Standard & Poor's (S&P) has rated Bharti Tele-ventures equivalent to the sovereign rating assigned to India, the highest that any Indian corporate has been assigned in the foreign currency category. Significantly, Bharti has been planning an international listing for some time and the internal process for the overseas float is believed to be underway.
"This is a vote of confidence on the growth potential of the telecom industry in India and Bharti's ability to exploit this potential and be one of the strongest and leading players in the market," says Akhil Gupta, joint managing director, Bharti Tele-ventures (BTVL). Asserting that this is the highest rating in foreign currency category, he adds that this rating has put Bharti in the league of select Indian companies like Reliance Industries, Indian Oil Corporation and Tata Motors.
S&P's ratings service has assigned its 'BB' corporate credit to Bharti based on its customer base in the wireless sector, improving profitability and cash flow measures.
S&P expects the company's customer growth to remain strong in the near to medium term given the considerable growth potential in the domestic customer base and also expects the company to maintain its market position amid increasing competition. These strengths are, however, partly offset by the company's aggressive expansion plan, intense competition, and regulatory uncertainty in India's telecom sector, according to S&P.
S&P rating (BB stable) factors in the established customer base of Bharti as the second-largest wireless operator in India, with a marketshare of above 20%. Bharti's subscribers have grown at a compounded annual growth rate of 121% in 1999-2004 to 6.5 million mobile subscribers, supported by its strong brand value, extensive coverage and integrated service offerings, says the company.
S&P rating also factors the profitability and cash flow measures as well as adequate liquidity of the company. Bharti's Rs 100-crore cash balance, Rs 1000 crore undrawn committed credit facilities (excluding export creditor loans), and Rs 400-crore short-term investments are more than sufficient to cover almost Rs 1,000 crore in debt repayment due by fiscal 2005, asserts Bharti.
Bharti is the largest GSM mobile service provider in India with about 7.7 million customers till last month consisting of over 7 million mobile subscribers. It offers mobile services in sixteen out of 23 circles and provides fixed line services in five circles.
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