S&P Global Ratings has upgraded Bharti Airtel Ltd.’s long-term issuer credit rating to ‘BBB+’ from ‘BBB’, with a stable outlook. The upgrade reflects the company’s strong growth prospects in India and Africa, coupled with prudent balance sheet management. S&P anticipates Bharti Airtel will continue to pay down debt as earnings rise, maintaining supportive leverage tolerance over the next 12-24 months. The senior unsecured debt rating was also raised to ‘BBB+’ from ‘BBB’.
Bharti Airtel’s Credit Rating Enhanced
S&P Global Ratings has announced a significant upgrade of Bharti Airtel Ltd.’s credit ratings. The long-term issuer credit rating has been elevated to ‘BBB+’ from ‘BBB’, accompanied by a stable outlook. This positive reassessment highlights the company’s robust performance and strategic financial discipline.
Key Drivers for the Upgrade
The upgrade is primarily driven by Bharti Airtel’s strong growth trajectory in its key markets of India and Africa. S&P anticipates that increasing data consumption in these high-growth regions will significantly boost the company’s earnings. This enhanced profitability is expected to support the company in effectively managing and reducing its existing debt obligations. Furthermore, the rating agency foresees Bharti Airtel maintaining a prudent approach to its balance sheet, operating with lower leverage levels going forward.
Rating Outlook and Expectations
The stable outlook indicates S&P’s confidence that Bharti Airtel will successfully pay down debt as its earnings and cash flows continue to grow. The company is expected to maintain a leverage tolerance consistent with the ‘BBB+’ rating over the forthcoming 12-24 months. Additionally, the company’s senior unsecured debt rating has also been upgraded to ‘BBB+’ from ‘BBB’.
Financial Performance and Growth Projections
Bharti Airtel’s earnings are projected to expand significantly due to growing data consumption and fundamental improvements in the Indian and African telecom markets. In India, subscriber numbers are expected to grow by 3%-4% annually, with average revenue per user (ARPU) increasing by 5%-7%. The African operations are also showing strong performance, with projected customer base growth of 9%-11% annually and ARPU growth of 5%-7% in U.S. dollars through fiscal year ending March 31, 2028.
Balance Sheet Strength and Financial Flexibility
S&P expects Bharti Airtel to exhibit strong financial flexibility, with its ratio of funds from operations (FFO) to debt projected to improve significantly, reaching 50%-52% in fiscal 2027 and approaching 60% in fiscal 2028. This improved leverage position will likely allow the company to consider other capital allocation decisions, such as acquisitions or increased shareholder returns. The company’s liquidity position is assessed as adequate, with sufficient sources to cover uses by approximately 1.3x over the 12 months ending March 31, 2027.
Rating Components
The foreign currency issuer credit rating is now BBB+/Stable/–, and the local currency issuer credit rating is also BBB+/Stable/–. Key components supporting this rating include a strong business risk profile, intermediate financial risk, and intermediate cash flow/leverage, anchored by a ‘bbb+’ rating.
Source: BSE
