bharti airtel_ india mobile broadly in-line; africa drags yet again– detailed report

7/23/2019 Bharti Airtel_ India Mobile Broadly in-line; Africa Drags Yet Again– Detailed Report

http://slidepdf.com/reader/full/bharti-airtel-india-mobile-broadly-in-line-africa-drags-yet-again-detailed 1/24

9/29/2015 Bharti Airtel: India mobile broadly in-line; Africa drags yet again– Detailed Report

http://www.motilaloswal.com/site/rreports/HTML/635658973278954724/index.htm

29 April 2015

4QFY15 Results Update | Sector: Telecom

Bharti AirtelBSE SENSEX

27,396

Bloomberg

Equity Shares (m)

M.Cap. INR b/USD b

52‐Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val INRm/Vol ‘000

Free float (%)

S&P CNX

8,286

BHARTI IN

3,997.4

1,599/25.7

426/304

7/‐4/‐2

1867/5032

34.6

CMP: INR401

TP: INR460 (+15%) Buy

India mobile broadly in‐line; Africa drags yet again4QFY15 EBITDA marginally below estimates: BHARTI’s 4QFY15 consolidated

EBITDA grew 10% YoY and 3.4% QoQ to INR80.5b (our estimate: INR81.7b). While

India mobile EBITDA performance continued to remain strong, growth at the

consolidated level was dragged down by sharp declines in Africa and enterprise

business. Revenue grew 3.6% YoY but declined 0.9% QoQ to INR 230.2b (our

estimate: INR239.6b). Proforma PAT increased 18% YoY but declined 18% QoQ to

INR14.15b (our estimate: INR19.16b). Reported PAT of INR12.55b included

INR1.59b exceptional net loss primarily related to restructuring activities.

India mobile ‐ Continued strong EBITDA growth; voice RPM under pressure: India

mobile revenue grew 11% YoY/2% QoQ to INR134.1b. EBITDA grew 23% YoY/6%

QoQ to INR51.7b (our estimate: INR52.2b). Mobile traffic grew ~5% YoY for fifth

consecutive quarter while voice RPM declined 2.5% YoY (3.9% QoQ). Excl. impact

of reduction in termination charges, we estimate voice RPM decline of ~2.5% QoQ.

Data revenue grew 10% QoQ (17.6% contribution; 12% traffic growth).

Sharp decline in Africa performance: Africa EBIDTA declined 14% QoQ to

USD207m (our estimate: USD233m). Revenue declined ~9% QoQ, impacted by

~8% revenue‐weighted currency depreciation. Bharti has significantly stepped up

capex in Africa with FY15 capex up ~70% YoY to USD1.07b.

Net debt stable; significant ramp‐up in capex: Net debt remained largely stable

QoQ at INR668b. Consolidated capex stood at ~INR65b (28% capex/sales). FY15

capex stood at USD3.06b (vs revised guidance of USD2.6‐2.8b), up 75% YoY.EBITDA estimates largely unchanged: Our EBITDA estimates are largely

unchanged. We expect 11% consolidated EBITDA CAGR over FY15‐17E. BHARTI

trades at prop. EV/EBITDA of 7.3x FY16E. Maintain Buy with a target price of

Financials & Valuation (INR Billion)

Y/E Mar

Net Sales

EBITDAAdj.

fiAdj. EPS

Adj. EPS Gr

BV/Sh (INR)

RoE (%)

RoCE (%)

Div. Payout

Valuations

P/E (x)

P/BV (x)

EV/EBITDA

Div. Yield (%)

30.8

2.4

7.5

0.6

24.1

2.2

7.3

0.7

31.1

2.1

6.5

0.6

2015 2016E 2017E

920

51.8

13.0

84.9

7.9

6.6

20.0

999 1,090

66.4

16.6

28.0

9.5

6.6

16.2

51.4

12.8

‐22.6

6.8

5.7

19.6

312.6 351.6 382.2

167.1 182.6 194.2





INR460 based on 6.5x 1‐yr fwd EV/EBITDA for India (ex towers), 4x EV/EBITDA for

Africa, and 15% discount vs TP for Bharti Infratel. We await management

commentary on significant step up in capex intensity as well as plans for further

expansion of data networks.

Estimate change

TP change

Rating change

Shobhit Khare ([email protected]); +91 22 3982 5428Investors are advised to refer through disclosures made at the end of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional‐Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Bharti Airtel

India & South Asia EBITDA up 7% QoQ

India & South Asia revenue grew 2% QoQ to INR170.2b (v/s our estimate of

INR173.5b).

