Bharti Airtel Ltd. is looking to pare $4.6 billion from its net borrowings over the next three years by listing its African unit and potentially selling some stake in its tower business, according to a person with knowledge of the matter, in a bid to safeguard its investment grade ratings.
The twin deals will help the billionaire Sunil Mittal-controlled carrier improve its balance sheet after net debt rose almost 45 percent to $14.6 billion over four years as the company borrowed to buy spectrum and defend its position against disruptive upstart Reliance Jio Infocomm Ltd. The build-up, which came with an eight-quarter-long stretch of earnings declines, has put Bharti Airtel at risk of a downgrade to junk at both Moody’s Investors Service and S&P Global Ratings.
“We see a high likelihood that Bharti can avoid becoming a fallen angel,” Anthony Leung, a Hong Kong-based senior analyst at Wells Fargo & Co. wrote in a report dated May 7. “We expect a majority, if not all, of Bharti’s tower business to be sold in a year’s time, which will meet the timeline target imposed by Moody’s to keep the credit at Baa3,” which is the lowest investment grade rating.