Crisil Upgrades Bharti Airtel's Long-Term Rating to AA+; Short-Term Rating Reaffirmed

CRISIL Ratings upgraded Bharti Airtel Ltd (Bharti Airtel )'s long-term bank facilities and debt plan to 'CRISIL AA+/Stable' from 'CRISIL AA/Stable' on Tuesday. Bharti Airtel's Rs 1,500 crore NCDs have been fully repaid, prompting CRISIL to remove their rating.

The rating agency claims that its decision is in accordance with its NCD rating removal policy.

BAL's operating indicators have continued to improve, producing a healthy financial risk profile, as seen by the rating action.

Despite adjusted gross revenue (AGR) dues and additional expenditure done for acquiring spectrum at the auction held in March 2021, CRISIL Ratings expects the company's overall credit risk profile to improve further in the near to medium term as a result of improving cash accruals, deleveraging plans including rights issues, and other factors, CRISIL Ratings expects the company's overall credit risk profile to improve further in the near to medium term.

Despite AGR dues and increased spectrum liabilities, BAL was able to keep its leverage (net Debt to EBITDA 1) at about 3 times as of June 30, 2021, because to significantly improving business performance and deleveraging initiatives employed.

CRISIL Expectation

CRISIL Ratings forecasts ARPUs to rise as a result of recent plan adjustments and customer up-trading, leading in increased operating revenue and profit. It also expects that a broad-based tariff hike, similar to the one witnessed last December, will occur within the next 6-9 months.

At current reserve prices, CRISIL Ratings expects that participation in the 5G spectrum auction may be restricted. Furthermore, CAPEX to establish a 5G network should not significantly alter present CAPEX outlays. The recently planned rights issue will buffer any large rise in investments in the 5G rollout. As a result, net leverage will remain under 2.5 times.

Rating Action

• Total Bank Loan Facilities Rated: Rs.20000 Crore
• Long Term Rating: CRISIL AA+/Stable (Upgraded from 'CRISIL AA/Stable')
• Rs.1500 Crore Non-Convertible Debentures: CRISIL AA/Stable (Withdrawn)
• Rs.3500 Crore Non-Convertible Debentures: CRISIL AA+/Stable (Upgraded from 'CRISIL AA/Stable')
• Rs.15000 Crore Commercial Paper: CRISIL A1+ (Reaffirmed)