EBITDA grew 7% QoQ to INR67.6b (v/s our estimate of INR67b).

EBITDA margin improved 160bp QoQ to 39.7% (v/s our estimate of 38.6%), led





by margin expansion in mobile, telemedia, and passive infrastructure segments.

India Mobile: EBITDA up 6% QoQ

Mobile revenue increased ~11% YoY and ~2% QoQ to INR134.1b (est of

INR136.9b).

Mobile EBITDA grew ~23% YoY and ~6% QoQ to INR51.7b (est of INR52.2b).

EBITDA margin improved ~360bp YoY and ~150bp QoQ to 38.6%.

Blended RPM increased 5.6% YoY but declined 2.4% QoQ to 47.5p. Voice RPM

declined 2.5% YoY and 3.9% QoQ to 36.2p.

Mobile traffic grew ~5% YoY and ~3.9% QoQ to 278b minutes, marginally above

our estimate of 275b minutes.

Data continued to grow strongly with traffic growth of 12% QoQ and data

revenue growth of 10% QoQ. Data contribution increased to 17.6% of revenue

in 4QFY15 from 16.2% in 3QFY15.

MOU per subscriber declined 4% YoY to 418 minutes (in line).

Mobile ARPU increased 1% YoY but declined 2% QoQ to INR198 (vs est of

INR206).

Blended monthly churn declined QoQ to 2.5%.

Africa: Currency depreciation continues to drag performance

Africa revenue declined ~9% QoQ to USD1,000m (v/s est of USD1,086m).

EBITDA declined 14% QoQ to USD207m implying EBITDA margin of 20.7% vs our

estimate of 21.5%.

Net loss increased 35% QoQ to USD183 led by forex loss

Total minutes increased 2% QoQ to 31b but RPM declined 11% QoQ.

Subscriber base increased 2% QoQ to 76.3m.

Net debt at INR668b; continued strong momentum in 3G site additions

Net debt remained largely flat QoQ at INR668b. 4QFY15 consolidated capex was

~INR65b (28% capex/sales) while FY15 capex stood at ~INR187b (20%

capex/sales).

While 2G site additions improved QoQ to ~3,600, 3G sites additions accelerated

to ~7,000.





29 April 2015 2

Bharti Airtel

Story in Charts

Exhibit 1: India mobile KPIs broadly in‐line with estimates

M ob il e A RP U ( IN R) M ob il e M OU ( mi ns ) M ob il e R PM ( p)

47.2

48.6

47.5

50.0

47.5

45.0

42.5

40.0

Source: Company, MOSL





Exhibit 2: Bharti India: YoY mobile traffic growth (%)

16

14

109

8

10 10

8 8

Exhibit 3: Bharti India: Mobile RPM trend (incl data)

YoY RPM (%)

1.87

Mobile RPM (INR)

7 2

76

5 5 5 5 5

51.17

‐21‐ 20 ‐ 18 ‐ 24 ‐ 17 ‐ 17 ‐ 17 ‐ 17 ‐ 1 ‐ 3

0.930.77

0.640.53 0.44 0.44 0.42 0.44 0.47 0.49 0.51

1.54

5

Source: Company, MOSL Source: Company, MOSL

Exhibit 4: Bharti India: Mobile data traffic

Data traffic (b MB)

25%

26%21%

14%

20 24 27 34

23%

16%

QoQ growth (%)

20% 19% 22%

14%12%

87

Exhibit 5: Bharti India: Data revenue contribution and ARMB

Data revenue per MB (p)

3532

4%

31

7%

11% 12%

7% 9% 10%

30

Data revenue (% of wireless)

29 29 30 28 28 27 27 27

5% 6% 18%14% 16%

13 16 39 47 56 68 77






29 April 2015 3

Bharti Airtel

Exhibit 6: Bharti India: Mobile churn rate per month (%)

7.27.9

8.8 8.8 8.5

5.9

3.2 3.2 3.22.7 2.4 2.7 3.1 2.7 2.5

7

5 ‐2

‐21

‐4‐6

7

Exhibit 7: Bharti vs Idea: QoQ India mobile traffic growth (%)

