Global credit rating agency Moody?s has assigned a ?Baa3? rating to Bharti Airtel. According to the agency, the operator is underpinned by receipt of strong and growing cash flows from its Indian operations, particularly in the wireless segment where it leads the market.
The Baa3 rating implies that the entity (Bharti Airtel) is medium-grade and subject to moderate credit risk and is in a position to repay short-term obligations. The rating agency has stated that the rating takes into account the Bharti Airtel?s large dollar denominated borrowings and the currency mismatch with its revenue. As on March 31, 2013, Bharti Airtel?s net debt stood at $11,738 million.
Moody?s has stated that the Bharti Airtel?s net debt may result into translation risk but the company has a policy of hedging a substantial level of its total foreign liabilities due over the next 12 months. The rating agency has also expressed concerns regarding the company?s investment in Africa on account of regulatory and policy changes.
In addition, Moody?s has stated that the regulatory environment for the telecom industry in India has been uncertain for the last few years. However, regulatory landscape has started improving following positive recommendations by the Telecom Regulatory Authority of India on spectrum charging. According to the rating agency, a stable regulatory environment is expected to contribute to ongoing improvements in Bharti Airtel?s cash flow generation.
