Bharti Airtel rating unaffected by its Qualcomm's India stake buy
25 May 2012
Bharti Airtel's deal to acquire a 49-per cent stake in Qualcomm Inc's fourth-generation (4G) broadband venture in India for $165 million, would not have any impact on its long-term corporate credit rating, Standard & Poor's Ratings Services said.
''We believe the current investment is small in size and that Bharti should be able to absorb the financial impact of paying for the remaining stake and of assuming debt at Qualcomm India BWA,'' S&P, which has BB+/Stable rating on Bharti Airtel, said.
''We estimate the additional impact to be between $900 million and $1 billion. This is assuming that Bharti will gain full ownership of Qualcomm India BWA in phases by the end of 2014,'' it added.
Airtel on Thursday agreed to acquire a 26-per cent stake held by two Indian partners in the Qualcomm broadband venture and the remaining by subscribing to fresh equity.
Brokerage firm Emkay had also commented that ''no near term impact on financials as it would take another 4-6 months for Bharti to launch services in newly acquired circles and balance sheet impact would be seen once Bharti would acquire remaining 51 per cent stake''.
The acquisition would make Bharti a serious competitor to Reliance Industries-owned Infotel, which has pan-India license to offer 4G services. Recently, Bharti has a headstart over RIL, as it has launched operations in Kolkata and Bangalore, it added.
Qualcomm would provide technical assistance to Bharti in network architecture and optimisation, infrastructure and device testing, while it would continue to develop and support the underlying technology and the LTE TDD ecosystem.
