribers (491 million), its solid market position in India's (Baa3 stable) high-growth mobile market and its large spectrum holdings.

Bharti's proven ability to access capital markets and the benefits of its strong and supportive shareholder base are also reflected in the ratings, said Moody's.

The company reported over a 25 per cent increase in its consolidated adjusted EBITDA to Rs 58,100 crore for the fiscal year ended March 31, 2022 compared with that in the prior year. This reflects a growing proportional share in its 4G subscriber base.

It shows the further step-up in average revenue per user (ARPU) at the company's core Indian mobile services segment -- which contributes around 53 per cent of consolidated EBITDA. The company's tariff increase in December 2021 helped drive ARPUs higher and supported the expectation of a sustainable profitability level over the next 12-18 months.

Moody’s said the stable outlook reflects Bharti's improving operating profile credit metrics. This covers the expectation of growing free cash flows and liquidity over the next 12-24 months, particularly at the core Indian operations.

The consolidated adjusted debt/EBITDA is expected to remain stable or improve, even with investments in 5G spectrum, and that cash flow savings from the moratorium will continue to be redeployed to reduce debt permanently, it said.