Affirming Bharti Airtel’s Ba1 corporate family rating, Moody’s Investor Service has also revised the outlook to ‘stable’ from ‘negative,’ citing AGR (adjusted gross revenue) dues staggered payment timelines and improved profitability of its Indian mobile services business.
The global rating agency said Airtel’s core India mobile business has benefited thanks to reduced competition, steady 4G customer additions and tariff hikes.
“Staggered payment resolution related to AGR liabilities is a positive development,” Annalisa DiChiara, Moody’s senior vice president said, adding that Airtel’s operating flexibility is improving.
Moody’s said the staggered AGR payment plan would alleviate pressure on the company’s cash flow.
Airtel shares closed 1.19% lower at Rs 491.65 on BSE Friday.
Earlier this month, the nation’s apex court gave telecom service providers 10 years to pay their balance AGR dues. Airtel pending AGR liabilities are at Rs 25,976 crore.
The telco had reported a consolidated net loss of over Rs 15,930 crore in the June quarter. However, its India mobile operation continued its recovery, with average revenue per user (ARPU) rising for the fifth straight quarter even though net 4G user adds slowed down amid the COVID-19 crisis.
Moody’s also affirmed the company’s senior unsecured rating and backed the senior unsecured notes issued by Bharti Airtel International (Netherlands) B.V.
Moody’s added it could upgrade the telecom giant’s ratings if its operating performance improves in such a way that the telco’s consolidated leverage is sustained below 2.5x which needs to be achieved in conjunction with an expansion in profitability at its core Indian business.
Competition in the Indian mobile segment had eased as price wars following Reliance Jio’s entry had subsided, the agency said.