Crisil lowers Bharti Airtelís rating over long-term debt

Credit rating agency Crisil has downgraded Bharti Airtel to AA+/stable from AAA/Negative citing the company's high long-term debt, which the agency presumes will not reduce by March 31. The company is expected to preserve cash for likely payment of one-time fees and licence renewal fees in 2013-14 and 2014-15, respectively.

The increase in debt is partially due to proportionate consolidation of debt in Qualcomm's BWA spectrum licences.

The company's debt totalled R70,500 crore as on September 30, compared to Crisil's estimate of R69,000 crore.

However, given the company's strong operating performance, the rating on the company's short-term debt and bank facilities has been reaffirmed at Crisil A1+. The company's share prices closed down 0.39% at R359.60 on the BSE on Friday.

According to the agency's explanation, "the downgrade reflects Crisil's belief that Bharti Airtel's gearing will not improve significantly as on March 31, 2013, despite an equity infusion through an initial public offer in its subsidiary, Bharti Infratel. Furthermore, potential cash outflows towards one-time spectrum fees and licence renewal fees are likely to result in its capital structure taking longer to improve than Crisil's previous expectations".

Bharti Airtel's financial risk profile continues to be supported by its robust operating cash flows. It generated operating cash flows (available for capex and debt repayments) of about R17,000 crore in 2011-12.

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