Rating agency Moody’s has upgraded telecom major Bharti Airtel’s credit rating outlook to positive from stable, reflecting improvement in its financial performance and growth potential. Moody’s has affirmed Bharti’s Ba1 corporate family rating (CFR) and senior unsecured rating, and the Ba1 rating on the backed senior unsecured notes issued by Bharti Airtel International (Netherlands) BV.
“The outlook change to positive reflects Bharti’s improving operating performance and credit metrics which, if sustained, could support an upgrade to investment grade within the next 12-18 months,” Moody’s Senior Vice President Annalisa Di Chiara said.
Airtel’s Ba1 CFR rating considers the company’s position as one of the largest telecom service operators globally in terms of subscribers (471 million), its market position in India’s (Baa3 stable) high-growth mobile market and its large spectrum holdings, said Moody’s.
The upgrade comes a day after the company announced a hike in prepaid tariff rates by up to 25 per cent, which will come into effect from November 26. In a regulatory filing to the stock exchanges, the telecom operator said that decision was taken “to provide a reasonable return on capital for a financially healthy business model.”
“Bharti Airtel has always maintained that the mobile Average Revenue Per User (ARPU) needs to be at Rs 200 and ultimately at Rs 300,” said Airtel in its statement.
The current Rs 79 plan will cost Rs 99 from Friday, a hike of 25 per cent. The Rs 149 plan will cost Rs 179, the Rs 1,498 plan will become Rs 1,799 and the Rs 2,498 plan will cost Rs 2,999.
Airtel further mentioned that data top ups will now cost Rs 58 (up from Rs 48), Rs 118 (Rs 98) and Rs 301 (Rs 251), respectively.
“The continued expansion of profitability, particularly at its core Indian mobile business, together with a steady reduction in its balance sheet debt is needed to mitigate the potential effect on Bharti’s credit metrics of significant investments in 5G and the compounding growth of deferred liabilities during the moratorium period,” Di Chiara added.
On Tuesday, shares of Bharti Airtel settled 2.35 per cent higher at Rs 759.50 apiece on the BSE.