Crisil upgrades Bharti Airtel to AAA on stronger financial profile
Bharti Airtel
and its holding company, Bharti Telecom Limited, on the back of the second-largest Indian telco's improved financial profile and steadily increasing revenue market share.
The ratings agency upgraded its rating on the long-term bank facilities of Bharti Airtel to Crisil AAA/Stable from Crisil AA+/Positive, while reaffirming the short-term rating and commercial paper at Crisil A1+.
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The rating upgrade factors in improvement in both business and financial risk profiles of the company during fiscal 2025, in line with the expectations of Crisil Ratings, the agency said in a statement Friday.
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Crisil also upgraded its rating on the non-convertible debentures (NCDs) of Bharti Telecom Limited, part of the Bharti Group, to Crisil AAA/Stable from Crisil AA+/Positive, while reaffirming its Crisil A1+ rating on the commercial paper.
The Airtel stock was trading 1.4% lower in afternoon trade at ₹1,902.05 on the BSE Friday.
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Crisil reported that the improvement in the business risk profile is supported by the company's continually increasing revenue market share in the domestic mobile segment—up approximately 400 basis points over fiscals 2021 to 2025—along with healthy growth in average revenue per user (ARPU), resulting in sharp growth in operating profit and improved return metrics.
In the near to medium term, Crisil Ratings expects strong operating profit, with easing capex requirements likely to contribute to steady deleveraging.
"Consolidated revenue grew 16% to ₹1,74,559 crore, while earnings before interest, tax, depreciation and amortisation (EBITDA) grew 21% to ₹94,733 crore in fiscal 2025. This was largely driven by continued strong growth in the India mobile business (accounting for ~57% of consolidated EBITDA). The ARPU for the India mobile services business improved 17% in fiscal 2025 to ₹245, supported by broad-based tariff hikes of 17–19% on average taken by BAL in June 2024," Crisil said.
The ratings agency added that Airtel's business segments such as home broadband and enterprise have demonstrated healthy growth over the past few years, and the momentum is expected to continue in the near to medium term.
The improvement in the business risk profile is also attributed to the better financial risk profile of the telco, led by a reduction in net leverage, which improved to 2.1 times in FY25 from 2.5 times in FY24, driven by strong earnings growth. Furthermore, improved cash flow allowed capex to be funded through internal accruals, with no reliance on external debt.
The ratings agency said capex intensity, which averaged 25% over the past two fiscals, is expected to moderate over the medium term as mass 5G networks have already been established. Spectrum capex is also likely to reduce, as most of the spectrum purchases were completed in FY23.
"A higher-than-expected outgo for network rollout or spectrum acquisition, along with any significant debt-funded acquisitions that could affect the overall financial risk profile, will continue to remain a key monitorable," the agency said.
For Airtel's holding company, Crisil said the upgraded ratings reflect the healthy market value-to-debt cover of Bharti Telecom and its robust financial flexibility, driven by the strong reputation of its promoters, the Bharti Group.
The upgraded ratings for Bharti Telecom also factor in the expected dividends from Bharti Airtel, which are sufficient to meet the annual interest obligations of the holding company.
"While BTL (Bharti Telecom Ltd) is exposed to refinancing risk, as there are significant repayments due in the current fiscal, the company has access to capital markets for funding and has an established track record of refinancing its debt at competitive rates. These strengths are partially offset by exposure to market risk," Crisil said.
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