Bharti ‐ QoQ growth

9 8

5

54

5‐2

35

2

3

‐3

Idea ‐ QoQ growth

9

5 54

4

1

‐2

2

‐3

1

8

6.4

4


Exhibit 8: India mobile revenue and EBITDA margin

India mobile revenue (INR b)

34.2 33.8 33.5

Exhibit 9: Africa revenue and EBITDA margin

38.6EBITDA margin (%)

34.9

34.1

36.5

37.1

Africa mobile revenue (USD m) EBITDA margin (%)

33.7

29.930.729.230.6

34.032.4

36.9

27.827.126.7 26.726.5 26.9 25.826.2 25.8 25.4 25.325.2

24.323.6

21.9

20.7






Exhibit 10: Bharti: Mobile cell site base and quarterly

additions

Cellsites ('000) Sites added ('000)

Exhibit 11: Consolidated net debt and net debt/EBITDA

Net Debt (INR b) Net Debt/EBITDA (x)

5.1

1.9

0.9 0.9 1.0 3.42.0 2.3

1.00.7

1.7

1.71.1

1.4

3.6

1.62.77

2.63

2.61 2.582.42 2.27

2.84 2.99 2.09

2.05 1.87

2.02 2.07

2.53 2.26 2.15


29 April 2015 4

Bharti Airtel

Bharti Airtel: SOTP based on FY17

Proportionate





EBITDA(INR b)

India business (excl. towers)

Tower business (15% discount to fair value)

Africa business

Less net debt

Total Value

Shares o/s (b)

CMP

Upside (%)

284

65

Ownership EBITDA(INR b)

100% 284

72%

90% 59

EV/EBITDA

6.5

4.0

Fair value(INR b)

1,847

545

235

801

1,826

Value/Sh

462

136

59

200

460

400

15

Source: MOSL

4.00





29 April 2015 5

Bharti Airtel

Bharti Airtel ‐ Consolidated Segment wise Summary as per IFRS (INR m

4QFY14* 3QFY15* 4QFY15* YoY% QoQ% 4QFY15E

136,909

11,547

16,986

14,259

11,838

68,441

‐20,338

239,642

52,155

v/s Est (%)

‐2.0

‐2.2

4.8

‐5.2

‐9.0

‐9.2

‐4.0

‐0.8

Revenue

Mobile 120,385 131,635 134,135 11.4 1.9

Telemedia 10,242 11,171 11,288 10.2 1.0

Enterprise 16,305 16,177 17,805 9.2 10.1

Passive Infrastructure 13,061 13,692 13,518 3.5 ‐1.3

Others (incl South Asia) 6,132 10,712 10,769 75.6 0.5

Africa 75,111 68,276 62,153 ‐17.3 ‐9.0

Eliminations ‐19,043 ‐19,492 ‐19,513 2.5 0.1

Consolidated Revenue 222,193 232,171 2 30,155 3.6 ‐0.9

EBITDA

Mobile 42,147 48,790 51,744 2 2.8 6.1





4,690

3,719

6,841

1,023

14,686

‐1,400

81,713

38.1

40.6

21.948.0

21.5

34.1

40,635

41,078

737

9,324

32,491

12,725

39.2

19,766

60419,162

10.1

‐17.2

‐1.1

108.1

‐12.2

‐1.5

48bps

514bps

‐460bps208bps

‐70bps

88bps

‐5.5

2.5

231.2

108.0

‐22.6

‐16.2

3bps

‐26.7

‐43.4‐26.2

Telemedia 3,816 4,381 5,165 35.4 17.9

Enterprise 3,661 3,542 3,079 ‐15.9 ‐13.1

Passive Infrastructure 6,340 6,525 6,766 6.7 3.7

Others (incl South Asia) 431 1,003 2,129 394.0 112.3

Africa 18,145 14,953 12,901 ‐28.9 ‐13.7

Eliminations ‐1,474 ‐1,337 ‐1,279 ‐ 13.2 ‐4.3

Consolidated EBITDA 73,066 77,857 80,505 10.2 3.4

EBITDA margin (%)

Mobile 35.0 37.1 38.6 357bps 151bps

Telemedia 37.3 39.2 4 5.8 850bps 654bps

Enterprise 22.5 21.9 17.3 ‐516bps ‐460bpsPassive Infrastructure 48.5 47.7 50.1 151bps 2 40bps

