S&P raises Airtel ratings on earnings momentum; says outlook positive

S&P Global Ratings has raised Bharti Airtel's ratings to 'BBB' on expectations that the telco's earnings growth will remain robust over the next 24 months fuelled by Indian operations, subscriber adds and user revenue lift.

The outlook for the Indian operations stems from expectations of 2 per cent to 4 per cent of annual subscriber additions and average revenue per user (ARPU) growth of 6 per cent to 8 per cent in the same period, a fall out of upgrades to higher-priced plans and higher data consumption.

S&P Global Ratings has raised its long-term issuer credit ratings on Bharti Airtel to 'BBB' from 'BBB-'.

"At the same time, we raised our ratings on the senior unsecured debt the company issued or guarantees to 'BBB' from 'BBB-', and the ratings on its subordinated perpetual securities to 'BB+' from 'BB'," it said.

The positive outlook reflects S&P Global Ratings' view that Bharti Airtel's continued deleveraging, and a correspondingly supportive leverage tolerance, could support a higher long-term issuer credit rating over the next 24 months.

S&P Global Ratings believes Bharti Airtel's earnings growth will remain robust over the next 24 months, fuelled by its Indian operations, according to a filing by the Sunil Mittal-led telco.

Airtel has been able to increase its ARPU in the Indian mobile segment faster through industry-wide tariff hikes in July 2024 (when it raised the prices on its mobile plans by 10-21 per cent). Its ARPU reached Rs 256 in the second quarter of FY26, up 21 per cent from the quarter ended June 2024.

"In addition, Bharti Airtel has been gaining wireless subscribers in the segment, alongside the largest telco, Reliance Jio Infocomm Ltd., partly benefitting from churn from third-placed Vodafone Idea," the note said, adding that the churn from Vodafone Idea is likely due to its under-investment in its network.

Bharti Airtel had 364 million wireless customers as of September 2025, up from 351 million a year ago.

"We forecast earnings from the Africa business to remain around 20 per cent of Bharti Airtel's consolidated earnings through fiscal 2027," it said.

India's telco industry competitive dynamics can accommodate Bharti Airtel's continued growth, it contended.

The India telco industry has largely consolidated to the current state where the top three players make up more than 90 per cent of the market (by wireless subscribers).

"Specifically, we estimate that Bharti Airtel has a wireless subscriber market share of 34 per cent now, against Reliance Jio's 41 per cent, far exceeding Vodafone's 17 per cent," it said.

According to S&P Global Ratings, players are now focused on improving returns, as evident from the tariff hikes of similar magnitude that the three telcos took in quick succession in July 2024, and after the top two telcos went through a wave of massive network and spectrum investments in the few years prior.

Plans by Reliance Jio to file for an IPO also support this notion, S&P Global Ratings said.

Bharti Airtel's rising earnings is driving improvement in cash flow, it said and forecast consolidated adjusted EBITDA will increase by 23-25 per cent to about Rs 1.2 trillion in fiscal 2026 and 7-8 per cent annually over the subsequent two years.

Rising debt at Bharti Airtel's parent could weigh on its improvement in creditworthiness, however, it said, adding Bharti Airtel is Bharti Telecom's largest investment.

"A higher debt load at Bharti Telecom Ltd, the immediate parent of Bharti Airtel, carries the risk of the company depending on dividends from Bharti Airtel to service its debt...The increasing materiality of debt at Bharti Telecom leads us to consider this in the rating thresholds that we set for Bharti Airtel," it added.

Debt at Bharti Telecom was about Rs 40,000 crore as of September 30, 2025, which is more than 15 per cent of Bharti Airtel's adjusted debt on the same date, and much higher than the Rs 1,000-2,000 crore in fiscals 2021 and 2022.

"Despite the rise in dividend receipts from Bharti Airtel, debt at Bharti Telecom could continue to increase, and will remain a monitoring point," according to S&P Global Ratings.