Bharti Airtel - Currency Headwind Derails Africa; Result Update Q3FY15 ::Edelweiss, report

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->

Bharti Airtel’s (Bharti) Q3FY15 revenue, at INR232.2bn, grew 1.6% QoQ versus Street’s 2.9% estimate. The disappointment was largely due to 3.3% QoQ revenue fall in USD terms in Africa. However, India business revenue jumped 2.8% QoQ in INR terms. EBITDA margin, at 33.5%, was below Street’s 33.8% estimate, again led by 175bps QoQ margin decline in Africa to 21.8%, while India business margin catapulted 52bps to 38.9%. We believe Bharti will be in a good position to capture data revenue growth given its superior spectrum footprint, although geopolitical and macroeconomic risks in Africa are a concern. The upcoming spectrum auctions will be the key monitorable event.

India: Mobile business in line, data growth continues to be robust

Operational performance of India mobile business was in line with expectation, with 4.2% QoQ revenue growth, led by 1.4% QoQ volume surge, flat voice realisation and 16.9% QoQ data revenue growth. The data revenue jump was driven by 14.2% QoQ volume growth and 2.6% QoQ realisation improvement as the company’s 3G subscriber base jumped 1.5mn QoQ to 16.9mn.

Africa: Currency depreciation takes a toll

Revenue, at USD1.1bn, fell 3.3% QoQ due to 5.2% adverse impact on account of currency movement despite 1.9% growth in constant currency. Fall in commodity prices and depreciation of EUR against USD, since many central African countries peg their currency against EUR, have led to sharp depreciation in local currencies. Some of the impact may continue in Q4FY15 as well. EBITDA margin fell 175bps QoQ to 21.8%.

LINK
https://www.edelweiss.in/research/Bharti-Airtel--Currency-Headwind-Derails-Africa;-Result-Update-Q3FY15/28259.html