Africa 24.2 2 1.9 20.8 ‐340bps ‐114bps

Consolidated EBITDA margin 32.9 33.5 35.0 209bps 144bps

Depreciation and amortization 39,444 38,015 38,401 ‐2.6 1.0

Operating income 33,622 39,842 42,104 25.2 5.7

Other income and share of JV/Associate 1,673 1,727 2,442 46.0 41.4

Net finance cost 9,911 10,450 19,391 95.7 85.6

Proforma Profit Before Taxes 25,384 31,119 25,155 ‐0.9 ‐19.2

Proforma Tax 13,306 13,145 10,668 ‐19.8 ‐18.8

Effective Tax Rate (%) 52.4 42.2 42.4 ‐1001bps 17bps

Proforma Profit After Tax 12,078 17,974 14,487 19.9 ‐19.4

Proforma Minority Interest 128 684 342 167.2 ‐50.0Proforma Net Profit 11,950 17,290 14,145 18.4 ‐18.2

#4QFY14/3QFY15/4QFY15 numbers adjusted for exceptional expense of INR2.3b/INR2.93b/INR1.59b on net basis


India Mobile: Operating Metrics

India ‐ Wireless KPIs

Wireless traffic (b min)

RPM (p)

ARPU (INR)

MOU (min)

Monthly churn (%)

Voice RPM (p)

Non‐voice revenue contribution

Data revenue contribution

4QFY14

265

44.9

196

437

2.4

37.2

17.4

11.5

3QFY15

267

48.6

202

416

2.7

37.7

22.6

16.2

4QFY15

278

47.5

198

418

2.5

36.2

23.7

17.6

YoY%

4.9

5.6

1.0

‐4.3

9bps

‐2.5

630bps

617bps

QoQ%

3.9

‐2.4

‐1.9

0.5

‐14bps

‐3.9

111bps

137bps

4QFY15E

275

49.2

206

418

v/s Est (%)

1.1

‐3.6

‐3.6

0.0






29 April 2015 6

Bharti Airtel

Bharti Africa: Quarterly Performance (USDm)

Revenue

EBITDA

EBITDA margin (%)

Depreciation and amortization

EBIT

Net finance cost

Profit Before Taxes

Total Tax

Profit After Tax (before minorities)

Minority Interest

Net Profit

Bharti Africa: KPIs

Mobile Subs (m)

Mobile ARPU (USD/month)

Total Minutes of Use (b mins)

Minutes of Use/Sub/Month

Effective Mobile RPM (US Cents)

4QFY14

1,145

290

25.3

226

64

188

‐124

68

‐192

‐22

‐170

3QFY15

1,103

241

21.9

190

51

167

‐115

41

‐156

‐20

‐136

4QFY15

1,000

207

20.7

176

31

249

‐218

‐5

‐213

‐30

‐183

YoY%

‐12.6

‐28.4

‐456bps

‐22.0

‐51.1

32.8

75.9

‐107.4

11.1

36.4

7.8

QoQ%

‐9.4

‐14.0

‐112bps

‐7.2

‐39.3

49.5

89.0

‐112.2

36.2

47.7

34.5

4QFY15E

1,086

233

21.5

196

37

113

‐76

42

‐118

‐30

‐88

v/s Est (%)

‐8.0

‐11.0

‐71bps

‐10.0

‐16.4

120.7

188.1

‐111.8

80.6

0.0

108.2

69.4

5.5

28.2

136

4.1

74.6

5.1

30.4

140

3.6

76.3

4.4

31.0

137

3.2

9.8

‐19.8

10.3

1.2

‐20.8

2.2

‐13.0

2.3

‐1.9

‐11.4

76.7

4.8

31.1

137

3.6

‐0.6

‐7.5

‐0.3

0.1

‐9.5






29 April 2015 7

9/29/2015 Bh ti Ai t l I di bil b dl i li Af i d t i D t il d R t





Bharti Airtel

Key assumptions and value drivers

Mobile segment

Mobile ‐ India

Subs (m)

YoY (%)

Average subs (m)

YoY (%)

Net adds per month (m)

YoY (%)

Total mobile traffic (b min)

YoY (%)

ARPU (INR/month)

YoY (%)

MOU

YoY (%)

Mobile RPM (INR)

YoY (%)

Mobile EBITDA margin (%)

Mobile Capex (INR b)

Mobile Capex/sales (%)

Mobile ‐ Africa

Subs (m)

YoY (%)

Netadds per month (m)

ARPU (USD/month)

YoY (%)

Capex (USD b)

Capex/Sales (%)

EBITDA margin (%)

