Moody's says Bharti Q2 numbers credit positive

Global rating agency Moody's today said the second quarter earnings of Bharti Airtel are credit positive while suggesting the company reduce its consolidated adjusted debt/Ebitda to below 2 times.
"The rating (Baa3) outlook is stable based on the expectation that Bharti will continue to grow its core Indian and African wireless businesses and the Group will continue to deleverage on both on absolute and relative basis," Moody's said, adding the rating may see upward pressure should the company's overall credit profile continue to improve.
"Credit metrics for first half of year (FY15) remain broadly in line with our expectations with Bharti maintaining strong momentum in its domestic mobile business," Moody's Vice -President and Senior Analyst Annalisa Di Chiara said.

Last week, the country's largest telcom services provider reported a near three-fold surge in net profit at Rs 1,383 crore, driven by growth in data revenue.
Bharti Airtel's total revenue rose 7.1 per cent to Rs 22,845 crore in Q2, boosted by a consolidated mobile data revenue of Rs 2,540 crore (up 66.7% Y-o-Y), contributing more than two-thirds of the incremental revenues.
Mobile data traffic grew significantly by 94.6 per cent to 78.1 billion MBs during Q2 from 40.1 billion MBs in the same quarter last year. Bharti said mobile data revenues now represent 11.1 per cent of the total topline as compared to 7.1 per cent in the corresponding quarter last year.

"We would like to see Bharti reduce consolidated adjusted debt/Ebitda to below 2 times and consolidated adjusted free cash-flow to debt to exceed 10 per cent," the rating agency said.
Moody's said it would also like to see a track-record that shows some of its key markets outside India like Nigeria demonstrate the ability to upstream cash flows to Bharti, while the operating performance of those subsidiaries remains solid.
"Downward pressure on rating could arise should competition intensify in any of its key markets, but particularly for the domestic wireless business, or its key operations and/or subsidiaries report materially declining margins, or Bharti fails to continue with its deleveraging strategy," Moody's said.