Detailed Rationale CRISIL Ratings has reaffirmed its ratings on the debt instruments of Bharti Telecom Ltd (BTL) at ‘CRISIL AA+/Stable/CRISIL A1+’. Furthermore, the rating on the commercial paper programme of Rs 13,000 crore has been withdrawn basis company’s request and receipt of required documentation. The withdrawal is in line with the rating withdrawal policy of CRISIL Ratings.
The ratings continue to factor in the healthy market value to debt cover of the company and its robust financial flexibility, driven by the strong reputation of its promoters, the Bharti group (shareholding through Bharti Enterprises Holding Pvt Ltd [BEHPL]) and Singapore Telecommunications Ltd (Singtel; rated 'A/Stable/A-1' by S&P Global Ratings). These strengths are partially offset by exposure to market risks. |
Analytical Approach CRISIL Ratings has followed the holding company approach for analysing the credit risk profile of BTL. Net debt of BTL, BEHPL and BEL [Bharti Enterprises Ltd; ‘CRISIL AA/Stable/CRISIL A1+’] have been combined for calculating the market value to debt cover. |
Key Rating Drivers & Detailed Description Strengths: Strong market value to debt cover The direct holding of BTL in Bharti Airtel Ltd (BAL; ‘CRISIL AA+/Stable/CRISIL A1+’) is worth around Rs 1.94 lakh crore as on July 19, 2023. BTL remains the largest shareholder in BAL, which has a healthy business as well as financial risk profiles being supported by strong market position in the Indian telecom industry and diversified operations in the non-mobile segments in India and mobility and other businesses in Africa. The promoter shareholding in BAL is entirely unencumbered.
BTL’s gross debt of around Rs 15,790 crore (as on July 19, 2023) is unlikely to change materially from current levels as near-term maturing debt is likely to get refinanced. Besides, BEHPL, BEL and BTL together currently have gross debt of around Rs 17,825 crore (as on July 19, 2023), signifying healthy cover, which is expected to be sustained throughout the tenure of the rated debt.
Robust financial flexibility
Weakness: Exposure to market risks Financial flexibility, in terms of cover available, will depend on prevailing market sentiments and the share price of BAL. Any increase in systemic risks or a sharp decline in BAL share price are rating sensitivity factors. |
Liquidity: Strong BTL enjoys healthy financial flexibility because of its shareholding in BAL, which is worth above Rs Rs 1.94 lakh crore as on July 19, 2023. BTL also benefits from its strong promoters, the Bharti group and Singtel. Given its status as a holding company, BTL will continue to depend on dividend income (mostly from BAL), monetisation of investments, infusion of funds by the promoters, or debt refinancing. The company also has strong access to capital markets. |
Outlook: Stable BTL will continue to benefit from the strong financial flexibility it derives from its holding in BAL and its robust debt cover. |
Rating Sensitivity Factors Upward Factors * Significant improvement in the operating performance of BAL * Substantial and sustained expansion in debt cover either due to low borrowings or increase in market value
Downward Factors * Downgrade in BAL’s rating by 1 or more notches * Steep fall in the market capitalization of BAL, leading to sustained decline in the debt cover of BTL |
About the Company Jointly promoted by the Bharti group and Singtel, BTL is a key shareholder in BAL. BEHPL and the Singtel group hold 50.56% and 49.44%, respectively, in BTL currently.
About BEHPL BEHPL, promoted by the Bharti Mittal family, is a key holding company of the Bharti group, which has interests in diverse businesses, such as telecom and financial services.
About BEL BEL, promoted by BEHPL, is a key holding company of the Bharti group, which has interests in diverse businesses. |
About BAL Headquartered in India, BAL is a global communications solutions provider with over 51 crore customers in 17 countries across South Asia and Africa as on March 31, 2023. The company ranks among the top three mobile operators globally and its networks cover over two billion people. Airtel is the largest integrated communications solutions provider in India and the second-largest mobile operator in Africa. Airtel's retail portfolio includes high speed 4G/5G mobile broadband, Airtel Xstream Fiber with convergence across linear and on-demand entertainment, streaming services spanning music and video, digital payments and financial services. For enterprise customers, Airtel offers a gamut of solutions that includes secure connectivity, cloud and data centre services, cyber security, IoT, Ad Tech and cloud-based communication. The company had 33.5 crore mobile subscribers in India and 14.0 crore in Africa as on March 31, 2023. |
Key Financial Indicators (Standalone)
*Provisional |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Yet to be placed
Annexure - Details of Rating Withdrawn
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Criteria Details
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