Fitch says removing Bharti Airtel from ratings watch to depend on Supreme Court ruling

Fitch Ratings on Thursday said removing Bharti Airtel Ltd from its Rating Watch Negative (RWN) will depend on the Supreme Court ruling on a review petition filed by telecom companies against being asked to pay backdated statutory dues after considering non-telecom revenues. Fitch assigned a rating of ‘BBB-‘ to the company’s proposed US dollar senior unsecured convertible notes. “The notes are rated at the same level as Bharti’s foreign-currency senior unsecured rating of ‘BBB-‘ and are also placed on RWN,” it said in a statement. The proposed interest-bearing notes can be converted to equity at a conversion price premium from a predetermined stock price, it said adding Bharti will use the proceeds of the notes to fund its capex or to refinance its debt.

“Fitch placed Bharti’s ratings on RWN on October 30, 2019, following India’s Supreme Court verdict against the country’s telcos on the definition of adjusted gross revenue (AGR) on which the incumbent operators, including Bharti, must pay hefty dues to the government. “The resolution of the RWN, which may take more than six months, requires a Supreme Court’s ruling on the review petition subsequently filed by telcos, successful completion of Bharti’s planned equity issuance of USD 2 billion and our assessment of the positive impact of EBITDA growth from announced tariff hikes by all telcos in December 2019,” it said.