FY10

128

36

111

42

2.8

6

610

28

243

‐25

459

‐10

0.53

‐17

38.7

34

10

FY11

162

27

145

31

2.9

3

792

30

201

‐17

455

‐1

0.44

‐17

34.7

59

16

44

5

0.2

7.3

0.9

24

25

FY12

181

12

172

19

1.6

‐45

889

12

188

‐6

431

‐5

0.44

‐1

33.9

32

8

53

20

0.7

7.1

‐2

1.5

37

27

FY13

188

4

185

8

0.6

‐64

968

9

185

‐1

436

1

0.42

‐3

30.1

57

13

64

20

0.9

6.3

‐11

0.7

16

26

FY14

206

9

197

7

1.4

150

1,030

6

194

5

436

0

0.44

5

33.8

42

9

69

9

0.5

5.6

‐11

0.6

14

26

FY15

226

10

216

10

1.7

18

1,080

5

198

2

417

‐4

0.47

7

37.3

93

18

76

10

0.6

5.0

‐10

1.1

24

23

FY16E

236

5

231

7

0.9

‐50

1,151

7

201

2

415

0

0.49

2

39.7

88

16

FY17E

245

4

241

4

0.7

‐16

1,211

5

213

6

419

1

0.51

5

38.8

86

14

86 95

13 11

0.8 0.8

4.7 4.5

‐6 ‐4

0.9 1.0

20 20

21 21


9/29/2015 Bharti Airtel: India mobile broadly in line; Africa drags yet again Detailed Report





29 April 2015 8

Bharti Airtel

Business Mix

Revenue (INR b)

Mobile

Telemedia

Enterprise

Passive Infrastructure

Others (incl South Asia)

Africa

Total revenue

Eliminations and others

FY10

331

34

45

71

6

0

487

‐68

FY11

363

36

41

86

10

131

667

‐72

FY12

403

37

45

95

16

198

794

‐80

FY13

431

36

53

50

32

240

842

‐73

FY14

467

39

63

51

41

273

934

‐77

FY15

520

44

67

54

43

269

998

‐77

FY16E

566

50

73

60

49

286

1083

‐84

FY17E

623

54

77

67

54

307

1183

‐92




9/29/2015 Bharti Airtel: India mobile broadly in-line; Africa drags yet again Detailed Report


Consolidated revenue

YoY%

EBITDA (INR b)

Mobile

Telemedia

Enterprise

Passive Infrastructure


Africa

Total EBITDA

Eliminations and others

Consolidated EBITDA

YoY%

Capex (INR b)

Mobile

Telemedia

Enterprise


Passive infrastructure

Africa

Consolidated capex

YoY%

Capex/Sales (%)

418

13

128

15

13

25

‐10

0

170

‐2

168

11

34

10

12

16

12

0

83

‐41

20

595

42

126

16

10

32

‐10

29

202

‐3

200

19

59

8

4

14

23

36

143

71

24

715

20

137

16

8

36

‐9

53

240

‐3

237

19

32

8

2

9

14

76

140

‐2

20

769

8

130

15

9

23

‐2

63

236

‐4

233

‐2

57

3

1

11

11

39

122

‐13

16

857

11

158

15

14

23

2

71

282

‐5

278

19

42

4

1

13

8

38

106

‐13

12

920

7

194

18

14

26

5

61

318

‐5

313

13

93

5

1

12

10

65

187

76

20

999

9

225

24

15

28

6

60

358

‐6

352

12

1090

9

242

26

16

33

7

65

389

‐7

382

9

88 86

7 8

1 1

17 17

11 10

57 61

181 183

‐3 1

18 17





9/29/2015 Bharti Airtel: India mobile broadly in line; Africa drags yet again Detailed Report


29 April 2015 9

Bharti Airtel

Summary of estimate change

FY15

Revenue (INRb)

Old

New

Change (%)

EBITDA (INRb)

Old

New

Change (%)

EBITDA margin (%)

Old

New

Change (bp)

Depreciation (INRb)

Old

New

Change (%)

Net finance cost (INRb)

Old

930

920

‐1.0

314

313

‐0.4

33.7

34.0

22bps

158

155

‐2

38

FY16E

1011

999

‐1.2

348

352

0.9

34.4

35.2

74bps

178

179

0

43

FY17E

1104

1090

‐1.3

379

382

0.8

34.3

35.1

72bps

208

209

1

57




y g y g p


NewChange (%)

