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Bharti Airtel
Management unfazed; we
remain worried
„Co bullish despite slippages; we maintain Underperform
We met with Mr Sanjay Kapoor – CEO of Bharti’s India & South Asia operations.
The Co expects revenue per minute in India to rise led by rate-hikes/tariffcorrections & phasing out of free minutes. Further, despite some slippage in
brand consistency and revenue market share Bharti believes its business model
is more sustainable vs peers. We recognize the economic rationale for
expectations that tariffs should rise. However, we think likely high pricesensitiveness of customers & policy-makers and unstable industry structure will
make it difficult to execute rate hikes. Maintain Underperform.
Co says small share slippage; sustainable model – key focus
Intra-circle roaming has recently become a material portion of the industry’s
incremental revenues; this may distort real revenue-share picture. On a reported
basis TRAI revenue data indicates that Bharti lost ~130bps of wireless revenue
mkt. share YoY. Adjusting for intra-circle roaming, our calculations show Bharti’s
market share slippage is still visible. Bharti said some competitors are sacrificing
margins/profits to gain share – this strategy is not sustainable.
3G readiness: key differentiator; topline scale to take time
3G services are expected to drive a high degree of competitive differentiation as
Bharti sees its own readiness in terms of analytics, networks, management depth
and customer service as best in class. However, topline acceleration will take time
as eco-system formulation and percolation of customer experience need to be
worked upon. Bharti expects to launch its broadband-wireless services, soon.
Stable regulatory outlook
Ongoing 2G probe has poised the telecom sector for equitable regulation in
Bharti’s view. The Co’s untainted status has strengthened respect for its inputs.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bharti Airtel
Management unfazed; we
remain worried
„Co bullish despite slippages; we maintain Underperform
We met with Mr Sanjay Kapoor – CEO of Bharti’s India & South Asia operations.
The Co expects revenue per minute in India to rise led by rate-hikes/tariffcorrections & phasing out of free minutes. Further, despite some slippage in
brand consistency and revenue market share Bharti believes its business model
is more sustainable vs peers. We recognize the economic rationale for
expectations that tariffs should rise. However, we think likely high pricesensitiveness of customers & policy-makers and unstable industry structure will
make it difficult to execute rate hikes. Maintain Underperform.
Co says small share slippage; sustainable model – key focus
Intra-circle roaming has recently become a material portion of the industry’s
incremental revenues; this may distort real revenue-share picture. On a reported
basis TRAI revenue data indicates that Bharti lost ~130bps of wireless revenue
mkt. share YoY. Adjusting for intra-circle roaming, our calculations show Bharti’s
market share slippage is still visible. Bharti said some competitors are sacrificing
margins/profits to gain share – this strategy is not sustainable.
3G readiness: key differentiator; topline scale to take time
3G services are expected to drive a high degree of competitive differentiation as
Bharti sees its own readiness in terms of analytics, networks, management depth
and customer service as best in class. However, topline acceleration will take time
as eco-system formulation and percolation of customer experience need to be
worked upon. Bharti expects to launch its broadband-wireless services, soon.
Stable regulatory outlook
Ongoing 2G probe has poised the telecom sector for equitable regulation in
Bharti’s view. The Co’s untainted status has strengthened respect for its inputs.
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