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http://content.icicidirect.com/mailimages/ICICIdirect_BhartiAirtelQualcomm_EventUpdate.pdf
B h a r t i a c q u i r e s 4 9 % s t a k e i n Q u a l c o m m …
Bharti Airtel has announced the acquisition of a 49% stake in Qualcomm,
which has BWA spectrum of 20 MHz each in Delhi, Mumbai, Haryana and
Kerala. Bharti has already launched 4G services in Kolkata and Bangalore
and also owns spectrum in Punjab and Maharashtra. The company
bought 13% of the stake from each of Tulip Telecom and GTL while the
remaining 23% was bought through fresh equity. The deal size is $165
million (~| 900 crore) and the complete ownership is expected to be
transferred by the end of 2014. We do not see revenue potential from the
acquisition immediately as 3G itself has not lived up to its expectation
even after a year of its launch. However, for the long term, it remains a
key positive. We maintain our estimates for now and continue to rate the
stock as BUY with a target price of | 420.
Exhibit 1: 3G failing to have an impact
Q4FY12 Comment
Gross 3G Users mn 9
Active 3G user (%) 25
3G Active users Mn 2.25
Additional ARPU from 3G Usage | 200
Additional revenue from 3G Users | crore 120
3G has not been successful thus
far in India accounting for only |
120 crore of Bharti's quaterly
revenue as compared to a quaterly
mobility revenue of ~ | 10000
crore
Source: Company, ICICIdirect.com Research
O u t l o o k & V a l u a t i o n
This acquisition may not translate into revenue growth in the near future
but equips Bharti Airtel to better capitalise on the data growth
opportunity. We believe data revolution is still some years away in India
but gaining access to key markets of Delhi and Mumbai is an important
step since both these cities would have the largest takers of 4G services.
We have not factored in the financial implications from this acquisition
and have kept our estimates unchanged. The stock is trading at attractive
valuations at 13.1x one year forwards EPS as compared to last three
years average of 23.1x. However, the regulatory overhang may keep the
stock subdued till more clarity emerges. We recommend BUY on Bharti
Airtel with a DCF based target price of | 420.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_BhartiAirtelQualcomm_EventUpdate.pdf
B h a r t i a c q u i r e s 4 9 % s t a k e i n Q u a l c o m m …
Bharti Airtel has announced the acquisition of a 49% stake in Qualcomm,
which has BWA spectrum of 20 MHz each in Delhi, Mumbai, Haryana and
Kerala. Bharti has already launched 4G services in Kolkata and Bangalore
and also owns spectrum in Punjab and Maharashtra. The company
bought 13% of the stake from each of Tulip Telecom and GTL while the
remaining 23% was bought through fresh equity. The deal size is $165
million (~| 900 crore) and the complete ownership is expected to be
transferred by the end of 2014. We do not see revenue potential from the
acquisition immediately as 3G itself has not lived up to its expectation
even after a year of its launch. However, for the long term, it remains a
key positive. We maintain our estimates for now and continue to rate the
stock as BUY with a target price of | 420.
Exhibit 1: 3G failing to have an impact
Q4FY12 Comment
Gross 3G Users mn 9
Active 3G user (%) 25
3G Active users Mn 2.25
Additional ARPU from 3G Usage | 200
Additional revenue from 3G Users | crore 120
3G has not been successful thus
far in India accounting for only |
120 crore of Bharti's quaterly
revenue as compared to a quaterly
mobility revenue of ~ | 10000
crore
Source: Company, ICICIdirect.com Research
O u t l o o k & V a l u a t i o n
This acquisition may not translate into revenue growth in the near future
but equips Bharti Airtel to better capitalise on the data growth
opportunity. We believe data revolution is still some years away in India
but gaining access to key markets of Delhi and Mumbai is an important
step since both these cities would have the largest takers of 4G services.
We have not factored in the financial implications from this acquisition
and have kept our estimates unchanged. The stock is trading at attractive
valuations at 13.1x one year forwards EPS as compared to last three
years average of 23.1x. However, the regulatory overhang may keep the
stock subdued till more clarity emerges. We recommend BUY on Bharti
Airtel with a DCF based target price of | 420.
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