Moody's Upgrades Bharti Airtel's Rating to Baa2, Cites Strong Financials and Market Position

Moody's Ratings has elevated Bharti Airtel Limited's issuer rating to Baa2 from Baa3, also changing the outlook from positive to stable. This upgrade signifies Moody's confidence in Bharti Airtel's substantially improved financial profile and its expanding market dominance.

Key factors driving this decision include structural advancements in India's rapidly growing mobile market, diminishing competition, and an anticipated favorable regulatory landscape. Moody's highlighted Bharti Airtel's strong standing in the resilient Indian telecom industry, a robust balance sheet, and supportive shareholders as reasons for its rating to be positioned above India's sovereign rating.

Bharti Airtel's global presence, with operations in 17 countries and over 624 million subscribers, alongside prudent financial management, underpins its Baa2 rating. The agency forecasts leverage, measured by adjusted debt-to-EBITDA, to improve to 1.8x by FY2025-26 and further to 1.5x by FY2026-27, supported by earnings growth and debt reduction efforts, including the prepayment of ₹260 billion in deferred spectrum liabilities.

In the first half of FY2025-26, Bharti Airtel reported a 17% year-on-year revenue increase to ₹1.02 trillion and a 20% EBITDA growth to ₹580.9 billion, with Indian operations contributing 75-80% of total figures. The company maintains excellent liquidity, with ₹134 billion in cash and investments sufficient for upcoming obligations.

Impact: This upgrade is highly positive for Bharti Airtel, likely boosting investor confidence and potentially leading to a more favorable cost of borrowing. It could also positively influence the company's stock price, reflecting its enhanced creditworthiness. Rating: 8/10

Difficult Terms Explained: Issuer Rating: A credit rating given to an entity that issues debt, indicating its ability to repay. Outlook (Stable/Positive): A projection of the future direction of a credit rating. Stable means it is unlikely to change soon; Positive suggests a potential upgrade. Financial Profile: The overall financial health of a company, including its assets, liabilities, revenues, and profits. Market Share: The percentage of sales a company holds within its industry. Leverage: The extent to which a company uses debt financing. Higher leverage means more debt. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance before accounting for certain expenses. Deleveraging: The process of reducing a company's outstanding debt. Liquidity: A company's ability to meet its short-term financial obligations. Deferred Spectrum Liabilities: Payments for mobile spectrum licenses that are postponed to a future date.