Vodafone Idea’s long-term issuer ratings downgraded on NCDs

Ratings agency India Ratings & Research on Friday downgraded telecom major Vodafone Idea’s long-term issuer ratings on non-convertible debentures (NCD) worth Rs 3,500 crore to “IND BBB/RWN” from “IND A+/Negative.” The NCDs were issued on June 12, 2015 and are due to mature on July 10, 2020.

The ratings agency attributed the downgrade to three key factors: the recent ruling by the Supreme Court on the adjusted gross revenue matter, delay in monetisation of the company’s fibre assets and its stake in Indus Towers, and risk of acceleration of bank loans.

The SC ruling on October 24 in favour of the telecom department’s definition of AGR is expected to adversely impact Vodafone Idea, as the telco is expected to make payments to the government aggregating to over Rs 28,000 crore.