The global ratings agency said “growing data consumption and a fundamental improvement in Indian and African telco markets will help expand Bharti Airtel’s earnings” and support further deleveraging.
S&P expects Bharti Airtel’s subscriber base in India to grow by 3%-4% over the next year, with average revenue per user (ARPU) increasing by 5%-7%, driven by higher data usage, premiumisation and subscriber additions.
Airtel’s Africa business may outshine India ops
The agency also expects Airtel’s African business to outperform its Indian operations over the next 12-24 months. Under its base case, S&P projects the African customer base to grow 9%-11% annually and ARPU in US dollar terms to rise 5%-7% annually through fiscal 2028.
“We forecast the company’s consolidated EBITDA will increase by 8%-10% annually over the subsequent two years, after a 28.0% increase in fiscal 2026,” S&P said. It expects Africa’s contribution to Airtel’s consolidated EBITDA to rise to 25%-27%, up from previous estimates of about 20%.
The agency said Airtel’s “expanding earnings and higher operating cash flows can help offset rising capital expenditure and dividends” even as the company increases investments in data centres, cloud services, financial services and African operations.
The stable outlook reflects S&P’s expectation that Airtel’s “expanding earnings and cash flows amid rational industry competition will improve its balance sheet strength over the next 12-24 months.” It forecasts the company’s funds-from-operations-to-debt ratio to improve to above 50% during the period. However, S&P warned that ratings could come under pressure if leverage does not improve and the FFO-to-debt ratio remains below 45%, particularly due to weaker-than-expected earnings or large debt-funded investments and shareholder payouts.