Past Dues Credit Negative for Airtel Despite Spectrum Payment Moratorium, Rate Hikes: Moody's

New Delhi: Adjusted gross revenue dues on Bharti Airtel are credit negative for the telecom operator despite a two-year moratorium given by the government on spectrum payment and the firm's plan to raise mobile call and data charges, credit rating agency Moody's Investors Service said on Monday.

Bharti Airtel has posted a staggering Rs 23,045 crore net loss for the second quarter ended September 30, due to provisioning of Rs 28,450 crore in the aftermath of the Supreme Court's ruling on statutory dues.

According to data from the government, the liabilities in the case of Bharti Airtel add up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is the spectrum usage charge due (excluding the dues of Telenor and Tata Teleservices).

"Potential payment of past-due fees weighs on credit profile, despite spectrum moratorium and price hikes," Moody's said. Bharti Airtel and Vodafone Idea announced new plans that will cost their subscribers up to 50 per cent more from Tuesday.

Bharti Airtel on November 26 made its latest filing with the Supreme Court seeking modification of the 90-day adjusted gross revenue (AGR) order for past-due licence fees and spectrum usage charges.

"If, as we expect, the amount Bharti is ultimately required to pay is large and needs debt funding, the company's debt leverage will increase, a credit negative," Moody's said.

The credit rating agency said that in case Bharti Airtel is required to make a payment of Rs 34,260 crore immediately and in full, the debt level of the company will rise 25 per cent if the company raises entire money to make payment through debt instruments.

"If Bharti and Vodafone are required to make their payments immediately and in full, it will likely have fundamental implications for the financial health and competitive dynamics of the Indian telecommunications industry," Moody's said.