Bharti Airtel's Ratings May Be Downgraded to Junk by Moody's

(Bloomberg) -- Bharti Airtel Ltd.’s rating has been placed on review for downgrade by Moody’s Investors Service on concern the cash flow generation at India’s second-biggest mobile phone carrier will remain weak.

The Baa3 issuer and senior unsecured rating of the company has been placed on review for a cut, Moody’s said in a statement Thursday. The review also reflects Bharti Airtel’s low levels of profitability, particularly from its operations in India, negative free cash flow and higher debt levels to fund capital spending, it said.

“Because we believe a more rational competitive environment in India’s telecommunications market is unlikely over the next 12-18 months, the review also reflects uncertainty as to whether the company’s profitability, cash flow situation and debt levels can improve sustainably and materially over the same period,” Annalisa DiChiara, vice president and senior credit officer, said in the statement.

A price war for customers has only worsened since upstart Reliance Jio Infocomm Ltd. debuted with free services in 2016, a knock-out blow for several smaller carriers that were forced to quit the business or merge. Bharti slipped to No. 2 in the industry last quarter after Idea Cellular Ltd.and the local unit of Vodafone Group Plc closed their merger to become India’s largest operator by subscribers.

To contact the reporter on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

To contact the editors responsible for this story: Unni Krishnan at ukrishnan2@bloomberg.net, Subramaniam Sharma, Kim Robert McLaughlin

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