Moody's Investors Service has affirmed Bharti Airtel's Ba1 corporate family rating (CFR) and senior unsecured rating as well as the backed senior unsecured notes issued by Bharti's subsidiary, Bharti Airtel International (Netherlands) B.V. At the same time, Moody's has changed the rating outlook to stable from negative.
Annalisa DiChiara, a Moody's Senior Vice President, said, "The ratings affirmation and change in outlook to stable reflect improving profitability at Bharti's core Indian mobile business, because of a moderation in industry competition, an increase in its 4G customer base, and a tariff hike from December 2019."
"The staggered payment resolution related to Adjusted Gross Revenue (AGR) liabilities is also a positive development," says DiChiara.
DiChiara added that overall, the company's operating flexibility is improving and will benefit from a gradual expansion of profitability, which will provide a buffer against any material deterioration in credit measures and support a steady deleveraging.
Moody's said that Bharti's Ba1 CFR considers its position as one of the largest telecom service operators globally in terms of subscribers (420 million), its solid market position in India's high-growth mobile market and its large spectrum holdings. These factors are offset by the company's elevated leverage, and relatively low, although improving, profitability and cash flow.
It further said that the competition in the Indian mobile segment has moderated over the last nine months as the price war following Reliance Jio Infocomm Ltd's (Jio) entry in September 2016 has subsided. But the pandemic has resulted in some subscriber contraction (1%-2%) over the last few months, which has amplified the impact of a natural attrition of subscribers due to SIM card consolidation in India following the tariff hikes implement in December 2019.
However, an increase in the composition of its 4G customers, which comprised nearly 50% of its Indian mobile subscriber base in June 2020, is helping to stabilize profitability, Moody's added.
Bharti Airtel is a leading global telecommunications company with operations in 18 countries across Asia and Africa.
The telecom major reported a consolidated net loss of Rs 15,933 crore in the June quarter as against net loss of Rs 2,866 reported in the same period last year. Total revenues increased by 15.4% year-on-year (YoY) to Rs 23,939 crore during the quarter. EBITDA margin stood at 44.4% as on 30 June 2020 as against 41% as on 30 June 2019.