Tax rate (%)

Old

New

Change (bp)

Net Profit (INRb)

Old

New

Change (%)

EPS (INR)

Old

New

Change (%)

4826

48

50

137bps

58

52

‐11.3

14.6

13.0

‐11.3

43‐1

49

48

‐68bps

63

66

4.8

605

54

54

20bps

52

51

‐0.6

15.8 12.9

16.6 12.8

4.8 ‐0.6


29 April 2015 10





Bharti Airtel

Financials and valuations

Income Statement

Y/E March

Revenues

Change (%)

Total Expenses

EBITDA

% of Gross Sales

Depn. & Amortization

EBIT

Net finance cost

Other Income

PBT

Tax

Rate (%)

Minority Interest

Adjusted PAT

Change (%)

E: Inquire Estimates

2011

594,672

42.1

395,007

199,664

33.6

102,066

97,598

21,813

998

76,783

17,790

23.2

‐1,475

60,468

‐32.6

2012

714,507

20.2

477,385

237,122

33.2

133,680

103,442

38,185

‐73

65,184

22,602

34.7

‐13

42,595

‐29.6

2013

769,045

7.6

536,466

232,579

30.2

148,148

84,431

40,085

3,506

47,852

25,183

52.6

‐88

22,757

‐46.6

2014

857,460

11.5

579,690

277,770

32.4

156,496

121,274

48,379

5,750

78,644

48,450

61.6

2,467

27,727

21.8

2015

920,394

7.3

607,779

312,614

34.0

154,713

157,901

48,464

‐838

108,599

53,904

49.6

2,860

51,835

86.9

2016E

999,451

8.6

647,898

351,553

35.2

178,903

172,651

42,777

4,844

134,718

65,188

48.4

3,167

66,364

28.0

(INR Million)

2017E

1,090,301

9.1

708,094

382,207

35.1

209,091

173,116

59,914

5,871

119,073

64,551

54.2

3,167

51,355

‐22.6

2018E

1,193,147

9.4

765,473

427,674

35.8

220,583

207,091

57,360

6,636

156,368

75,944

48.6

3,167

77,257

50.4

Balance Sheet

Y/E March

Share Capital

Add. Paid up Capital

Reserves

Net Worth

Loans

Minority Interest

Other Liabilities

Deferred Tax Liability

Capital Employed

2011

18,988

56,499

412,181

487,668

616,708

28,563

28,078

18,572

1,179,589

2012

18,988

56,499

430,626

506,113

690,232

27,695

31,920

18,861

1,274,821

2013

18,988

56,499

427,729

503,216

667,363

40,886

36,166

22,300

1,269,932

2014

19,987

123,456

454,117

597,560

758,958

42,102

47,247

26,894

1,472,761

2015

19,987

123,456

476,121

619,564

803,556

48,525

41,769

21,358

1,534,772

2016E

19,987

123,456

534,718

678,161

1,015,387

51,792

43,658

21,852

1,810,850

(INR Million)

2017E

19,987

123,456

577,962

721,405

1,012,259

54,958

45,815

22,506

1,856,943

2018E

19,987

123,456

638,007

781,450

856,040

58,124

48,139

23,223

1,766,976





Gross Block

Less : Depreciation

Net Block

Other Non‐Current Assets

Curr. Assets

Inventories

Debtors

Cash & Bank Balance

Short‐term investments

Other Current Assets

Curr. Liab. & Prov.

Creditors

Other Current Liabilities

Net Curr. Assets

Appl. of Funds

E: MOSL Estimates

1,599,377

310,634

1,288,743

64,244

112,077

2,139

54,929

9,575

6,968

38,466

285,475

249,737

35,738

‐173,398

1,179,589

1,776,560

440,740

1,335,820

86,711

148,084

1,308

63,735

20,300

18,934

43,807

295,795

243,461

52,334

‐147,710

1,274,821

1,923,675

637,011

1,286,663

108,685

196,906

1,109

67,824

16,078

65,546

46,349

322,321

273,147

49,174

‐125,416

1,269,932

2,085,053

678,908

1,406,145

165,429

260,198

1,422

62,441

49,808

98,606

47,921

359,011

299,258

59,753

‐98,813

1,472,761

2,401,065

899,625

1,501,440

203,108

253,270

1,339

67,252

11,719

124,100

48,860

423,047

361,013

62,034

‐169,776

1,534,772

2,873,558

1,101,704

1,771,855

209,688

279,107

1,437

74,814

25,948

125,061

51,847

449,799

387,890

61,909

‐170,692

1,810,851

3,106,977

1,332,443

1,774,535

215,435

351,804

1,565

82,736

104,947

106,762

55,794

484,830

422,631

62,199

‐133,026

1,856,944

3,286,580

1,581,417

1,705,162

221,302

364,824

1,709

91,133

104,947

106,762

60,273

524,312

461,782

62,529

‐159,488

1,766,976

29 April 2015 11

Bharti Airtel

Financials and valuations

Ratios

Y/E March

Basic (INR)

