Bharti Airtel Gains Momentum with Upgraded 'BBB' Rating

S&P Global Ratings has raised Bharti Airtel's credit ratings to 'BBB', citing robust earnings growth from Indian operations and subscriber additions. The ARPU growth and competitive industry dynamics are boosting Airtel's market position. However, rising debt at parent company Bharti Telecom poses potential risks to its creditworthiness.

S&P Global Ratings has elevated Bharti Airtel's credit score to a 'BBB' rating, driven by expectations of solid earnings growth over the next two years from its Indian operations. The increase in average revenue per user (ARPU) and subscriber growth are key contributors to this upgrade.

Bharti Airtel has seen a significant rise in its ARPU following industry-level tariff hikes, with prices on mobile plans increasing by 10-21% in July 2024. This financial momentum is further supported by Airtel's expanding market share, now at 34% compared to Reliance Jio's 41% and Vodafone Idea's 17%.

While Bharti Airtel's financial outlook is positive, S&P Global Ratings has noted concerns over the rising debt of its parent company, Bharti Telecom. The accumulation of this debt, now around Rs 40,000 crore, alongside the company's dependence on Airtel's dividends, is being closely monitored for potential impacts on credit ratings.

(With inputs from agencies.)