ICRA has reaffirmed the 'AA+' rating for the Rs 46 billion term loans and Rs 22.50 billion bank facilities of Bharti Airtel. The outlook on the long term rating is stable. ICRA has also reaffirmed 'A1+' rating of Rs 2.50 billion bank limits of Bharti. Further, the issuer rating of 'IrAA+' with a stable outlook has also been reaffirmed.

The rating reaffirmation factors in the improvement in the operating profitability (from 30.1% in H1FY13 to 32.2% in H1FY14) and the steady revenue growth (10% y-o-y for H1FY14) of the company primarily on the back of improvement in performance in mobile business in India.

The India mobile business reported improvement in operating margins (from 30.3% in H1FY13 to 33.0% in H1FY14) as the operating environment has improved over the last few quarters with implicit consolidation and easement in the competitive intensity in the industry.

ICRA also continues to factor in the encouraging growth in revenues from data services (y-o-y growth of 87.3% in H1FY14); however the contribution of the same to the mobile revenues remains relatively low (8.3% in H1FY14).

Over the last one year, the company has undertaken fund raising initiatives such as USD 1.3 billion of fresh issue of equity share capital to Qatar Foundation Endowment (QFE) and initial public offer of equity shares of Bharti Infratel (subsidiary of Bharti) and the funds so raised were utilized towards retiring part of the debt.

Moreover, the ratings continue to favorably take into account Bharti's integrated telecommunications operations, its diversified presence across geographies and business verticals, economies of scale with presence in large telecom markets like India and Africa, and Singapore Telecommunications's  (rated  Aa3(stable)  by  Moody's  Investor  Services)  32.3% effective ownership. 

The stable outlook on the ratings reflects ICRA's expectation that the company would be able to maintain its leadership position and generate strong cash flows in the domestic market and improve upon its capital structure driven by its deleveraging initiatives along with strong cash flows. However, performance in Africa, developments on the regulatory front, and any significant increase in capex/investments beyond what is currently anticipated would remain key rating sensitivities. 

Shares of the company declined Rs 9.5, or 2.81%, to settle at Rs 328.10. The total volume of shares traded was 969,039 at the BSE (Thursday).