ICRA has downgraded Bharti Airtel’s long-term rating to ‘AA-’ from ‘AA’.
The move is attributed to the recognition of higher than anticipated provisions following the Supreme Court’s judgement on payment of dues for licence fees on adjusted gross revenues (AGR) and spectrum usage charges in the latest quarterly results.
Although Airtel has not tied up funds for the same, 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 said.
The downgrade follows Airtel’s results during the quarter ended September 2019 with the company announcing massive losses for the period.
As per ICRA, ratings continue to remain under watch with negative implications. Additionally, ratings on Airtel’s commercial paper were reaffirmed at ‘A1+’.
Moreover, additional provisioning related to indemnities to be paid to certain investors of Airtel Africa is also a credit negative.