visit note bharti airtel - static...
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Edelweiss Securities Limited
We attended Bharti Airtel’s (Bharti) analyst meet held at Uganda, Africa. Key takeaways: 1) rationalisation of network, leveraging improvement in coverage and capacity with launch of 3G in 900MHz band, and rationalisation of SG&A costs has led to margin improvement, and is sustainable; 2) higher tower sharing by operators is necessary for further improvement in margins; 3) Bharti is targeting increased bundle sales to improve ARPUs; 4) capex is likely to increase to USD600-800mn for investments towards 3G/4G expansion; 5) opportunity in Africa remains strong with favourable demographics, high urbanisation, low mobile penetration; and 6) Bharti is in the fray for acquiring Etisalat’s Nigerian operations, which on successful operations will boost EBITDA due to synergies. Maintain ‘BUY’ with TP of INR625 on industry consolidation that will trigger structural improvement in profitability.
Cost rationalisation to drive margins; capex to inch up
In past 2 years, Bharti’s Africa operations reported 2.4% revenue CAGR while costs
declined at 7.0% CAGR, primarily owing to lower SG&A and network costs. The
company had focused on improving opex productivity through correction in recharge
margins, SIM/RCV cost reduction, P&L’s focus on each retail store, etc. Bharti has also
launched 3G in 900MHz band in 10 countries leading to enhanced network coverage
and capacity. This led to meagre 439 tower addition in past 1 year with decline in TTM
capex to USD299mn from USD734mn YoY. However, Bharti plans to launch LTE in 4
new countries, which will drive up capex to USD600-800mn.
Outlook and valuations: Opportunities aplenty; maintain ’BUY’ Bharti acknowledges that its ‘minutes factory’ model has not worked well in Africa and
that it is now adopting different strategies to drive revenue growth and profitability in
different markets. The company sees plenty of opportunities in Africa with favourable
demographics, low mobile penetration & population covered, abundant spectrum for
high throughput/site, and mobile money potential. We remain positive on the stock on
improving Africa performance and consolidation in India. At CMP, the stock is trading
at 8.9x FY19E EV/EBITDA. We maintain ‘BUY/SO’ with DCF-based TP of INR625.
VISIT NOTE
BHARTI AIRTEL This time for Africa
COMPANYNAME
EDELWEISS 4D RATINGS
Absolute Rating BUY
Rating Relative to Sector Outperform
Risk Rating Relative to Sector Low
Sector Relative to Market Underweight
MARKET DATA (R: BRTI.BO, B: BHARTI IN)
CMP : INR 533
Target Price : INR 625
52-week range (INR) : 565 / 289
Share in issue (mn) : 3,997.4
M cap (INR bn/USD mn) : 2,129 / 33,081
Avg. Daily Vol.BSE/NSE(‘000) : 7,333.9
SHARE HOLDING PATTERN (%)
Current Q1FY18 Q4FY17
Promoters *
67.1 67.1 67.1
MF's, FI's & BK’s 9.9 10.3 11.2
FII's 16.4 16.2 15.2
Others 6.6 6.4 6.5
* Promoters pledged shares (% of share in issue)
: NIL
PRICE PERFORMANCE (%)
Stock Nifty EW
Telecommunication Index
1 month 5.8 0.0 (0.7)
3 months 32.2 3.2 17.6
12 months
60.5 24.9 35.6
Sandip Agarwal +91 22 6623 3474
Pranav Kshatriya +91 22 4040 7495
India Equity Research| Telecom
December 11, 2017
Financials (INR mn)
Year to March FY16 FY17E FY18E FY19E
Net revenue 965,320 954,684 893,940 986,126
EBITDA 339,841 353,299 320,648 368,729
Adjusted Profit 51,246 45,602 26,992 36,935
Adjusted diluted EPS (INR) 12.8 11.4 6.8 9.2
EPS Growth (%) 17.9 (11.0) (40.8) 36.8
Diluted P/E (x) 41.6 46.7 78.9 57.7
EV/EBITDA (x) 9.0 9.2 10.3 8.9
ROAE (%) 8.0 6.9 4.6 5.1
Telecom
2 Edelweiss Securities Limited
Focusing on one country at a time
Bharti had forayed into Africa with the strategy of replicating its ‘minutes factory’ model
there, banking on outsourcing to reduce costs and lowering prices to fuel elasticity, like in
India. However, every African country has different market dynamics as well as
demography, income level, urbanisation, regulatory environment, etc. Hence, Bharti failed
to reduce costs with outsourcing as anticipated as consumers also did not increase usage
with a fall in tariff, a la India.
