ICRA has taken a consolidated view of Bharti Hexacom Limited (BHL) with its parent Bharti Airtel Limited (BAL – rated [ICRA]AA-(Stable)/[ICRA]A1+) and both are together referred to as BAL. BAL holds 70% stake in BHL and balance 30% stake is held by Telecommunications Consultants India Limited (TCIL), a Government of India enterprise. BHL operates mobile and telemedia services in two important telecom circles (Rajasthan and North East, which contributed around 7.5% of BAL's AGR in FY2019) and derive operational and financial synergies with Bharti. Rationale The resolution of rating watch1 factors in the successful completion of Bharti Airtel Limited's (BAL) fund raising exercise of USD 3 billion (approximately Rs. 21,600 crore) via equity and equity convertible instruments. BAL's latest fund raising includes equity infusion via Qualified Institutional Placement (QIP) issuance of USD 2 billion (Rs. 14,400 crore) along with foreign currency convertible bonds (FCCB) of USD 1 billion (Rs. 7,200 crore). The reaffirmation of the ratings factors in BAL's established market position in the telecom industry in India, its integrated telecommunications operations, its diversified presence across geographies and business verticals, and economies of scale with presence in large telecom markets like India and Africa. ICRA also notes that the company has 35.2% effective ownership (prior to QIP) by Singapore Telecommunications Limited's {rated A1(Negative) by Moody's Investor Services}. ICRA also takes into consideration the steps taken by the company over the last two years to consolidate its market position and its spectrum holding, through acquisition of data centric spectrum through participation in auctions as well as inorganically. Moreover, the company has demonstrated steady recovery in operating metrics during H1FY2020 which coupled with the recently undertaken tariff hikes would result in further improvement in average revenue per user (ARPU) thereby translating into healthy OPBDITA growth in FY2021. BAL has undertaken sizeable deleveraging initiatives in the current fiscal including, i) rights issue of around Rs. 25,000 crore, and ii) IPO of USD 670 million of Airtel Africa besides measures to improve its debt profile through issuance of perpetual bonds of USD 750 million. These steps along with recent QIP and FCCB placement demonstrate its strong financial flexibility. With expected improvement in cash flow generation from operations coupled with moderation in capital intensity as well as deferral of spectrum instalments over FY2021-22 would allow strengthening of credit profile over the medium term.