2011 2012 2013 2014 2015 2016E 2017E 2018E





EPS

Cash EPS

Book Value

DPS

Payout %(Incl.Div.Taxes)

Valuation (x)

P/E

Cash P/E

EV/EBITDA

EV/Sales

Price/Book Value

Dividend Yield (%)

Profitability Ratios (%)

RoE

RoCE

Turnover Ratios

Debtors (Days)

Asset Turnover (x)

Leverage Ratio

Net Debt/Equity (x)

15.9

42.8

136.1

1.0

6.3

11.2

46.5

140.7

1.1

10.0

6.0

45.0

143.4

0.6

10.0

7.0

46.6

161.8

2.1

30.4

13.0

51.7

167.1

2.6

20.0

16.6

61.4

182.6

2.7

16.2

12.8

65.2

194.2

2.5

19.6

19.3

74.5

210.1

3.1

16.1

25.1

9.3

10.6

3.6

2.9

0.2

35.6

8.6

9.4

3.0

2.8

0.3

57.0

8.6

8.5

2.6

2.5

0.5

30.8

7.7

7.5

2.5

2.4

0.6

24.1

6.5

7.3

2.5

2.2

0.7

31.1

6.1

6.5

2.2

2.1

0.6

20.7

5.4

5.4

1.9

1.9

0.8

12.6

8.7

8.1

6.2

4.2

4.3

4.7

5.0

7.9

6.6

9.5

6.6

6.8

5.7

9.6

7.3

34

0.78

33

0.65

32

0.71

27

0.79

27

0.80

27

0.78

28

0.78

28

0.89

1.2 1.2 1.1 1.0 1.0 1.2 1.0 0.8

Cash Flow Statement

Y/E March

Op.Profit/(Loss) bef Tax

Other Income

Interest Paid

Direct Taxes Paid

(Inc)/Dec in Wkg. Cap.

CF from Op.Activity

(inc)/Dec in FA + CWIP

(Pur)/Sale of Investments

CF from Inv.Activity

Issue of Shares

Inc/(Dec) in Debt

2011

199,664

998

‐21,813

‐37,970

120,819

261,699

‐848,290

45,451

‐802,839

9,624

514,810

2012

237,122

‐73

‐38,185

‐25,730

‐18,280

154,854

‐180,757

‐11,990

‐192,748

‐19,791

73,524

2013

232,579

3,506

‐40,085

‐31,431

21,448

186,018

‐98,991

‐58,141

‐157,132

‐21,242

‐22,869

2014

277,770

5,750

‐48,379

‐43,887

43,534

234,787

‐275,978

‐78,209

‐354,187

71,204

91,595

2015

312,614

‐838

‐48,464

‐55,281

‐4,989

203,043

‐250,008

‐15,049

‐265,057

‐13,854

44,598

2016E

351,553

4,844

‐42,777

‐65,172

12,523

260,972

‐449,317

‐961

‐450,278

2,355

211,831

(INR Million)

2017E

382,207

5,871

‐59,914

‐64,551

22,055

285,668

‐211,771

18,299

‐193,472

0

‐3,128

2018E

427,674

6,636

‐57,360

‐75,944

18,849

319,856

‐151,211

0

‐151,211

0

‐156,219





Other Financing ActivitiesCF from Fin.Activity

Inc/(Dec) in Cash

Add: Opening Balance

Closing Balance

961525,395

‐15,748

25,323

9,575

‐5,11348,620

10,725

9,575

20,300

11,005‐33,106

‐4,222

20,300

16,078

‐9,669153,131

33,730

16,078

49,808

‐6,81923,925

‐38,089

49,808

11,719

‐10,651203,535

14,229

11,719

25,948

‐10,069‐13,196

78,999

25,948

104,947

‐12,426‐168,646

0

104,947

104,947

29 April 2015 12

Bharti Airtel

Corporate profile: Bharti Airtel

Company description

Bharti Airtel is an integrated telecom operator with

presence in wireless, fixed‐line and broadband,

lo ng distan ce, enter pr ise, and passive

infrastructure services across India, Sri Lanka,

Bangladesh and Africa. Bharti is the largest Indian

wireless operator with revenue market share of

~31% and population coverage of 86%. Bharti is the

fourth largest wireless company globally by

subscribers.