Table 1: African countries have significantly varying characteristics
Source: Company, Edelweiss research
The company has since rejigged management and appointed Raghunath Mandava as MD &
CEO, Airtel Africa and also realigned its strategy. On sales side, it has eased price war to
improve realisation and is focusing on increasing bundle sales for enhanced ARPUs. The
company has built a simplified app to smoothen KYC issues and from our field visit we
gathered that customer onboarding in Uganda, including KYC, is done in 5-10 minutes.
It has also dawned on Bharti that it is better to have a unique strategy for every country
given their unique characteristics. Management has also enhanced powers of each
operating country unit - Africa management focuses on rigorous monthly planning and
meeting with each operating unit. The company has also carried out organisational
restructuring in some of the operating units to facilitate this transition with Africa
headquarter focusing on collaboration in each unit.
Network optimisation rationalising capex
Bharti has launched 3G in 900MHz band (U900) in 10 out of 14 countries which has seen
higher bandwidth being available to more customers. Typically, U900 cell radius is almost
twice the coverage of U2100 cell and ~50% higher than GSM900. Also, U900 has better in-
building penetration versus U2100. This has led to increased coverage area making some of
the sites redundant, thus, optimising capex and reducing network opex. Consequently, TTM
Country Population
(mn) GDP (USD bn)
GDP per capita
(PPP)
Area
('000 sq km)
Population density
(person/sq km)
Urbanization
(%)
DRC 79 35 742 2,345 35 43%
Niger 21 7.5 907 1,267 16 19%
Malawi 18 5.4 1,084 118 192 16%
Madagascar 25 10 1,396 587 43 35%
Uganda 42 26 1,714 241 207 16%
Rwanda 11 8 1,774 26 483 29%
Chad 14 10 1,846 1,284 12 23%
Tanzania 50 47 2,583 947 63 36%
Kenya 49 71 2,925 580 85 26%
Zambia 17 20 3,636 753 22 41%
Ghana 28 43 3,980 239 124 55%
Congo B 5 8 5,301 342 15 65%
Nigeria 186 405 5,439 924 204 48%
Gabon 2 14 16,786 268 8 87%
Seychelles 0.1 1 26,319 0 206 54%
India 1,299 2,263 2,263 3,287 445 33%
Bharti Airtel
3 Edelweiss Securities Limited
capex for Africa operations has been only USD299mn versus USD734mn YoY. The company
plans to extend U900 to 3 more countries, taking the total countries to 13. The capex is
expected to increase going ahead as Bharti is in process of launching LTE in 5 countries, but
expects peak capex to be USD600-800mn.
Table 2: Bharti African network upgrade status
Source: Company, Edelweiss research
Higher spectrum availability offset for higher network opex Bharti’s African operations spread across 14 countries cover 58% lower population than
India operations, but it is supported by 88% lower tower count. This is due to significantly
better spectrum footprint in Africa, especially in the sub-GHz band. Consequently, Bharti’s
Africa operations support ~133% higher subscribers and generate ~240% higher revenue
than India. Bharti also has strong capacity spectrum which will help increase data capacity in
the urban areas.
