CRISIL upgrades rating on bank facilities of Bharti Airtel to ‘AA+/Stable’

The credit rating agency reaffirmed the ‘CRISIL A1+’ rating on the commercial paper programme.

Sep 28, 2021 05:09 IST India Infoline News Service

Bharti Airtel
CRISIL Ratings has upgraded its long-term rating on the bank facilities and debt programme of Bharti Airtel Limited (BAL) to ‘CRISIL AA+/Stable’ from ‘CRISIL AA/Stable’, and has reaffirmed the ‘CRISIL A1+’ rating on the commercial paper programme.

CRISIL Ratings has withdrawn its rating on Rs1,500cr non-convertible debentures (NCDs) of BAL, as they have been fully repaid. CRISIL Ratings has received confirmation of no dues against these NCDs from the debenture trustee. The rating action is in line with the CRISIL rating policy on the withdrawal of rating on NCDs.

“The rating action reflects continued improvement in BAL’s operating metrics resulting in healthy financial risk profile. CRISIL Ratings expects further improvement in the overall credit risk profile of the company over the near to medium term on the back of improving cash accruals, deleveraging plans including rights issue, notwithstanding adjusted gross revenue (AGR) dues and additional expenditure done for acquiring spectrum at the auction held in March 2021,” company shared CRISIL ratings rationale.

Consolidated earnings before interest, tax, depreciation and amortization (EBITDA; including impact of Ind-AS 116 and excluding other income) grew by ~22% on-year to Rs 12,980 crore in the first quarter of fiscal 2022, aided by healthy subscriber addition of mobility business over the past few quarters and improving average revenue per user (ARPU). Over the last four quarters ended June 2021, BAL has added around 4.6 crore 4G customers. The company has the highest ARPU for India mobile services in the industry, at Rs 146 during the quarter through June 2021.

Moreover, the EBITDA margins of the India and Africa mobile service businesses improved by over 850 basis points (bps) on-year to ~49% and ~400 bps on-year to ~48% respectively during the quarter. CRISIL Ratings expects the ARPUs to improve, aided by recent revisions in some plans and up-trading by subscribers, resulting in further improvement in operating revenue and profit.

CRISIL Ratings also believes that a broad based tariff hike as was last seen in December 2019, is likely within next 6-9 months.

Bharti Airtel Ltd ended at Rs696.25 per piece down by Rs26.6 or 3.68% from its previous closing of Rs722.85 per piece on the BSE.

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