Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  Airtel under Moody’s lens for ratings downgrade
BackBack

Airtel under Moody’s lens for ratings downgrade

The review reflects Airtel's low levels of profitability, negative free cash flow and higher debt

Moody’s said that its review for the downgrade will focus on Bharti Airtel’s plans to reduce debt levels significantly over a short period of time and its plans to turnaround the underlying Indian mobile operations. Photo: AFPPremium
Moody’s said that its review for the downgrade will focus on Bharti Airtel’s plans to reduce debt levels significantly over a short period of time and its plans to turnaround the underlying Indian mobile operations. Photo: AFP

Mumbai: Bharti Airtel Ltd’s credit rating was placed under review for a possible downgrade by Moody’s Investors Service on high debt levels and weak cash flow generation.

Moody’s has placed on review for downgrade the Baa3 issuer and senior unsecured rating of Bharti Airtel, and the ratings on the backed senior unsecured notes issued by Bharti’s wholly-owned subsidiary, Bharti Airtel International (Netherlands) BV, Moody’s said in a statement on Thursday.

Baa3 rating means the entity is medium-grade, subject to moderate credit risk and has an acceptable ability to repay short-term obligations, according to Moody’s.

“The review for downgrade is primarily driven by our expectation that Bharti’s cash flow generation will remain weak and leverage elevated," Annalisa DiChiara, vice president and senior credit officer at Moody’s, said in a statement. 

The review by Moody’s also reflects Bharti Airtel’s low levels of profitability, particularly from its core Indian mobile operations, negative free cash flow and higher debt levels to fund capital spending.

“Because we believe a more rational competitive environment in India’s telecommunications market is unlikely over the next 12-18 months, the review also reflects uncertainty as to whether the company’s profitability, cash flow situation and debt levels can improve sustainably and materially over the same period," DiChiara added. 

Moody’s said that its review for the downgrade will focus on Bharti Airtel’s plans to reduce debt levels significantly over a short period of time and its plans to turnaround the underlying Indian mobile operations.

“The ratings could be downgraded if the company fails to use proceeds received from its recent pre-IPO (initial public offering) of its African business or its proposed capital-raising activities for debt reduction," Moody’s said. 

“Moreover, any further deterioration in its operating performance, particularly in the Indian mobile segment, such that earnings and cash flows or revenue market share contracts from current levels, would also lead to a downgrade," it added. 

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Rhik Kundu
Rhik writes about the Indian economy and its crucial indicators. He is constantly navigating corporates, decoding policies, and dabbling with everything in between.
Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 08 Nov 2018, 11:25 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie