Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Bharti Airtel Ltd.
3Q results - Inline ex re-branding expense
EBITDA and Net Income impacted by re-branding expense
Bharti reported consolidated 3QFY11 results: Revenues came at Rs157,560m vs.
UBS-e Rs158,386m. EBITDA came at Rs49,816m vs. UBS-e of Rs52,974m. Net
profit came at Rs13,033m vs. UBS-e Rs17,728m. One-time rebranding expense of
Rs3,395m impacted EBITDA and net Income. Net Income was also impacted by
derivative & FX fluctuations. Adjusting for these expenses EBITDA came in at
Rs53,211m and net income at Rs17,803m.
Minutes growth below UBS-e; Data shows strong pick-up
Total minutes on network (India & SA) grew 4.5% qoq to 205b mins (UBS-e 208b
mins). Voice rev/min declined from Rs0.39 in 2QFY11 to Rs0.38 (UBS-e Rs0.39).
Data as a % of rev increased to 13.8% from 12.7% in 2QFY11. Mobile rev for
India & SA grew 3.9% to Rs91,459m (UBS-e Rs92,838m), while EBITDA margin
(before rebranding expense) declined 30bp qoq to 34.9%. MOU for Africa
increased by 7% qoq to 120 mins while voice rev/min declined by 8.7% (US¢ 5.6).
Key takeaways from conference call
1) The initial trends of MNP implementation have been positive for Bharti as it has
emerged as net gainer. 2) In Africa, the company has undertaken tariff correction
in all markets and its tariffs are competitive now. 3) Management is confident that
the interconnect rate will come down in the next 2-3 years in Africa.
Valuation: Maintain Buy with SOTP based price target of Rs500
With improving regulation & pricing environment, we think Indian mobile sector
can outperform in 2011. We expect Bharti to benefit from improving outlook.
Key takeaways from the conference call
The management is not worried about MNP implementation in India. The
initial trends from MNP implementation have been positive for Bharti as the
company has been a net gainer. Also, the company has not seen any churning
amongst its high ARPU customers due to MNP.
In Africa, MNP services is likely to be launched in Kenya from 1st Arpil
2011, while in Nigeria, Uganda and Ghana the MNP implementation is being
considered.
In Africa, the company undertook tariff correction in 7-8 countries in
2QFY11 and has untaken similar action in the remaining African countries
during 3QFY11. At present, the management believes tariffs in all African
markets are competitive and it does not intend to introduce any disruptive
pricing.
In India, Bharti expects to complete roll out of 3G services in all licensed
areas by the end of March 2011. The company is also in talks with other
operators to offer pan-India 3G services to its customers.
In Africa, the management believes there is significant data opportunity. The
company has 3G licenses in 9 countries and it offers mobile commerce
services in 7 of these countries.
The company is working with all African national regulators to bring down
interconnect rates. Management expects that the interconnect rate will come
down in the next 2-3 years.
In Africa, Bharti has given its passive network management contract to
Ericsson, Nokia Siemens and Huawei. Also, the company is in the process of
demerging the tower business as separate entity in all African nations.
The company maintained its capex guidance of $1.8-2.0bn for FY11 in India
and South Asia (ex tower business) and $800m for Africa. In Africa, the
company is currently focussed on building its capacities; while next year the
company will focus on expanding coverage (2/3rd of capex will be meant for
expansion).
Bharti Airtel Ltd.
With a pan-India presence, Bharti Airtel is the largest mobile operator in the
country and recorded a revenue market share of 31.5% in Q4 FY10. The
broadband and telephone group provides services in 100 cities, while the
enterprise services group has two sub-units: carriers (long-distance services) and
corporate services. All services are provided under the Airtel brand. Singapore
Telecom owns a 32.04% stake. Bharti Airtel acquired an 80% stake in Zain
Africa in 2010 at an EV of US$10.7bn.
Statement of Risk
Irrational competition among the operators, the shortage of frequency spectrum
and over-bidding during the 3G spectrum auction are the key risks facing all the
operators at the industry level.
We believe Bharti faces execution risk in light of the rapid growth of India's
mobile subscriber base. The company recently announced a shift in strategy and
will focus on overseas acquisitions as another means of creating shareholder
value. While Bharti's management has historically had good discipline when it
comes to investing capital, we believe there is a risk of Bharti overpaying for
acquisitions, given that there are typically multiple bidders in most transactions.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Bharti Airtel Ltd.
