Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
4QFY11- Promising future
Increase in non-voice revenue highlights 3G potential
Synergies from outsourcing visible in Africa
Tower sharing in Africa could further aid margin improvement
Reiterate BUY, TP unchanged at INR440 based on DCF
Strong operating performance
Bharti reported 4QFY11 revenue of
INR162.6b, which was in line with our
expectation. EBITDA came in 1.9% lower
at INR54.4b due to higher network
operating costs. PAT at INR14.0b was
16% lower than our expectation, due to
higher-than-expected depreciation and
amortization expense related to 3G.
Non-voice reflects 3G potential
Mobile services in India & South Asia (SA)
region reported revenue of INR94.9b, up
3.8% q-q and 14.2% y-y. Bharti managed
to restrict the fall in ARPU to about 2% qq
by retaining MOUs at 449mins while
ARPM compressed from INR0.44 to INR0.43. Non-voice revenue share
increased to 15%, from 13.8% in 3QFY11, due to the increasing adoption
of wireless data after the launch of 3G services. However, mobile
services segment margins in India and SA compressed to 33.4% due to
higher costs related to expansions in Sri Lanka and Bangladesh.
Telemedia and Enterprise segments reported margin improvements to
45.2% (from 44.6% in 3Q) and 25.7% (from 21.5% in 3Q), respectively.
Synergies from outsourcing visible in Africa
The African operations reported revenue of INR41.8b, which was up
3.2% q-q, driven by net addition of 2.08m subscribers coupled with
relatively flat ARPU. The African ARPU was USD7.2, marginally lower
than USD7.3 in 3Q. ARPM inched higher to USD 0.062 from INR0.061,
due to a compression in MOUs to 115mins from 120mins as a result of
an increase in interconnect charges in Democratic Republic of Congo.
African margins improved to 26.4% from 20.8%, as the steps taken by
management to replicate ‘Minute Factory’ in Africa began paying
dividends and due to the absence of one-time branding costs of INR3bn
present in 3Q. Bharti is in the process of demerging its tower assets in
Africa to form a JV with local operators along the lines of its Indus Towers
JV in India, which could further aid margin improvement. The tenancy of
Bharti Infratel and Indus Towers JVs has improved to 1.73 and 1.83
tenants respectively, which we believe is a step closer to an eventual
listing or sale of the JVs, as talked about by management.
Reiterate BUY with a TP of INR440
We reiterate BUY with a DCF-based TP of INR440, comprising core
business value of INR445 and Bharti’s Africa operations at negative INR5.
Risks to our thesis and TP are any adverse regulation, re-emergence of
tariff wars, geo-political risks in Africa, and slow adoption of 3G services.
The Risk Experts
• Our starting point for this page is a recognition of the
macro factors that can have a significant impact on stockprice
performance, sometimes independently of bottom-up
factors.
• With our Risk Expert page, we identify the key macro risks
that can impact stock performance.
• This analysis enhances the fundamental work laid out in
the rest of this report, giving investors yet another resource
to use in their decision-making process.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
4QFY11- Promising future
Increase in non-voice revenue highlights 3G potential
Synergies from outsourcing visible in Africa
Tower sharing in Africa could further aid margin improvement
Reiterate BUY, TP unchanged at INR440 based on DCF
Strong operating performance
Bharti reported 4QFY11 revenue of
INR162.6b, which was in line with our
expectation. EBITDA came in 1.9% lower
at INR54.4b due to higher network
operating costs. PAT at INR14.0b was
16% lower than our expectation, due to
higher-than-expected depreciation and
amortization expense related to 3G.
Non-voice reflects 3G potential
Mobile services in India & South Asia (SA)
region reported revenue of INR94.9b, up
3.8% q-q and 14.2% y-y. Bharti managed
to restrict the fall in ARPU to about 2% qq
by retaining MOUs at 449mins while
ARPM compressed from INR0.44 to INR0.43. Non-voice revenue share
increased to 15%, from 13.8% in 3QFY11, due to the increasing adoption
of wireless data after the launch of 3G services. However, mobile
services segment margins in India and SA compressed to 33.4% due to
higher costs related to expansions in Sri Lanka and Bangladesh.
Telemedia and Enterprise segments reported margin improvements to
45.2% (from 44.6% in 3Q) and 25.7% (from 21.5% in 3Q), respectively.
Synergies from outsourcing visible in Africa
The African operations reported revenue of INR41.8b, which was up
3.2% q-q, driven by net addition of 2.08m subscribers coupled with
relatively flat ARPU. The African ARPU was USD7.2, marginally lower
than USD7.3 in 3Q. ARPM inched higher to USD 0.062 from INR0.061,
due to a compression in MOUs to 115mins from 120mins as a result of
an increase in interconnect charges in Democratic Republic of Congo.
African margins improved to 26.4% from 20.8%, as the steps taken by
management to replicate ‘Minute Factory’ in Africa began paying
dividends and due to the absence of one-time branding costs of INR3bn
present in 3Q. Bharti is in the process of demerging its tower assets in
Africa to form a JV with local operators along the lines of its Indus Towers
JV in India, which could further aid margin improvement. The tenancy of
Bharti Infratel and Indus Towers JVs has improved to 1.73 and 1.83
tenants respectively, which we believe is a step closer to an eventual
listing or sale of the JVs, as talked about by management.
Reiterate BUY with a TP of INR440
We reiterate BUY with a DCF-based TP of INR440, comprising core
business value of INR445 and Bharti’s Africa operations at negative INR5.
Risks to our thesis and TP are any adverse regulation, re-emergence of
tariff wars, geo-political risks in Africa, and slow adoption of 3G services.
The Risk Experts
• Our starting point for this page is a recognition of the
macro factors that can have a significant impact on stockprice
performance, sometimes independently of bottom-up
factors.
• With our Risk Expert page, we identify the key macro risks
that can impact stock performance.
• This analysis enhances the fundamental work laid out in
the rest of this report, giving investors yet another resource
to use in their decision-making process.
No comments:
Post a Comment