Fitch Ratings on Thursday affirmed Bharti Airtel’s long-term foreign-currency issuer default rating (IDR) and senior unsecured rating at ‘BBB-’ and the outlook on the IDR as stable.
The agency has also affirmed the ratings on Bharti Airtel International (Netherlands) BV’s senior unsecured bonds at ‘BBB-’.
Bharti’s ratings are supported by its diversified and integrated business profile, with operations spanning the mobile, fixed-line, digital TV, tower and enterprise sectors in India as well as mobile operations in 14 African markets. It has held on to its Indian mobile revenue market share of around 31%-33% despite intense competition, the ratings firm said.
“The stable outlook reflects our expectations of a recovery in its Indian mobile segment and continued growth in Africa and the enterprise segment. We believe that Bharti’s management is committed to an investment-grade rating and we expect the company to further reduce debt through an equity issuance by its African subsidiary and the sale of a stake in its tower subsidiary,” the ratings firm said.
According to Fitch’s forecast, funds from operations adjusted net leverage will improve to 2.1x-2.3x in the financial year ending March 2020 (FY20) from 2.4x at FYE19, excluding $6.1 billion in deferred spectrum costs, after Bharti raised $3.5 billion from a rights issue in June 2019.
“We expect leverage to remain under the 2.5x threshold above which Fitch would consider negative rating action. We expect the company to repay debt using the proceeds from an equity issuance worth $750 million by its African subsidiary and the sale of a stake in the combined Indus Tower and Bharti Infratel both in H2FY20,” it said.―Financial Express