S&P Global Ratings said Thursday Bharti AirtelNSE 3.15 %’s sale of a minority stake in its Africa subsidiary will ease some pressure on the rating of the India-based telecom company. Six global investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group International, have agreed to invest USD 1.25 billion through a primary equity issuance in Airtel Africa.
“Bharti Airtel’s sale of a minority stake in its Africa subsidiary will ease some pressure on the rating on the India-based telecommunications company. Bharti will use the proceeds of about USD 1.25 billion to repay of debt,” S&P Global Ratings said in a statement.
Despite the reduction in leverage, S&P said it continues to see risk of a downgrade if the business performance of Bharti does not improve in line with our expectation over the next 12-18 months, such that the ratio of funds from operations to debt remains below 20 per cent, it said.
Bharti continues to prudently manage its leverage by exploring options to monetise assets and reduce debt, in our view, S&P noted. “However, sustainable improvement in the company’s financial position depends on revival of its operating performance in India,” S&P said.
Telecom operator Bharti Airtel on Thursday reported a 65.4 per cent drop in consolidated net profit at Rs 119 crore for the second quarter ended September 2018. Total revenue came in at Rs 20,422 crore for the September quarter, which was 6.2 per cent lower than Rs 21,777 crore notched in the year-ago period.
Its India revenues fell 3.6 per cent year-on-year while the Africa revenues rose 10.8 per cent.
“Rupee depreciation will result in a higher translated foreign currency debt and push up Bharti’s capital expenditure. However, the higher translated foreign currency debt will largely be a non-cash adjustment.”
