Bharti Airtel Q4 result supports Baa3 ratings: Moody's

Telecom major Bharti Airtel result for three-month period and full year ended March 31, continues to support firm's Baa3 issuer and senior unsecured ratings as well as stable outlook, Moody's Investors Service said today.
"The strong momentum in Bharti's India businesses continues to support Baa3 ratings. Moreover, as tower asset proceeds -- totaling USD 1.8 billion received to date -- will be used for debt reduction, its credit metrics will remain in line with our expectations," Moody's Vice President and Senior Credit Officer Annalisa Di Chiara said in a statement.
The credit rating reflects ability of a company to repay debt. The Baa rating granted by Moody's indicates obligation on a firm are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

Further the '3' indicates that the company is on lower end of the rating category.
"The stable outlook reflects Moody's expectation of strong cash flow generation from its Indian operations and the application of cash proceeds from its asset sales to reduce debt on an absolute and relative basis," Moody's said.
Credit metrics that indicate negative trends include ratio between consolidated debt and EBITDA (cash flow) rising above 3 to 3.25 times, consolidated retained cash flow to adjusted debt remaining below 20 per cent, or adjusted EBITDA margin falling below 35 per cent.

Bharti Airtel posted 2.8 per cent jump in net profit to Rs 1,290 crore for March quarter despite over 25 per cent rise in depreciation and spectrum amortisation expenses.

The Sunil Mittal-led company had reported a net profit of Rs 1,255 crore in the January-March period of 2015-16.
Total revenue of the company rose 8.4 per cent to Rs 24,960 crore compared with Rs 23,016 crore last year.
For entire 2015-16, the company's net profit stood at Rs 5,484 crore whereas total revenues were to the tune of Rs 96,532 crore.
Moody's said in India, on a reported basis, mobile services revenue grew 9.2 per cent year-on-year in the fourth quarter, reflecting the robustness of voice demand and a growing data segment in the quarter.
"Bharti's key business lines in India all reported healthy quarterly year-on-year improvements, with EBITDA increasing to Rs 77 billion from Rs 68 billion in the same quarter last year. EBITDA margins for the Indian operation also improved to 42.2 per cent from 40.7 per cent yoy," Moody's said.

Downward pressure could arise should competition intensify in any of its key markets, but particularly for the Indian wireless business such that its key operations or subsidiaries report materially declining margins, or if Bharti fails to continue with its deleveraging strategy, Moody's said.