Exhibit 19: Sensex rebased

Bharti Airtel

500

450

400

350

300

250

Sensex ‐ Rebased





Exhibit 20: Shareholding pattern (%)

Mar‐15

Promoter

DII

FII

Others

65.4

7.5

17.9

9.2

Dec‐14

65.4

7.4

17.5

9.7

Mar‐14

65.3

7.8

16.4

10.5

Exhibit 21: Top holders

Holder Name

Three Pillars Pte Ltd

Life Insurance Corporation Of India under various

Dodge and Cox International Stock Fund

Goldman Sachs (Singapore) Pte

ICICI Prudential Life Insurance Company Ltd

% Holding

5.0

4.7

1.5

1.4

1.3

Note: FII Includes depository receipts

Exhibit 22: Top management

Name

Sunil Bharti Mittal

Gopal Vittal

Designation

Chairman

Managing Director & CEO

Exhibit 23: Directors

Name

Sunil Bharti Mittal

Gopal Vittal

Rajan Bharti Mittal

Ajay Lal*

Manish Kejriwal*

Dinesh Kumar Mittal*

Craig Edward Ehrlich*

Name

Obiageli Katryn Ezekwesili*

Vegulaparanan Kasi Viswanathan*

Bernardus Johannes Maria Verwaayen*

Manoj Kohli

Tan Yong Choo

Chua Sock Koong

Sheikh Faisal Thani Al‐Thani

*Independent

Exhibit 24: Auditors

Name

S R Batliboi & Associates LLP

Chandrasekaran Associates

KPMG

R J Goel & Co

Type

Statutory

Secretarial Audit

Internal

Cost Auditor

Exhibit 25: MOSL forecast v/s consensus

EPS

(INR)

FY16

FY17

FY18

MOSL

forecast

16.6

12.8

19.3

Consensus

forecast

16.8

20.3

29.6

Variation

(%)

‐1.0

‐36.9

‐34.8





29 April 2015 13

This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company(ies) and/sector(s), if any, covered in the report and may beBharti Airteldistributed by it and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does

not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not

for public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal

recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider

whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as

up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.

Disclosures

NOTESMOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a

some companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or

its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this

material may educate investors on investments in such business. The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other

parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on the profitability of MOSt which may include earnings from investment banking and other business.

MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders,

and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary

trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing

among other things, may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position

in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation

or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with

respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations

made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report

Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as

such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set

of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of

its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is

based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions

provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or

summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to

update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way

responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time,

any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.

The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on

this report or for any necessary explanation of its contents.

Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any

compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.

Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.

Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report

MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities

mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the

report.

Motilal Oswal Securities Limited is under the process of seeking registration under SEBI (Research Analyst) Regulations, 2014.

There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities

Analyst Certification


The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will bedirectly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report The research analysts strategists or research associates principally responsible for preparation




The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will bedirectly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation

of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues

Disclosure of Interest Statement

Analyst ownership of the stock

Served as an officer, director or employee

BHARTI AIRTEL LTD

No

No

Regional Disclosures (outside India)

For U.S.

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law,

regulation or w hich would subject MOSt & its group companies to registration or licensing requirements wi thin such jurisdictions.

Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In

addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the

United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or

intended for U.S. persons.

This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional

investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major

institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the

"Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning

agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this

chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL,

and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors

Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to

accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.

In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Anosh Koppikar Kadambari Balachandran

E mai l : an os h. Kopp ik ar @m ot il al os wa l. co m E mai l : k ad am ba ri .ba lac hand ra n@ mot il al os wa l. co m

Contact : (+65)68189232 Contact : (+65) 68189233 / 65249115

Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931

For Singapore

Motilal Oswal Securities Ltd

29 April 2015Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025

Phone: +91 22 3982 5500 E‐mail: [email protected] 14

bharti airtel_ india mobile broadly in-line; africa drags yet again– detailed report

Documents