After Care, Ind-Ra and Crisil downgrade Vodafone-Idea long-term issuer ratings on NCDs

India Ratings and Research (Ind-Ra) and Crisil have downgraded telecom major Vodafone Idea's long-term issuer ratings on non-convertible debentures (NCDs) worth Rs 3,500 crore.

The NCDs were issued on June 12, 2015 and are due to mature on July 10, 2020. On Thursday, Care Ratings had downgraded Vodafone Idea's long-term bank facilities and non-convertible debentures to Care A-minus with negative implications.

Late on Friday, Ind-Ra downgraded the telecom company's rating to IND BBB from IND A plus and simultaneously placed it on rating watch negative (RWN). The outlook on earlier rating was negative.

"The rating action reflects heightened risk on Vodafone Idea's near-term liquidity position, deterioration in operating performance and weakening of financial support from the promoters (Aditya Birla Group and Vodafone Plc) in FY22," it said.

Ind-Ra gave three broad reasons for its action: adverse Supreme Court ruling on October 24, risk of acceleration of bank loans and delay in asset monetisation. The court directed Vodafone Idea to pay Rs 28,000 crore (license fees of Rs 6,900 crore and the balance is interest and penalty) over the next three months.

On October 24, the apex court ruled in favour of the Department of Telecommunications' (DoT) definition of adjusted gross revenue (AGR).

"Even if liabilities towards the Supreme Court ruling and acceleration of bank loan payment do not crystallise, the asset monetisation remains critical for Vodafone Idea to maintain its liquidity buffer in H1 FY21. Consequently, any delay in visibility of completing the fibre asset monetisation beyond FY20 will be negative for the ratings."

Giving similar reasons, Crisil too downgraded its rating from A negative to BBB plus with negative implications.

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