S&P Global Ratings Upgrades Bharti Airtel To BBB+ Citing High Growth in Africa and India, Balance Sheet Discipline

S&P Global Ratings Upgrades Bharti Airtel To BBB+ Citing High Growth in Africa and India, Balance Sheet Discipline​

S&P Global Ratings has upgraded its long-term issuer credit rating for Bharti Airtel Ltd., assigning a rating of BBB+/Stable. The upgrade comes alongside a rating increase on the senior unsecured debt issued by the company. S&P's report highlights that growing data consumption in high-growth markets across India and Africa, combined with strong balance sheet discipline, are the primary drivers behind this rating action.

The ratings changes announced by S&P Global Ratings reflect positive trends in both the domestic Indian telecom market and the international operations of Bharti Airtel. The stable outlook provided reflects S&P's view that the company is on track to deleverage as earnings and cash flows improve over the next 12 to 24 months.

Rating Overview​

S&P Global Ratings made the following specific rating adjustments for Bharti Airtel Ltd.:

Key Rationale and Operational Focus​

The rating action is supported by a fundamental improvement observed in both the Indian and African telecom markets. In India, S&P projects that Bharti Airtel’s subscriber numbers will increase by 3% to 4% over the next year, while average revenue per user (ARPU) is expected to grow by 5-7%. These gains are attributed to rising consumer spending on telecommunication services, subscriber additions, and the company's efforts in premiumization, which is being supported by churn from competitors.

Operating performance in Africa has been noted as stronger than anticipated by S&P Global Ratings. The agency anticipates that the African customer base will grow between 9% and 11% annually, with ARPU growing by 5% to 7% annually in U.S. dollars through the fiscal year ending March 31, 2028.

Looking ahead, S&P forecasts the company's consolidated EBITDA to increase by 8% to 10% annually over the subsequent two years, following a 28.0% increase in fiscal 2026 (year ending March 31). Furthermore, it is estimated that African earnings will rise to 25% to 27% of Bharti Airtel's consolidated EBITDA from previous estimates of about 20%.

Financial Projections and Discipline​

Bharti Airtel is expected to prudently manage its balance sheet amid continued growth. The company is projected to increase capital expenditure (Capex) annually, reaching approximately INR565 billion by fiscal 2028, up from INR452 billion in fiscal 2026. This increased capex will be utilized across the data center business (Nxtra Data Ltd.), cloud services, and its African operations, alongside capital investments required for the India financial services segment.

The dividend outlook is also strong; total cash dividends are forecasted to reach about INR230 billion in fiscal 2027 and approximately INR350 billion in fiscal 2028, following a 65% to 75% annual increase from a low base in the past two fiscal years.

S&P Global Ratings forecasts that adjusted discretionary cash flow (DCF) will be adequate, projecting an annual adjusted DCF of INR220 billion to INR240 billion through fiscal 2028. This strong cash generation capability is expected to drive deleveraging, with the funds from operations (FFO) to debt ratio projected at 50% to 52% in fiscal 2027 and approaching about 60% in fiscal 2028.

Financial Performance Snapshot​

The following table provides a summary of key financial metrics forecast by S&P Global Ratings for Bharti Airtel Ltd.:

Liquidity and Stability View​

S&P assesses Bharti Airtel's liquidity as adequate, noting that the company has strong access to banks and capital markets both domestically and internationally. The analysis also points out that while debt at the Bharti Telecom level is a watchpoint, S&P does not include this debt in its adjusted metrics for Bharti Airtel due to shareholder agreements between the two key shareholders.

The stable outlook means S&P expects the expanding earnings and cash flows to improve the company's balance sheet strength over the next 12 to 24 months. A downside scenario could materialize if leverage does not improve, or if higher competition results in significantly weaker earnings than projected by the agency. Conversely, an upgrade would be possible if Bharti Airtel further deleverages, achieving an FFO-to-debt ratio that remains above 60%.

BHARTIARTL Stock Price Movement​

Shares of Bharti Airtel Limited slipped today by 1.41% to close at ₹1877.3, trading down on a challenging day for the telecom giant. The equity was traded in volume of approximately 8.96 million shares as the market settled.