Bharti trashes downgrade by Standard & Poor's
10 June 2010
Not happy with the downgrade from BBB- to BB+ awarded by Standard & Poor's to Bharti Airtel after its acquisition of Zain's African operations, Akhil Gupta, deputy group chief executive and managing director, Bharti Enterprises, told CNBC-TV18 in an interview that he absolutely disagrees with S&P's assessment.
"We see no reason why our business will go down. We have built up net cash positions in the past for major acquisitions. Every good company should have a reasonable amount of debt," he said.
Bharti's net debt to earnings before interest, taxes, depreciation and amortisation (EBITDA) is now at 2.75 times, Gupta said. "Bharti Airtel is a debt-averse firm. We expect net debt to EBITDA to be less than 2.5 and 2 times in 12 and 24 months respectively." He said the company has an operating free cash flow of around $2 billion.
The Indian telecom giant will focus on reducing cost and extracting more value from capital expenditure. Kohli said, "We expect a capex of around $800 million in FY11, which will be utilised better than before. The final capex figure is to be firmed up in two months."
Affordable tariffs in Africa will be Bharti's key strategy. Kohli said African tariffs are at European Union or US levels, and the company will bring them down. Outlining the company's African strategy, he said, "We plan to drive aspirational usage and get African users to talk more."
He does not see African tariffs falling to Indian levels. "Indian tariffs are below our expectations," he said.