Moody's upgrades Bharti Airtel rating on improving profitability


PTI | New Delhi | Updated: 26-05-2022 20:03 IST | Created: 26-05-2022 20:03 IST
Moody's upgrades Bharti Airtel rating on improving profitability
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Moody's Investors Service has upgraded Bharti Airtel's rating to Baa3, citing continued strengthening of its operational metrics as well as stabilisation of the financial profile.

It has withdrawn the company's Ba1 corporate family rating.

Moody's has also changed the outlook for the company to stable from positive.

''The rating upgrade reflects the continued strengthening of Bharti's operational metrics as well as the stabilization of its financial profile, including lower leverage levels and improving profitability. Moreover, we expect that these improvements can be sustained given Bharti's solid market position, rising profitability at its core Indian mobile business and prudent financial management,'' Moody's Senior Vice President Annalisa Di Chiara said.

Bharti's Baa3 rating considers the company's position as one of the largest telecom service operators globally in terms of subscribers (491 million), its solid market position in India's high-growth mobile market and its large spectrum holdings, a statement by Moody's said.

Entities given Baa3 ratings are considered medium grade and are subject to moderate credit risk and the firm has an acceptable ability to repay short term obligations, it added.

The company had posted more than two-fold jump in consolidated net profit for March quarter 2021-22 to Rs 2,008 crore, buoyed by a lift in average revenue per user and an exceptional gain.

Revenue from operations rose 22.3 per cent to Rs 31,500 crore during the fourth quarter of 2021-22, compared to the year-ago period.

The net profit before exceptional items for the quarter came in at Rs 1,860 crore, while exceptional gain boosted the net profit to Rs 2,008 crore.

As a result, profit after tax was over 2.5 times higher for March quarter, compared to Rs 759 crore recorded in the year-ago period.

Consolidated net debt excluding lease obligations for Bharti Airtel stood at Rs 1,23,544 crore as on March 31, 2022, compared to Rs 1,15,512.4 crore in the year-ago period.

The change of outlook to stable indicates that the company's performance is expected to improve even after it invests in upcoming 5G auction, Moody's said.

''The company's tariff increase in December 2021 helped drive ARPUs (average revenue per user) higher and supports Moody's expectation of a sustainable profitability level over the next 12-18 months.

Moody's expects a further 15-20 per cent increase in Bharti's consolidated adjusted EBITDA by the end of fiscal 2023, reflecting stable growth at its Indian and African operations, which are held through its 56 per cent owned subsidiary, Airtel Africa plc and contribute around 30 per cent of consolidated EBITDA.

Earlier, Moody's had assigned Ba1 corporate family rating to Bharti which indicated substantial risk on repayment of credit offered to the company.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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