New Delhi: In a major validation for Bharti Airtel, global rating agency S&P Global Ratings has officially enhanced the company’s unsecured debt rating from ‘BBB’ to ‘BBB+’ with a stable outlook. This comes after the company has spent years keeping its head above water, becoming the only surviving legacy company to take on Reliance Jio’s price undercutting juggernaut.
The company, which made headlines in 2010 for its $10.7 billion acquisition of Zain Telecom’s African assets, has come a long way from the time when Africa remained a drag on its operations. Under Chairman Sunil Mittal, Airtel has spent 7 years turning around its Africa operations, even as Reliance Jio emerged as another challenge facing the telco.
Over the years, the company has pared down its massive debt of about $10 billion following the acquisition enough to improve its net debt to EBITDA ratio to 1.29x,as it overcame the challenges of consolidating its operations across 15 African countries.
Back home, it faced the rapid rise of Reliance Jio by shifting focus to gaining high value premium subscribers and corporate, postpaid connections that offered higher margins. They invested heavily in upgrading its infrastructure for high-speed 4G and V-Fiber broadband technology. It built a non-telecom bundled offering with premium OTT subscriptions and satellite TV, helping its Average Revenue Per User (ARPU) growing past ₹250, outperforming Jio and retaining 40% of its market share.
All of this has helped the company vastly improve its balance sheets despite the devastating price war and high debt load from spectrum auctions. Now that it has earned its BBB+ rating upgrade, it can now access international credit at lower interest rates as it looks to enhance its offerings to its customers across Africa, where it aims to capture a yet underpenetrated market with custom offerings.
