Bharti Airtel’s revenue and operating income (read: Ebitda) is likely to grow by mid-single digit percentages in FY20, during which the Sunil Mittal-led telco is also estimated to pump in a whopping $4 billion (Rs 28,000 crore) of capex to bolster 4G networks and fibre infrastructure, ratings agency, Fitch said.

The global ratings agency said the strong revenue show would be spurred by better average revenue per user (ARPU) in the Indian mobile segment coupled with steady growth in Africa and business-to-business (B2B) segments.

Fitch estimates Airtel’s India mobile business Ebitda will increase 15-20 per cent this fiscal, driven by strong growth in data usage and higher blended ARPU, especially as competition eases and incumbents focus on profitability.

“Bharti’s management is committed to an investment-grade rating, and we expect Airtel to further reduce debt through the upcoming equity issuance of its Africa subsidiary and stake sale in its tower arm (read: Bharti Infratel),” Fitch said in a media statement Thursday.

Bharti Airtel shares closed a shade over 2 per cent higher at Rs 348.65 on BSE Thursday.

The global ratings agency also affirmed Airtel’s long-term foreign currency issuer default rating (IDR) and senior unsecured rating at BBB-, adding that its outlook on the IDR is stable.

It said the stable outlook reflects expectations of a recovery in Airtel’s Indian mobile segment, continued growth in Africa and the enterprise segment, and also the telco’s ability to hold on to revenue market share (RMS) despite intense competition.

Airtel’s RMS had recently shrunk 285 basis points to 27.3 per cent in the March quarter, forcing it to trail nearest rivals Vodafone Idea and Reliance Jio, but the company told ET that the phenomenon was triggered by one-time accounting adjustments, adding that the anomaly would get corrected in the June quarter, FY20 itself.

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Fitch estimates Airtel’s funds flow from operations (FFO) adjusted net leverage to improve to 2.1x-2.3x in FY20 from 2.4x in FY19, excluding the $6.1 billion in deferred spectrum costs, helped by Bharti’s $3.5 billion funds raise via a mega rights issue.

“We expect Airtel’s leverage to remain under the 2.5x threshold, although it may climb to 2.4-2.5x in FY21 if it were to make a large upfront payments for 5G spectrum assets,” said the global rating agency, adding that it would “consider negative rating action” if the telco’s leverage rises above the 2.5x threshold.

The government has recently underlined plans to conduct the next spectrum sale in calendar 2019 itself, which will mark the debut of 5G airwaves. In the run up to the sale, it has decided to allocate 5G trial spectrum for a year that will be extendable, for a one-time fee of Rs 5,000 per location.





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