Bharti's credit rating unaffected by Infratel stake sale: Moody's

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26 Aug, 2025 12:21

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The credit rating of Bharti Airtel will remain unaffected as the value realised from stake sale in its mobile tower arm Bharti Infratel is muted by its recent acquisition and continuing tariff war in the sector, Moody's Investors Service today said.

"Although the stake sale is aligned with management's commitment to reduce absolute debt levels, we believe the net effect is muted by the company's recently announced acquisitions and intense price competition which is pressuring operating profits industry-wide," Moody's Vice President and Senior Credit Officer Annalisa Di Chiara said in a statement.

Moody's sees Bharti Airtel's announcement on March 28, to have sold 10.3 per cent of its subsidiary Bharti Infratel Limited to a consortium of funds advised by KKR and the Canada Pension Plan Investment Board for around Rs 6,194 crore as credit positive but it "has no immediate effect on the company's Baa3 issuer rating and stable outlook."

Bharti will use all proceeds from the sale to reduce absolute debt levels through March and April 2017.

On March 23, Bharti announced the acquisition of Tikona Digital Networks' 4G Business the wireless broadband spectrum and 350 sites, in five telecom circles for around Rs 1600 crore.

In late February, the company also announced the acquisition of Telenor (India) Communications Private Limited in a non-cash transaction to further bolster its strong spectrum holding position pan India.

Moody's said that although ongoing and transformative consolidation activity in the Indian telcom sector and Reliance Jio Infocomm Limited's announcement of its tariff plan beginning from April 1 will help stabilise industry-wide average revenue per user over the longer term, intense price competition will persist over the next few quarters as operators respond in efforts to protect and grow their market shares.

"As a result, Moody's expects Bharti's profitability to remain under pressure at least over the next four quarters. However, cash proceeds from monetisation activities - including additional divestments in Infratel - could help to reduce absolute debt levels further," the statement said.