Moody’s retains stable outlook for Bharti Airtel; expects it to grow

Friday, 7 August,New Delhi : Moody’s has retained stable rating outlook for the country’s top telecom operator Bharti Airtel as it expects the telco to continue to grow its core Indian and African wireless businesses.

“Bharti Airtel Ltd.’s operating performance for the first quarter ended 30 June 2015 (1Q 2015/16) continues to support its Baa3 credit profile,” Moody’s said in a statement.

The stable rating outlook reflects Moody’s expectation that Bharti will continue to grow its core Indian and African wireless businesses, and that the group will continue to deleverage on both an absolute and relative basis.

Moody’s said Bharti reported its results for the first quarter of 2015-16, with revenues up 3.1% year-on-year to Rs 237 billion (US $3.7 billion).

“Revenues from India, the largest revenue contributor, grew 10% from the prior year. Bharti also reported EBITDA of Rs 83 billion and an EBITDA margin of 34.9% in 1Q 2015/16,” it added.

On a reported basis, the company’s leverage metrics for last 12 months ended June 30 appear higher than our downward rating triggers, it said.

“After considering the pro forma effect of debt reduction from expected African tower asset sales and debt refinancing with the US $1 billion issuance in June, credit metrics for the 12 months to June 2015 remain broadly in line with expectations.

“Strong momentum in Bharti’s Indian businesses also continue to support its Baa3 credit profile,” said Annalisa Di Chiara, Moody’s Vice President and Senior Analyst.

In India, revenue growth was driven by mobile services, reflecting the robustness of voice demand and a growing data segment. Mobile data revenue was up 67.3% in the first quarter and contributed 19.2% of mobile segment revenues, compared to 12.4% in the same quarter last year.

At the same time, Moody’s said Bharti’s African operations reported an 11.6% year-on-year decline in revenue, contributing around 26% of total revenues.

“Although revenue growth remained sluggish, mobile data revenue grew by 48.5% year-on-year to US $128 million, and now represents 12.9% of total mobile revenue,” it added.