Bharti Airtel’s Credit Outlook Upgraded to Positive by Moody’s - Details

In a significant development for Bharti Airtel, Moody’s Ratings has upgraded the company’s outlook to positive from stable while affirming its Baa3 issuer rating. 
Driving Forces Behind the Upgrade
Nidhi Dhruv, Vice President and Senior Credit Officer at Moody’s, emphasized the rationale for the upgrade:

“The change in outlook to positive reflects a significant improvement in Bharti’s financial profile and its steadily increasing market share, supported by structural changes in India's fast-growing mobile sector. Easing competitive intensity and our expectations of a relatively supportive regulatory environment also contribute to the positive outlook.”

Bharti Airtel’s robust market position in India, coupled with leverage trending toward 2.0x, positions it as a resilient player in the global telecom space. Notably, its market share has grown from 33% in March 2020 to 37% by September 2024, further solidifying its dominance.

Financial Milestones and Debt Reduction
Bharti Airtel has aggressively reduced debt, including prepayment of ₹20,000 crore ($2.4 billion) in spectrum liabilities during FY24-25. This effort is expected to improve its consolidated leverage to 2.6x by March 2025, with further improvements to 2.2x anticipated by March 2026.

The company’s revenue for the first half of FY24-25 grew by 7% year-on-year to ₹80,000 crore, while EBITDA rose by 6% to ₹42,000 crore. This growth was largely driven by the Indian operations, which contributed 75-80% of both revenue and earnings.

Global Operations and Risks
Despite its strong domestic performance, Bharti Airtel remains exposed to evolving regulatory and market risks, particularly in its African operations spanning 14 countries. However, Airtel Africa, a 56.1%-owned subsidiary, contributes only 20% of consolidated EBITDA, mitigating its overall impact.

Liquidity and Future Prospects
With a well-staggered debt maturity profile and 60% of its debt maturing post-March 2029, Bharti Airtel’s liquidity remains robust. The company’s strong access to domestic and international capital markets further solidifies its financial stability.

Looking ahead, Moody’s noted that a potential upgrade to Baa2 would depend on sustained profitability improvements and stable regulatory conditions. Metrics such as adjusted consolidated debt/EBITDA below 2.5x and retained cash flow/adjusted debt above 30% will be key indicators.