On 23 November, Moody’s Investors Service reviewed Bharti Airtel Ltd.’s (Bharti) and its branch Bharti Airtel International (Netherlands) BV’s rating outlook from stable to positive.
“The outlook change to positive reflects Bharti’s improving operating performance and credit metrics which, if sustained, could support an upgrade to investment grade within the next 12-18 months,” Moody’s Senior Vice President Annalisa Di Chiara said.
“The continued expansion of profitability, particularly at its core Indian mobile business, together with a steady reduction in its balance sheet debt, is needed to mitigate the potential effect on Bharti’s credit metrics of significant investments in 5G and the compounding growth of deferred liabilities during the moratorium period,” Moody’s lead analyst for Bharti Di Chiara added.
The firm recorded a 27 per cent rise in its consolidated recorded EBITDA to Rs 272 billion for the six months ended 30 September 2021, compared with the corresponding period in 2020. Moody’s assumes Bharti’s consolidated adjusted EBITDA to grow toward Rs 570 billion – Rs 585 billion by the end of the fiscal year 2022, which ends 31 March 2022 — around 25 per cent increase over the fiscal year 2021’s.
In August 2021, Bharti declared a Rs 210 billion rights issue involving an upfront payment and two tranches being established over the next three years. The firm raised the upfront amount of Rs 52.5 billion in October 2021, which Moody expects to decrease debt.
Bharti Airtel has also allowed the four-year moratorium to pay its statutory dues due to the government holding around Rs 500 billion of spectrum liabilities and Rs 280 billion of annual gross revenue (AGR) dues — both amounts as of 31 March 2021. However, the moratorium is only till 30 September 2025.