International rating agency Standard & Poor’s on Wednesday lowered Bharti Airtel’s rating due to the large debt which the company had taken to finance its acquisition of Zain’s African assets. Bharti’s shares, however, were up by five per cent on the stock market and was one of the top gainers.
“We lowered Bharti’s rating to reflect our expectation that the company’s leverage and cash-flow protection measures will deteriorate significantly following its largely debt-funded acquisition of Zain Africa, based on an enterprise value of $10.7 billion,” said Standard & Poor’s credit analyst Mehul Sukkawala.
Bharti has also paid higher-than-expected payment for the 3G spectrum of about $2.7 billion and the wireless brodadband auction is also intensifying which may further increase Bharti’s pay out. “(This along) with material incre-ase in operating lease commitments will likely significantly increase Bharti’s debt,” he added.
A top Bharti official had said that the company’s net debt ratio to EBITDA is around 2.75.