Negative past installment credit for Airtel despite the moratorium on spectrum payment, rate increases: Moody's

New Delhi, December 2 () The adjusted gross income quotas at Bharti Airtel are negative for the telecommunications operator despite a two-year moratorium given by the government on spectrum payment and the company's plan to increase charges for calls and mobile data, the credit rating agency Moody's Investor Service said Monday.

Bharti Airtel has published a staggering net loss of Rs 23,045 million for the second quarter ending September 30, due to the provision of Rs 28,450 million as a result of the Supreme Court decision on legal fees.

According to government data, the obligations in the case of Bharti Airtel total almost 35,586 million rupees, of which 21,682 million rupees are license fees and another 13,904.01 rupees are the charge for use of the spectrum due (excluding the Telenor and Tata Teleservicios fees).

The potential payment of overdue fees weighs on the credit profile, despite the moratorium on the spectrum and price increases, Moody's said.

Bharti Airtel and Vodafone Idea announced new plans that will cost their subscribers up to 50 percent more as of Tuesday.

Bharti Airtel presented his last presentation to the Supreme Court on November 26 to request the modification of the 90-day adjusted gross income order (AGR) for expired license fees and spectrum use charges.

If, as we expect, the amount that Bharti must ultimately pay is large and needs debt financing, the leverage of the company's debt will increase, a negative credit, Moody's said.

The credit rating agency said that in case Bharti Airtel must make a payment of Rs 34,260 million immediately and in full, the company's debt level will increase by 25 percent if the company collects full money to make the Payment through debt instruments. If Bharti and Vodafone are required to make their payments immediately and completely, it is likely to have fundamental implications for the financial health and competitive dynamics of the Indian telecommunications industry, Moody's said. PRS HRS

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