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Moody's revises Bharti Airtel rating outlook to positive from stable

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Moody's Investors Service on Tuesday revised Bharti Airtel Ltd's and its subsidiary Bharti Airtel Int'l (Netherlands) B.V.'s ratings outlook to positive from stable.

Moody's revises Bharti Airtel rating outlook to positive from stable
Moody's Investors Service on Tuesday revised Bharti Airtel Ltd's and its subsidiary Bharti Airtel Int'l (Netherlands) B.V.'s ratings outlook to positive from stable.
"The outlook change to positive reflects Bharti's improving operating performance and credit metrics which, if sustained, could support an upgrade to investment grade within the next 12-18 months," says Annalisa Di Chiara, a Moody's senior vice president.
Also, Moody's has affirmed Bharti's Ba1 corporate family rating (CFR) and senior unsecured rating, as well as the Ba1 rating on the backed senior unsecured notes issued by Bharti Airtel Int'l (Netherlands) B.V.
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"The continued expansion of profitability, particularly at its core Indian mobile business, together with a steady reduction in its balance sheet debt, is needed to mitigate the potential effect on Bharti's credit metrics of significant investments in 5G and the compounding growth of deferred liabilities during the moratorium period," added Di Chiara, who is also Moody's lead analyst for Bharti.
Yesterday, Bharti Airtel announced 20-25 percent tariff hikes for various prepaid offerings, including tariffed voice plans, unlimited voice bundles and data top-ups, and said the new rates will come into effect from November 26.
The entry-level tariffed voice plan has been raised by about 25 percent, while for unlimited voice bundles, the increase in most cases is about 20 percent. Sunil Mittal led telco -- whose India mobile customer base stood at about 323 million at the last count -- has also increased the tariffs for data top-up plans by about 20-21 percent.
In a statement announcing the revised mobile tariffs, Airtel said it has always maintained that the mobile Average Revenue Per User (ARPU) needs to be at Rs 200 and ultimately at Rs 300 to provide a reasonable return on capital that allows for a financially healthy business model.
"We also believe that this level of ARPU will enable the substantial investments required in networks and spectrum. Even more important, this will give Airtel the elbow room to roll out 5G in India," an Airtel statement said.
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