| Data Infrastructure Trust | ||||
| 'CRISIL A1+' assigned to Commercial Paper | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has assigned its ‘CRISIL A1+’ rating to the Rs.1000 crore commercial paper progamme and reaffirmed its ‘CRISIL AAA/Stable’ rating on the corporate credit rating of Data Infrastructure Trust (DIT), an infrastructure investment trust (InvIT) of telecommunication (telecom) infrastructure assets sponsored by BIF IV Jarvis India Pte Ltd (BIF IV, or sponsor) with Brookfield India Infrastructure Manager Pvt Ltd (BIIMPL) as its investment manager and Axis Trustee Services Ltd as the trustee.
The rating reflects the strong credit profile of the underlying assets of DIT which are into telecom infrastructure. Summit Digitel Infrastructure Ltd (SDIL; rated CRISIL AAA/Stable), which is the principal investment for DIT has strategic importance to Reliance Jio Infocomm Ltd (RJIL; rated ‘CRISIL AAA/Stable/CRISIL A1+’) and strong business linkages with it. The rating also factors in strong financial risk profile with comfortable debt service coverage ratio (DSCR) of the underlying assets. These strengths are partially offset by susceptibility to revenue and counterparty risks related to external tenants for underlying assets.
The rating also factors in the second investment made by DIT in fiscal 2022 for acquisition of Crest Digitel Pvt Ltd (Crest; erstwhile known as Space Teleinfra Pvt Ltd). The rating of DIT also continues to draw comfort from its consolidated debt to assets under management (AUM) of ~46% as on March 31, 2023.
DIT is acting as an investment vehicle for the Brookfield group holding underlying assets pertaining to telecom infrastructure. Being the flagship InvIT for the group in data and telecom related infrastructure, the trust may evaluate opportunities in order to expand the asset base of InvIT in future. CRISIL Ratings will continue to monitor such transactions, and the impact of such transactions on the business and financial risk profiles of DIT will remain a key rating sensitivity factor. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of DIT with its underlying special purpose vehicles (SPVs), namely SDIL and Crest. This is because the trust is expected to have direct control over these SPVs and furthermore, the SPVs have to mandatorily dispense 90% of their net distributable cash flow (after meeting debt obligation for senior external debt) to the trust, leading to highly fungible cash flow. Also, as per extant regulations, the cap on borrowing of an InvIT has been defined at a consolidated level (equivalent to 70% of the value of the InvIT assets).
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Strong credit profiles of underlying assets driven by healthy cash flow visibility and limited downside risks to profitability DIT’s credit profile is being driven by strong credit profiles of the underlying assets. SDIL, being the key asset (accounting for ~98% assets of DIT) has a strong business risk profile as reflected through RJIL being the anchor tenant for all its towers, which comprise a substantial share of the total tenancies of RJIL. Moreover, RJIL has strong economic incentive from third-party tenancies, which enhances the strategic importance of the SPV. Furthermore, the operations and maintenance (O&M) and project execution partner (Reliance Projects and Property Management Services Ltd) being a Reliance group entity underscores the business linkages.
The business profile of SDIL is further supported due to a very long term 30 years master services agreement (MSA) with RJIL which ensures stable revenue for SDIL, with upside to revenue coming from contracting third-party tenancies. SDIL has also entered a contract with third-party tenants for providing tower infrastructure to the latter’s networks and is adding tenancies, which will also aid SDIL’s cash flow. Moreover, fixed tower-usage fees and O&M costs and pass-through of any increase in site rentals to tenants (including RJIL) protect profitability. Additionally, project execution risks are borne by the contractor and towers are transferred to the company only post completion at a fixed price.
Crest has inherent business strengths of high client stickiness given MSAs of 5-7 years with telcos, which provide revenue visibility and allow exit penalties, annual rental escalation, steady upfront deposits and timely payments from tenants.
Comfortable financial risk profile The financial risk profile is supported by stable cash accrual and comfortable DSCR for external debt, based on revenue from just the anchor tenant for SDIL. Likewise, the financial risk profile of Crest is also supported by limited debt translating into a strong capital structure and healthy debt coverage metrics.
Weakness: Susceptibility to revenue and counterparty risks related to external tenants for underlying assets Limited players in the Indian telecom industry may constrain the third-party tenancies of SDIL. Moreover, the telecom sector is susceptible to technological changes and competition, which may impact cash accrual and leverage ratio of telecom companies. Thus, counterparty risks related to external tenants persist. Nevertheless, DIT has a strong DSCR for its external debt based on revenue from just the anchor tenant. |
Liquidity: Superior Stable cash flow with minimum downside risks will comfortably cover debt obligation, leading to healthy DSCR at DIT consolidated level. CRISIL Ratings expects DIT to have consolidated operating cash accruals of ~Rs 4,700-5,000 crores in fiscal 2024. This along with cash and cash equivalents of ~Rs 582 crore (as on 31st March 2023) should suffice SDIL’s and Crest’s debt servicing obligations of ~Rs 4,400 crores and ~Rs 30 crore respectively, in fiscal 2024. Moreover, high quality and long life of the assets beyond the tenor of the debt, should help the SDIL refinance at favourable terms, whenever required, as demonstrated over last few quarters. |
Outlook: Stable DIT will continue to benefit because of the steady cash flow at SDIL backed by the long-term tower use agreement with RJIL in SDIL. |
Rating Sensitivity factors Downward factors * Downgrade in the rating of SDIL by one or more notches * Increase in leverage leading to significant and sustained weakening of average DSCR for the tenor of debt |
About the Trust DIT, formerly known as Tower Infrastructure Trust, was originally incorporated by Reliance Industrial Investments and Holdings Ltd (RIIHL; a wholly owned subsidiary of RIL) on January 31, 2019, as a trust under the provisions of the Indian Trusts Act, 1882. The trust was registered as an InvIT with the Securities and Exchange Board of India (SEBI) on March 19, 2019. In August 2020, upon receipt of approval from the Department of Telecommunications (DoT), BIF IV Jarvis India Pte Ltd became the sponsor to the InvIT by subscribing to 89.79% of the units of the InvIT. Post this, the InvIT acquired a 100% equity stake in SDIL. The units of the InvIT got listed on the Bombay Stock Exchange (BSE) w.e.f. September 2020. In October 2021, the name of the trust was changed from Tower Infrastructure Trust to Data Infrastructure Trust. The trustee is Axis Trustee Services Ltd. Brookfield India Infrastructure Manager Pvt Ltd (BIIMPL) is the investment manager of the trust. SDIL is Data InvIT’s first investment and is engaged in the business of operating and managing the tower assets which have been transferred to it from RJIL. In March 2022, Data InvIT acquired Crest, a leading indoor coverage solutions provider in India, for a consideration of around Rs 900 crore. This was funded by way of issuance of additional units on a rights basis and preferential basis.
About Summit Digitel Infrastructure Ltd SDIL is an SPV formed by the transfer of tower assets and a portion of liabilities by RJIL. In December 2019, RIIHL entered into a binding agreement with Brookfield Asset Management Inc (Brookfield) for investment of Rs 25,215 crore by the latter in the units issued by DIT, post which DIT holds 100% stake in SDIL.
About Crest Digitel Infrastructure Ltd Crest, incorporated in April 2016, is a neutral host provider (IP-1), deploying digital indoor solutions by providing 2G/3G/4G network through a common shared infrastructure. The company is mainly in the business of owning and operating shared inbuilding communications infrastructure, which is used by wireless carriers, broadcasters and other communications companies to provide services to end users. The company offers solutions, including built to suit in-building solution (IBS), outdoor small cells solution, among other services. |
Key Financial Indicators (Consolidated)
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Yet to be issued |
Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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