Bharti Airtel Set for Growth with Higher Earnings and Positive S&P Global Ratings Outlook
Bharti Airtel, one of India’s leading telecom operators, is poised for a period of robust financial growth over the next two years, according to S&P Global Ratings. The global credit rating agency recently revised its outlook on Bharti Airtel from “stable” to “positive,” citing expected gains in earnings and cash flow due to an industry-wide hike in mobile tariffs.
Rising Earnings and Improved Credit Profile
S&P Global Ratings highlighted that the company’s improving standalone credit profile is underpinned by its strong financial performance and decreasing leverage. The increase in mobile tariffs, effective July 4, 2024, saw prices rise by 10–21%, which is expected to drive higher revenue for telecom operators, including Airtel.
“Most of the benefits of the tariff hike will become evident over the next two quarters as existing plans complete their validity,” the rating agency stated.
In addition to mobile services, Bharti Airtel is set to benefit from growth in its home broadband and enterprise segments. The rise in home broadband adoption and digital transformation initiatives in businesses are expected to boost the company’s earnings further.
Conditions for a Ratings Upgrade
While the positive outlook marks a significant milestone for Bharti Airtel, S&P noted that an upgrade to its credit rating might still hinge on a similar improvement in India’s sovereign rating. This linkage reflects the interdependence of the company’s financial health with broader economic conditions.
Challenges Ahead
The tariff hike, while advantageous for revenue, may lead to some loss of subscribers as higher prices encourage cost-conscious consumers to reduce the number of active SIM cards. However, the anticipated rise in average revenue per user (ARPU) could offset these losses, bolstering overall profitability.
Industry Trends and Airtel’s Growth Trajectory
The telecom sector in India has been experiencing consolidation and price adjustments, enabling operators like Bharti Airtel to focus on profitability and quality services. As a frontrunner in the market, Airtel’s diversified portfolio—spanning mobile, broadband, and enterprise services—positions it to capitalize on growing demand for connectivity and digital solutions.
Conclusion
With S&P Global Ratings’ revised outlook and strong growth prospects, Bharti Airtel is set to cement its position as a key player in the telecom industry. The combination of higher mobile tariffs, increased broadband adoption, and enterprise digitization could propel the company’s earnings and cash flows in the coming months. However, maintaining subscriber loyalty amid price hikes will remain a critical challenge as Airtel navigates this growth phase.
