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Bharti Airtel
Conference takeaways
Having met with management today at our 15th Annual India Investor
Conference in New Delhi, these are some of our takeaways...
„TRAI recos unfair; limited worst-case hit
Bharti said recent TRAI recommendations on spectrum valuations do not create a
level playing field as start-up spectrum given in 2008 is being valued differently vs
spectrum to be allotted during licence renewals. Even in a worst-case scenario,
the Co feels its strong cash generation places it at a relative advantage versus
other operators.
3G rollout on track; early feedback is encouraging
Bharti has launched 3G operations in 3 cities so far and said its early feedback is
very positive. By March 2011, the Co plans to launch 3G in 40-50 cities across its
13 licenced circles. Bharti believes the 3G opportunity in India could be huge
given low penetration of fixed-broadband.
MNP - not a game changer
Bharti is a net gainer from MNP but the Co does not see MNP introduction as a
game changer for the market. According to Bharti, there is no visible pressure on
tariffs from MNP.
Tower IPO not on the agenda for next 2 quarters
Bharti said that IPO plans for Bharti Infratel or their holding in Indus Towers seem
unlikely at least for next 6 months.
Africa performance continues to improve
Bharti highlighted that revenues from Africa are growing at a strong pace. Despite
variations between on-net and off-net costs overall margin outlook is healthy.
Price objective basis & risk
Bharti (BHTIF)
Our PO of Rs310/sh values Bharti at a FY12E-EV/EBITDA of around 6.5x-7x
post-Zain. The consolidated valuation places Bharti at nearly 20-25% premium vs
GEM wireless majors. Normalised EBITDA growth for Bharti is estimated at
around 15% vs growth of GEM majors at around 10%. Upside risks to our PO
could stem from 1) stronger than expected profit contribution from Bharti-Africa,
2) sooner than expected industry consolidation in India, and 3) unforeseen 3G
adoption in India. Weaker than expected subscriber quality and renewed
competitive intensity in India, weak 3G impact, dramatic regulatory changes and
poor execution in Africa pose downside risks.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bharti Airtel
Conference takeaways
Having met with management today at our 15th Annual India Investor
Conference in New Delhi, these are some of our takeaways...
„TRAI recos unfair; limited worst-case hit
Bharti said recent TRAI recommendations on spectrum valuations do not create a
level playing field as start-up spectrum given in 2008 is being valued differently vs
spectrum to be allotted during licence renewals. Even in a worst-case scenario,
the Co feels its strong cash generation places it at a relative advantage versus
other operators.
3G rollout on track; early feedback is encouraging
Bharti has launched 3G operations in 3 cities so far and said its early feedback is
very positive. By March 2011, the Co plans to launch 3G in 40-50 cities across its
13 licenced circles. Bharti believes the 3G opportunity in India could be huge
given low penetration of fixed-broadband.
MNP - not a game changer
Bharti is a net gainer from MNP but the Co does not see MNP introduction as a
game changer for the market. According to Bharti, there is no visible pressure on
tariffs from MNP.
Tower IPO not on the agenda for next 2 quarters
Bharti said that IPO plans for Bharti Infratel or their holding in Indus Towers seem
unlikely at least for next 6 months.
Africa performance continues to improve
Bharti highlighted that revenues from Africa are growing at a strong pace. Despite
variations between on-net and off-net costs overall margin outlook is healthy.
Price objective basis & risk
Bharti (BHTIF)
Our PO of Rs310/sh values Bharti at a FY12E-EV/EBITDA of around 6.5x-7x
post-Zain. The consolidated valuation places Bharti at nearly 20-25% premium vs
GEM wireless majors. Normalised EBITDA growth for Bharti is estimated at
around 15% vs growth of GEM majors at around 10%. Upside risks to our PO
could stem from 1) stronger than expected profit contribution from Bharti-Africa,
2) sooner than expected industry consolidation in India, and 3) unforeseen 3G
adoption in India. Weaker than expected subscriber quality and renewed
competitive intensity in India, weak 3G impact, dramatic regulatory changes and
poor execution in Africa pose downside risks.
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