3Q results - Inline ex re-branding expense
EBITDA and Net Income impacted by re-branding expense
Bharti reported consolidated 3QFY11 results: Revenues came at Rs157,560m vs.
UBS-e Rs158,386m. EBITDA came at Rs49,816m vs. UBS-e of Rs52,974m. Net
profit came at Rs13,033m vs. UBS-e Rs17,728m. One-time rebranding expense of
Rs3,395m impacted EBITDA and net Income. Net Income was also impacted by
derivative & FX fluctuations. Adjusting for these expenses EBITDA came in at
Rs53,211m and net income at Rs17,803m.
Minutes growth below UBS-e; Data shows strong pick-up
Total minutes on network (India & SA) grew 4.5% qoq to 205b mins (UBS-e 208b
mins). Voice rev/min declined from Rs0.39 in 2QFY11 to Rs0.38 (UBS-e Rs0.39).
Data as a % of rev increased to 13.8% from 12.7% in 2QFY11. Mobile rev for
India & SA grew 3.9% to Rs91,459m (UBS-e Rs92,838m), while EBITDA margin
(before rebranding expense) declined 30bp qoq to 34.9%. MOU for Africa
increased by 7% qoq to 120 mins while voice rev/min declined by 8.7% (US¢ 5.6).
Key takeaways from conference call
1) The initial trends of MNP implementation have been positive for Bharti as it has
emerged as net gainer. 2) In Africa, the company has undertaken tariff correction
in all markets and its tariffs are competitive now. 3) Management is confident that
the interconnect rate will come down in the next 2-3 years in Africa.
Valuation: Maintain Buy with SOTP based price target of Rs500
With improving regulation & pricing environment, we think Indian mobile sector
can outperform in 2011. We expect Bharti to benefit from improving outlook.
The management is not worried about MNP implementation in India. The
initial trends from MNP implementation have been positive for Bharti as the
company has been a net gainer. Also, the company has not seen any churning
amongst its high ARPU customers due to MNP.
In Africa, MNP services is likely to be launched in Kenya from 1st Arpil
2011, while in Nigeria, Uganda and Ghana the MNP implementation is being
considered.
In Africa, the company undertook tariff correction in 7-8 countries in
2QFY11 and has untaken similar action in the remaining African countries
during 3QFY11. At present, the management believes tariffs in all African
markets are competitive and it does not intend to introduce any disruptive
pricing.
In India, Bharti expects to complete roll out of 3G services in all licensed
areas by the end of March 2011. The company is also in talks with other
operators to offer pan-India 3G services to its customers.
In Africa, the management believes there is significant data opportunity. The
company has 3G licenses in 9 countries and it offers mobile commerce
services in 7 of these countries.
The company is working with all African national regulators to bring down
interconnect rates. Management expects that the interconnect rate will come
down in the next 2-3 years.
In Africa, Bharti has given its passive network management contract to
Ericsson, Nokia Siemens and Huawei. Also, the company is in the process of
demerging the tower business as separate entity in all African nations.
The company maintained its capex guidance of $1.8-2.0bn for FY11 in India
and South Asia (ex tower business) and $800m for Africa. In Africa, the
company is currently focussed on building its capacities; while next year the
company will focus on expanding coverage (2/3rd of capex will be meant for
expansion).
Bharti Airtel Ltd.
With a pan-India presence, Bharti Airtel is the largest mobile operator in the
country and recorded a revenue market share of 31.5% in Q4 FY10. The
broadband and telephone group provides services in 100 cities, while the
enterprise services group has two sub-units: carriers (long-distance services) and
corporate services. All services are provided under the Airtel brand. Singapore
Telecom owns a 32.04% stake. Bharti Airtel acquired an 80% stake in Zain
Africa in 2010 at an EV of US$10.7bn.
Statement of Risk
Irrational competition among the operators, the shortage of frequency spectrum
and over-bidding during the 3G spectrum auction are the key risks facing all the
operators at the industry level.
We believe Bharti faces execution risk in light of the rapid growth of India's
mobile subscriber base. The company recently announced a shift in strategy and
will focus on overseas acquisitions as another means of creating shareholder
value. While Bharti's management has historically had good discipline when it
comes to investing capital, we believe there is a risk of Bharti overpaying for
acquisitions, given that there are typically multiple bidders in most transactions.
No comments:
Post a Comment