MTN talks won’t impact Bharti's ratings: S&P

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Friday , May 09, 2008 at 1651 hrs Bharti Airtel's ongoing talks with South Africa-based MTN for a possible acquisition of stake will not have an impact on the telecom major's ratings, as the discussions are still preliminary, says global credit rating agency S&P.

However, the agency noted that if the possibility of a significant investment or buyout increases, then Bharti would likely be placed on credit-watch with negative implications.

Currently, Bharti has a medium investment grade rating of 'BBB-' with a stable outlook.

"This will signal rating pressure stemming from the financing and the incremental debt required to fund the outlay for the potential transaction," S&P said in a statement.

It also added that there might not be any upside potential in the ratings, if Bharti indeed pursues a significant investment or acquisition in MTN.

"While a prominent overseas investment adds diversity to Bharti's businesses and cash flows, the financing and the debt requirements are of greater concern, especially since Bharti has budgeted capital expenditures of about USD3.3 billion per annum," the rating agency said.