LIVE TV
ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Budget 2021
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Jobs
  • Indian Railways
  • World
    • Economy
    • Politics
    • Markets
  • videos
  • photos
  • Authors
  • More ...
    • VIDEOS
    • PHOTOS
Read in App
Business News » Companies News

Bharti's lower cash flow narrow rating headroom: Fitch

Industry revenue growth is likely to be in the mid-single-digits, after a decline in 2017

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
Bharti's lower cash flow narrow rating headroom: Fitch
Three large telecom operators -- Bharti, Jio and merged entity of Vodafone-Idea -- have emerged from the shake-out. Image source: Reuters
Written By: ZeeBiz WebTeam
Updated: Mon, Jan 22, 2018
06:24 pm
ZeeBiz WebDesk
RELATED NEWS
Bharti Airtel, Vodafone Idea, Reliance Jio: Market Share Focus to Delay Tariff Hikes highlights Jefferies Bharti Airtel, Vodafone Idea, Reliance Jio: Market Share Focus to Delay Tariff Hikes highlights Jefferies
Bharti Airtel share price today: Jefferies maintain Hold rating with price target of Rs 675 Bharti Airtel share price today: Jefferies maintain Hold rating with price target of Rs 675
Vodafone Idea share price: Subscriber loss bottoming out, but liquidity a major concern highlights Motilal Oswal Vodafone Idea share price: Subscriber loss bottoming out, but liquidity a major concern highlights Motilal Oswal
Airtel 6GB free data coupons: Check new offer for these Airtel prepaid customers | All details here Airtel 6GB free data coupons: Check new offer for these Airtel prepaid customers | All details here
Bharti Airtel, HDFC Life in Focus: Kotak Securities and Nomura highlights expected MSCI Changes Bharti Airtel, HDFC Life in Focus: Kotak Securities and Nomura highlights expected MSCI Changes

Bharti Airtel's rating headroom will narrow due to lower cash generation and high capex requirements in the financial year ending March 2018 (FY18), says Fitch Ratings. 

However, some of the pressure on Bharti and other incumbent Indian telecom operators should begin to fade this year, as the intense competition sparked by Reliance Jio's 2016 market entry begins to ease.

We estimate Bharti’s funds from operations (FFO)-adjusted net leverage will deteriorate to around 2.1x-2.3x in FY18, from 1.9x at FYE17, excluding $7.2 billion in deferred spectrum costs. 

This would move it closer to the threshold of 2.5x, above which Fitch would consider negative rating action. Bharti remains committed to maintaining an investment-grade rating and plans to sell a larger stake in its tower arm, Bharti Infratel, in FY19. Over the past 12 months, it has sold a total of 18.5% in Infratel for about $1.9 billion. 

Fitch forecast annual negative free cash flow to the tune of $600 million-800 million during FY18-19, as Bharti's cash flow from operations will be insufficient to fund large capex requirements. 

The company increased its capex guidance by $1 billion to around $4 billion to strengthen its network infrastructure, particularly 4G, and to compete against Jio.

The regulator's decision in January 2018 to extend deferred spectrum liability payment to 16 years from 10 will only partially ease cash flow pressures.

"We forecast Bharti's revenue and EBITDA to rebound in FY19 driven by a likely improvement in the blended average revenue per user (ARPU) in the Indian mobile sector as data usage and tariffs rise," Fitch said. 

FY18 revenue and EBITDA are likely to decline by 10% and 15%, respectively, reflecting unprecedented competition that pushed down blended ARPU by 29% to an all-time low of Rs123 (S1.9) in the quarter ended December 2017. 

The slide in ARPU was also driven by the regulator's decision to reduce voice mobile termination rate by 57%, and it was despite a 37% increase in voice usage per user per month and a fivefold increase in per user data usage to 5.3 GB per month.

In Africa, Bharti's strategy to be either the number one or two in each market will boost its position and profitability over the long term. Its African operation is already growing strongly, with EBITDA in the region up by 24% in 9 month of FY17, and higher voice and data usage are likely to drive further gains in 2018. 

The outlook for the Indian telcom sector is improving, which could mean that the results in the quarter ended December 2017 marked a low point for Bharti and other incumbents. 

"We revised the sector outlook to stable in 2018 from negative in 2017, as we expect competition to ease now that industry consolidation is all but completed." 

Three large telecom operators -- Bharti, Jio and merged entity of Vodafone-Idea -- have emerged from the shake-out. Their combined revenue market share will increase to around 90% in 2018, from 80% in 2017, as smaller telcom players continue to exit. 

Industry revenue growth is likely to be in the mid-single-digits, after a decline in 2017. The current low industry tariffs are unsustainable, and we expect they rise in 2018, as Jio switches its focus from gaining customers to making reasonable returns on its $31-billion investment in the sector.
 

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
Bharti Airtelcapex requirementsReliance Jiotelecom operatorsspectrum costsFY18FY17spectrum liability paymentnegative cash flowAverage Revenue Per User (ARPU)revenue growth
RELATED NEWS
Bharti Airtel, Vodafone Idea, Reliance Jio: Market Share Focus to Delay Tariff Hikes highlights Jefferies Bharti Airtel, Vodafone Idea, Reliance Jio: Market Share Focus to Delay Tariff Hikes highlights Jefferies
Bharti Airtel share price today: Jefferies maintain Hold rating with price target of Rs 675 Bharti Airtel share price today: Jefferies maintain Hold rating with price target of Rs 675
Vodafone Idea share price: Subscriber loss bottoming out, but liquidity a major concern highlights Motilal Oswal Vodafone Idea share price: Subscriber loss bottoming out, but liquidity a major concern highlights Motilal Oswal
Airtel 6GB free data coupons: Check new offer for these Airtel prepaid customers | All details here Airtel 6GB free data coupons: Check new offer for these Airtel prepaid customers | All details here
Bharti Airtel, HDFC Life in Focus: Kotak Securities and Nomura highlights expected MSCI Changes Bharti Airtel, HDFC Life in Focus: Kotak Securities and Nomura highlights expected MSCI Changes

LATEST NEWS

Stock Market Outlook: Nifty, Bank Nifty crucial levels REVEALED; Anil Singhvi explains key reasons behind massive fall

7th Pay Commission: CONFIRMED! 3% DA, DR hike for government employees, pensioners of THIS state from March 1

7th Pay Commission Latest News: Check out these vacancies notified by UPSC; salary up to Rs 1,77,500 plus DA and other allowances

CBSE exam 2021: Class 10, 12 students should know THESE 10 points before appearing for board exams

ISRO First Mission in 2021: Indian rocket to launch Brazilian satellite, PM Modi picture on spacecraft, space privatisation and more

IIT Bombay releases GATE 2021 answer key—This is how you can check and raise objection

Petrol, diesel prices on February 27: Fuel prices hiked again today—check rates in your cities

PM Narendra Modi to inaugurate India Toy Fair today

Bank Holidays March 2021: RBI says banks will remain closed on these many days next month

Sovereign Gold Bond Scheme 2021: Issue Price fixed at Rs 4,662/gm

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
Copyright © Zee Media Corporation Ltd. All rights reserved