What credit rating did the agency assign?

Bharti Airtel’s Proposed Corporate Structure: What Credit Rating Has the Rating Agency Assigned? | File photo

Telecom operator Bharti Airtel Limited (BAL) recently proposed a corporate structure. Through the reorganization, BAL aims to focus more on the digital business and unlock value. India Ratings and Research (Ind-Ra) said Bharti Airtel’s recently proposed corporate structure is credit neutral. The proposed reorganization is subject to regulatory approvals.

The rating agency explained that the agency adopted a consolidated view of Bharti Airtel and its subsidiaries, including Bharti Hexacom Limited, Bharti Telemedia Limited and Airtel Africa plc, to arrive at the ratings. This is mainly due to the strong operational and strategic ties between them.

The agency said the ties will remain strong even under the new corporate structure.

Although the operator has a solid track record in building businesses and monetizing them, the rating agency is considering access to the evolution of the digital business and any monetization of it case by case. “Furthermore, Ind-Ra believes that separating licensed and unlicensed revenue streams would provide greater clarity on regulatory responsibilities, thereby reducing regulatory risk.”

The agency said, “Ind-Ra rates BAL’s debt at ‘IND A1+’, Bharti Hexacom’s debt at ‘IND A1+’ and Bharti Telemedia’s debt at ‘IND A1+’.”

India’s telecom sector outlook for FY22 is stable, according to the agency. The agency believes that after the first round of consolidation witnessed in the industry over the past decade, the second round of consolidation (Consolidation 2.0) is kicking off in the industry.

“This will lead to a structural change in the business model of telecom operators, moving from a voice-only service provider to a provider of complete digital solutions.” Offerings such as broadband services, cable television services (direct to home), business solutions (B2B), electronic payment wallets/platforms, music applications and the transmission platform by above the top, will now become the basic offers. This will help operators in the medium term, unlike before, to ensure customer acquisition, customer loyalty and strengthen the market footprint.

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