Bharti Airtel - 2QFY11 results: Largely in-line: UBS

Visit http://indiaer.blogspot.com/ for complete details �� ��


UBS Investment Research
Bharti Airtel Ltd.
2QFY11 results: Largely in-line

􀂄 Consolidated revenue and net profit marginally ahead of UBS-e
Bharti reported consolidated 2QFY11 results: Revenues came at Rs152,150m vs.
UBS-e Rs150,767m. EBITDA came at Rs51,212m vs. UBS-e of Rs51,157m. Net
profit came at Rs16,612m vs. UBS-e Rs16,014m. Bharti has achieved 48% of our
FY11 EBITDA estimate in 1HFY11. 2QFY11 results are not comparable to 1Q as
Bharti consolidated Zain Africa for three months vs. 23 days in the last quarter.


􀂄 Minutes growth marginally below; voice rev/min in line with UBS-e
Total minutes on the network (India & South Asia) grew 0.5% qoq to 196bn mins,
marginally below UBS-e of 197bn mins. Mobile mins carried per site per quarter
decreased from 1.81m in 1QFY11 to 1.73m. Voice rev/min declined from Rs0.40
in 1QFY11 to Rs0.39 (UBS-e Rs0.39). Mobile segment revenues for India and
South Asia operations were flat qoq at Rs88,045m, while EBITDA margin
declined 80bp qoq to 35.2%. The MOU for Africa operations increased by 9% qoq
to 112 mins while voice rev per min declined by 7% to US¢ 6.14.

􀂄 Key takeaways from conference call
1) The qoq decline in MOU was more pronounced partly due to floods in some
states 2) Bharti believes operators are likely to price 3G services rationally 3)
Bharti is unlikely to initiate a price war in Africa 4) Management expects Bharti to
benefit from MNP implementation in India given that it has a strong brand name.
􀂄 Valuation: Maintain Buy with SOTP based price target of Rs415
We see limited downside to rev/min in India and expect India mobile market to
consolidate in next 12-18 months. We expect Zain to be positive in medium term.