Bharti Airtel is rated above India’s sovereign rating by Standard & Poor’s

24 Mar 2009

Standard & Poor’s Rating services has affirmed its BBB- long term corporate credit rating on Bharti Airtel and said that the outlook is stable.  Infact, the rating is higher than India’s sovereign rating of BBB-/Negative/A-3 but lower than the Transfer and Convertibility Assessment of BBB+. The rating agency said that Bharti’s creditworthiness is less likely to be affected by India’s sovereign credit factors because of its relatively strong operating and financial performance.

S & P said that India's telecommunications market is fairly liberalized, but uncertainty on issues such as allocation of additional spectrum and pricing of 3G licenses presents a moderate credit risk for most operators, including Bharti. On the positive side, it said that the market continues to grow rapidly, largely due to low penetration of about 30%. This has helped fast revenue growth for Bharti of more than 40% but S & P expects that to moderate in future. But Bharti's EBITDA margin continued to top 40% and is not expected to materially deteriorate, even if the economic environment affects its growth.

S & P said that Bharti's expected capital expenditure is US$3.0 billion - US$3.5 billion in fiscal 2010, but this is expected to be mostly funded through internal cash flows and could result in marginally negative free operating cash flows on a consolidated basis in the near term.crackcrack

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