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Bharti Airtel share price falls 4% after ICRA rating downgrade

ICRA also said that the rating is unlikely to be upgraded in the medium-term. However, significant improvement in operating metrics and material reduction in debt might lead to a rating upgrade.

November 26, 2019 / 04:56 PM IST
 
 
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Ending the day as the top Sensex loser, Bharti Airtel  closed with a loss of 4.34 percent on BSE on November 26 after ICRA revised the long-term ratings of the company.

ICRA has revised the long-term ratings of the company from "ICRA AA" to "ICRA AA-", Bharti Airtel said in a regulatory filing.

"The revision in the long-term rating factors in the recognition of higher than anticipated provision pertaining to the Supreme Court judgment on dues payable towards licence fees on adjusted gross revenues (AGR) as well as spectrum usage charge in the latest quarterly results," ICRA said.

This liability, if materialises, is expected to be funded through a bridge loan, which would result in deterioration in debt coverage metrics in the near-term, ICRA added.

ICRA also said the rating was unlikely to be upgraded in the medium-term. However, significant improvement in operating metrics and material reduction in debt might lead to an upgrade.

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Established market position, robust spectrum portfolio, diversified operations, improvement in Africa performance and deleveraging attempts to reduce debt are the credit strengths of Bharti Airtel. Sizeable provisioning pertaining to the AGR issue, moderate debt coverage and persisting high competitive intensity in the industry were the credit challenges, ICRA said.

Telecom stocks may experience some tough days ahead after reports emerged that the committee of secretaries that was to discuss floor price with TRAI has been disbanded.

Disbanding implies there is no more government relief.

The government is unlikely to intervene in the Supreme Court-mandated statutory payment, CNBC TV18 reported.

The government reiterated that only the Supreme Court can provide relief on AGR dues.

Telcos may see tariff war in the absence of a floor price and they have only two months to pay dues. They have to pay interest on delayed amounts.

Street was hoping for a reduction in fees and a floor price on voice and data.
Moneycontrol News
first published: Nov 26, 2019 03:50 pm

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