New Delhi: S&P Global Ratings has upgraded Bharti Airtel from ‘BBB’ to ‘BBB+’ following high growth in India and Africa and balance sheet discipline.
“The stable rating outlook reflects our expectation that Bharti Airtel’s expanding earnings and cash flows amid rational industry competition will improve its balance sheet strength over the next 12-24 months,” the S&P report said.
Airtel’s earnings are set to benefit from growing data consumption and an improvement in the two telco markets.
The analysts expect Airtel’s subscriber base to increase by 3-4 per cent, and the average revenue per user by 5-7 per cent, over the next year. Higher consumer spending on telco services and subscriber additions will boost the company’s operations in India. Airtel’s premium services and churn from other players will also contribute to the earnings growth.
However, the report has highlighted debt at Airtel’s parent company, Bharti Telecom, as a watch point.
“This is because Bharti Telecom Ltd. has no operations of its own aside from owning equity stakes in Bharti Airtel. Even though Bharti Telecom has in the past raised equity to service its own financial obligations, the rising debt level carries the risk of depending on dividends from Bharti Airtel to service its debt,” the report said.
Growth at Airtel’s Africa
Airtel Africa’s operating performance is stronger than expected, the report said. It will likely outpace the company’s earnings in India over the next year or two.
“We project the African customer base to grow 9%-11% annually, and 5%-7% annual growth in ARPU in U.S. dollars through the fiscal year ending March 31, 2028,” the report read.
The rebasing of Airtel’s earnings in the continent also reflects the currencies’ relative strength against the Indian rupee, which has depreciated 5-7 per cent against the US dollar over the past six months.
The ratings agency expects Airtel’s consolidated earnings to increase by 8-10 per cent annually over the next two years, after a 28 per cent increase in FY26. Airtel Africa’s earnings will rise to 25-27 per cent of the company’s consolidated EBITDA over this period, up from previous estimates of about 20 per cent.
“Bharti Airtel’s India financial services segment would require more capital investments as it ramps up more meaningfully over the next few years,” the report said.
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