It downgraded Rs 6,000 cr value of non-convertible debentures issued by Vodafone from AA- to A+.
The highest score within the scheme is AAA+, and the present revision represents a reducing of the score by one notch.
“The downgrade displays continued pricing stress within the cell phone trade, main to weak working efficiency of Voda-Idea,” CRISIL, a unit of worldwide score company Standard & Poor’s, stated.
Vodafone Idea, shaped out of the merger of Telecom operators Vodafone India and Idea cellular, is struggling to transfer again into the black after relentless pricing and product competitors by new entrant Reliance Jio pushed Vodafone and Idea into the pink a yr in the past.
Prices of information packs have come down by about 90% and people of voice packs by about 50% since Jio entered the scene two years in the past.
Earlier this month, Vodafone Idea reported its first set of monetary numbers after its formation. The firm’s earnings earlier than curiosity, tax, depreciation, and amortisation (EBITDA) fell to simply Rs 2,349 crore for the six months of this yr from Rs 11,908 crore for the complete yr of fiscal 2018.
The firm has launched into an aggressive cost-cutting program to enhance margins.
“Synergy benefits of the merger are expected to improve the EBITDA over the medium term. The timely realisation of synergy benefits will be a key monitorable,” CRISIL stated.
The company continued to preserve a unfavorable outlook on the score.
“CRISIL believes the credit risk profile of the combined entity will continue to be affected by competition, while the quantum and timeliness of synergy benefits will be key rating sensitivity factors. Moreover, support provided to the combined entity by its sponsors, Vodafone and ABG, will remain a key monitorable,” it stated.
CRISIL, nevertheless, didn’t change the score on Rs 2,000 cr business paper borrowing that the corporate has.
The company famous that the corporate has a powerful market place within the cell phone section in India in addition to assist from robust sponsors within the type of UK’s Vodafone Group and India’s Aditya Birla Group.
“These strengths are partially offset by modest debt protection metrics and exposure to regulatory changes and technological risks,” it stated.
Vodafone Idea has robust liquidity, the company stated, marked by liquid surplus of Rs 13,551 crore as on September 30, 2018. The firm has principal reimbursement obligation of Rs 9,641 crore over the 18 months by means of March 31, 2020, the company identified.
“The liquidity will also be supported by the planned equity infusion and lean working capital cycle.”