Crisil upgrades Bharti Airtel debt programme rating to AA+, stable outlook

Crisil Rating on Tuesday said it has upgraded the long term rating on the bank facilities and debt programme of Bharti Airtel to AA+ with a stable outlook.

Earlier, the rating was AA with a stable outlook.

The credit rating agency reaffirmed the A1+ rating on the commercial paper programme of Bharti Airtel and withdrawn its rating on Rs 1,500 crore non-convertible debentures (NCDs) of the company, as they have been fully repaid.

"The rating action reflects continued improvement in BAL's (Bharti Airtel) operating metrics resulting in a healthy financial risk profile," Crisil said in its report.

The credit rating firm 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 for acquiring spectrum at the auction held in March 2021.

The credit rating reflects the company's ability to service its debt. The AA rating indicates high safety in the firm to pay back debt, and 'plus' is a subcategory within the rating.

Bharti Airtel has seen growth in revenue from operations aided by healthy subscriber addition of mobility business over the past few quarters and improving average revenue per user (ARPU).

The firm has recorded the highest ARPU of Rs 146 in the industry.

Crisil expects the APRU to improve further with further tariff hikes.

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

Bharti Airtel has been able to maintain its leverage at around 3 times as of June 30, 2021, despite AGR dues and additional spectrum liabilities, on account of rapidly improving business performance and deleveraging measures undertaken, it added.

According to Crisil, the rights issue plan of up to Rs 21,000 crore will further improve the company's leverage.

"Of this, around 25 per cent will be raised in October 2021 and the balance in two additional tranches in the next 24 to 36 months. Thus, leverage is likely to improve to below 2.5 times by end of fiscal 2022, aided by continuing healthy operating performance and deleveraging plans," the report said.

The telecom reforms and relief measures approved by the government will ease out cash flows and will ensure optimal usage of resources, increase their accessibility and enable accelerated investments in the telecom sector, it added.