According to S&P Global Ratings, Bharti Airtel’s proposed rights issue of up to Rs 250 billion is not enough to stabilise its credit rating. The agency believes that there is a negative outlook, which is an indication of rating downgrade.

S&P Global Ratings believes that the proposed rights issue, if successful, would go a long way in restoring Airtel’s balance sheet and shoring up leverage. However, the negative outlook on the rating captures the risk of renewed competition and elevated capital spending by Airtel, which may keep the leverage elevated. The rating headroom remains limited despite the sizable equity infusion, the agency noted.

In addition, S&P stated that Airtel’s higher capital expenditure over the past few years has weighed on its debt capacity. However, the operator may complete its 4G-rollout over the next two to three quarters, which could mean a sizable reduction in its capital spending.