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Bharti Airtel Ltd: Third Time the Charm

Fitch reaffirmed the issuer rating and senior unsecured debt ratings of Bharti Airtel Ltd (BHARTI IN)(Bharti) at BBB- with a stable outlook on 26-June. Fitch’s key rating rationales include:

  • Market-leading position in India, solid spectrum portfolio and diversified and integrated operations. Bharti's African operation will continue to benefit from cost savings and higher market share in its key African markets.

  • Operating EBITDA margin to remain stable at around 34%-35%.

  • Fitch expects FFO adjusted net leverage to worsen to around 2.1x-2.3x in FY19 from 2.0x in FY18, but to remain below the 2.5x threshold, above which Fitch will consider a negative rating action.

  • Net leverage to remain stable with the monetization of the tower assets and see a 2018 recovery in revenue and EBITDA on stable tariffs.

All the three major rating agencies have now reaffirmed a “BBB-/Baa3” rating for Bharti but S&P and Moody’s maintain a negative outlook (as highlighted in our report: Bharti Airtel: Retroactive Outlook Revision dated 18-May 2018).

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