With the Supreme Court rejecting a review of its order that put Rs 1.47 lakh crore liability of past dues on telecom firms, Vodafone Idea’s ability to compete in the Indian market is likely to weaken and this will provide an opportunity for Bharti Airtel and Reliance Jio to gain market share, Moody’s Investors Service said on Friday.
“The financial burden will likely further weaken Vodafone Idea’s ability to compete in the Indian market, potentially providing an opportunity for competitors Bharti and Jio to gain market share,” the US-based agency said.
Moody’s further added: “While a fresh blow, the judgment is no real surprise and Bharti had already made provisions to help offset the impact on its balance sheet. Nevertheless, the impact on its credit profile will likely be significant, with both debt and leverage set to rise.”
Meanwhile, Bharti Airtel and Vodafone Idea are evaluating filing a curative petition before the apex court for relaxation on penalties and payment deadline. In a statement, Bharti Airtel, which faces a liability of nearly Rs 35,586 crore, said it was disappointed by the order and was now “evaluating filing a curative petition”. Vodafone Idea, which has to pay Rs 53,038 crore, said it was also “exploring further options, including filing of a curative petition”.
Moody’s places Yes Bank’s ratings under review
Moody’s Investors Service has placed Yes Bank’s long-term foreign currency issuer rating of B2 under review, with the direction uncertain, citing “slowness in raising new capital”.
“The placing of Yes Bank’s deposit rating of B2 under review reflects Moody’s expectation that the bank’s standalone viability is getting increasingly challenged by its slowness in raising new capital,” the US-based agency has said in a statement.
It further said the potential credit risk to the bank’s senior creditors is uncertain, because there are a number of diverse scenarios that could affect the rating in either positive or negative directions.
Yes Bank is in discussions with a number of investors to raise new equity capital, which would be credit positive if executed successfully, Moody’s said adding that “If the bank successfully recapitalises and repairs and cleans its balance sheet, its ratings could stabilise or face upward pressure”.