Fitch Ratings has today assigned Essar Telecom Infrastructure Private Limited (ETIPL) a National Long-term rating of ‘BBB+(ind)’ with a Stable Outlook. The rating also takes into consideration the strategic importance of ETIPL to the telecom operations of the Essar Group and the company’s experienced management with a long track record in the telecom industry.
The rating further reflects the good tenant profile with long-term agreements for providing passive infrastructure services with all the leading telecom operators including Bharti Airtel, Vodafone, Idea Cellular and Bharat Sanchar Nigam Limited (BSNL).
The ratings reflect the stable and predictable cash flow generated by ETIPL’s telecom towers business. Once a tower asset is rented, it usually generates rental income over the term of the master service agreements between the two parties.
As most leading telecom companies are spinning off their tower businesses into separate tower companies, there is a hightened competition for third-party tower companies. ETIPL’s substantially lower tower base portfolio, compared with an operator-owned company, acts as a constraint on its ratings. Fitch expects that operator-owned tower companies may experience a loss of business as new entrants could opt to tie-up with larger tower companies to roll out development faster.
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