Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bharti Airtel (BRTI.BO)
Buy Equity Research
Steady momentum in India, Upbeat on Africa outlook; Reit. CL-Buy
What's changed
We reiterate our Buy rating on Bharti after its 4Q con-call. Key takeaways:
1) Mgmt believes pricing power may return in India cellular market and
believes that should arrest the EBITDA margin decline; 2) Mgmt stated that
tariff readjustments are complete in Africa and expects cost per minute to
reduce in coming quarters as outsourcing contracts are now in place.
Mgmt stated that MOU/sub for Africa declined 4.2% qoq as there was a
regulatory intervention in DRC. Adjusted for that MOU/sub was up 3.5%
qoq; 3) Bharti believes in next 12 months almost all of its 6 loss making
African markets may turn profitable; 4) Bharti increased its FY12 capex
guidance for Africa from around US$ 850 mn to US$1-1.2 bn as it expects
higher traffic. Mgmt expects to spend US$ 1.5 bn/US$ 400 mn on capex in
India and tower business; 5) Bharti believes LTE rollout and 3G launch will
help in the uptake of broadband penetration in India; 6) Mgmt stated that
impact of MNP is limited as the proportion of subs base porting/
renegotiating tariffs is relatively small.
Implications
We reduce our EPS estimates for FY12/FY13/FY14 by 17%/10%/9% as we
model-in higher net interest expenses (led by expensing of 3G debt as
Bharti rolls out 3G services in the remaining circles) and higher tax-rate
(accounting for circles coming out of tax holiday). We also reduce our
FY12E capex by 9% to US$3.2 bn. This is inline with mgmt guidance of
US$ 3.1 bn. Our 12-m SOTP based target price reduces by 2% to Rs410 as
we roll forward by 3 months.
Valuation
At a FY12E PE of 17.9X, Bharti is trading at a premium to the Asian telco
average of 14.7X, but offers a better EPS FY11-14 CAGR (27%) when
compared to the regional telecom average CAGR of 8%.
Key risks
Price wars in India; Weaker than expected KPIs from African operations.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
Asia Pacific Conviction Buy List
Coverage View: Neutral
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bharti Airtel (BRTI.BO)
Buy Equity Research
Steady momentum in India, Upbeat on Africa outlook; Reit. CL-Buy
What's changed
We reiterate our Buy rating on Bharti after its 4Q con-call. Key takeaways:
1) Mgmt believes pricing power may return in India cellular market and
believes that should arrest the EBITDA margin decline; 2) Mgmt stated that
tariff readjustments are complete in Africa and expects cost per minute to
reduce in coming quarters as outsourcing contracts are now in place.
Mgmt stated that MOU/sub for Africa declined 4.2% qoq as there was a
regulatory intervention in DRC. Adjusted for that MOU/sub was up 3.5%
qoq; 3) Bharti believes in next 12 months almost all of its 6 loss making
African markets may turn profitable; 4) Bharti increased its FY12 capex
guidance for Africa from around US$ 850 mn to US$1-1.2 bn as it expects
higher traffic. Mgmt expects to spend US$ 1.5 bn/US$ 400 mn on capex in
India and tower business; 5) Bharti believes LTE rollout and 3G launch will
help in the uptake of broadband penetration in India; 6) Mgmt stated that
impact of MNP is limited as the proportion of subs base porting/
renegotiating tariffs is relatively small.
Implications
We reduce our EPS estimates for FY12/FY13/FY14 by 17%/10%/9% as we
model-in higher net interest expenses (led by expensing of 3G debt as
Bharti rolls out 3G services in the remaining circles) and higher tax-rate
(accounting for circles coming out of tax holiday). We also reduce our
FY12E capex by 9% to US$3.2 bn. This is inline with mgmt guidance of
US$ 3.1 bn. Our 12-m SOTP based target price reduces by 2% to Rs410 as
we roll forward by 3 months.
Valuation
At a FY12E PE of 17.9X, Bharti is trading at a premium to the Asian telco
average of 14.7X, but offers a better EPS FY11-14 CAGR (27%) when
compared to the regional telecom average CAGR of 8%.
Key risks
Price wars in India; Weaker than expected KPIs from African operations.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
Asia Pacific Conviction Buy List
Coverage View: Neutral
No comments:
Post a Comment