Table 3: Abundant spectrum availability throughout Africa
Source: Company, Edelweiss research
Country U900 LTE
Uganda a a
Zambia a a
Malawi a a
Madagascar a a
Gabon a a
Seychelles a a
Kenya a a
Congo B a Planned
Chad a Planned
Tanzania a -
Niger Planned Planned
Rwanda Planned -
Nigeria Planned Planned
DRC Planned -
800 900 1800 2100 2600 2300 Total
Seychelles 10.0 12.0 20.0 20.0 - - 62.0
Gabon 10.0 8.0 14.0 15.0 20.0 - 67.0
Congo B - 11.8 15.0 15.0 - - 41.8
Malawi - 11.6 19.8 10.0 - - 41.4
Madagascar - 11.2 24.4 10.0 - 8.5 54.1
Uganda - 10.8 15.0 20.0 10.0 - 55.8
Rwanda - 10.4 15.0 15.0 - - 40.4
Niger - 10.2 10.0 15.0 - - 35.2
Zambia - 10.0 20.0 20.0 - - 50.0
Chad - 10.0 25.0 10.0 - - 45.0
Kenya - 10.0 10.0 10.0 - - 30.0
Tanzania - 7.5 12.5 10.0 - - 30.0
DRC - 6.0 12.0 10.0 - - 28.0
Nigeria - 5.0 15.0 10.0 - - 30.0
Frequency band (MHz)Country
Telecom
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Network opex per tower in Africa stands at USD35.5k/annum with a range of 30k-
75k/annum across countries. Relatively, network opex per tower in India is a low
USD35.5k/annum. Despite significantly high network opex, tower sharing in Africa is at 1.1x-
1.2x versus ~2x in India. There exists potential to substantially cut network if operators
adopt passive infrastructure sharing.
Table 4: Bharti’ network statistics- Africa versus India
Source: Company, Edelweiss research
Various initiatives to improve opex productivity
The new management has been focusing on cost rationalsation in SG&A and also achieved it
through recharge margin correction, SIM/ RCV cost reduction, P&L focus on each retail store,
revamping logistics, warehousing, converting USD denominated contracts into local
currency, etc. Bharti has set the target of achieving over 40% EBITDA margin in all circles
where it has RMS of over 40% and has managed to achieve targeted margins in 5 out of 8
countries. Consequently, on CC basis, SG&A expense for Africa business is down by 24.8%
YoY. We believe that the low-hanging fruit in opex productivity improvement has been
achieved and further reduction in SG&A will be gradual.
Table 5: Cost rationalization driving EBITDA expansion
Source: Company, Edelweiss research
Table 6: Higher RMS driving higher EBITDA margin
Source: Company, Edelweiss research
Particulars India Africa
Revenue per site (USD '000/annum) 46.8 159.0
Opex per site (USD '000/annum) 14.7 35.5
Subscribers per site(‘000/site) 1.7 4.0
EBITDA % <20 20-30 30-40 >40
FY16 (no. of countries) 8 4 3 0
Q2FY18 (no. of countries) 4 4 2 5
Market size
(USD mn)
Key
Telcos
Bharti's
Position
Airtel RMS
% (2016)
Key
competitors
EBITDA
range (%)
Niger 329 4 1 >40 Orange >40
Malawi 222.0 4 1 >40 TNM >40
Uganda 699 5 2 >40 MTN >40
Zambia 479 3 1 >40 MTN >40
Gabon 348 4 2 >40 Maroc >40
Congo B 375 3 2 >40 MTN 30-40
Nigeria 4,707 6 2 ~20 MTN 30-40
Seychelles 53 2 2 >40 C & W 30-40
DRC 988 6 3 20-30 Voda, Orange 20-30
Madagascar 192 3 1 >40 Orange, Telma 20-30
Chad 272 3 2 >40 Tigo 20-30
Tanzania 1,039 5 3 20-30 Vodacom, Tigo <20
Kenya 2,292 3 2 <10 Safaricom <20
Rwanda 163 3 3 10-20 MTN, Tigo -ve
Bharti Airtel
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Opportunities aplenty: Mobile banking, internet
Bharti sees vast opportunities in Africa led by favourable demographics, rising data
consumption and potential for mobile banking in absence of banking infrastructure. The
company is targeting each country with separate strategy for building the Airtel Money
network, which is crucial for success in the mobile business.
Table 7: High potential for mobile banking
Source: Company, Edelweiss research
Exploring acquisition of Etisalat’s Nigerian operations
Nigerian lenders who have taken over control of Etisalat, Nigeria had availed USD1.2bn
syndicated loan from a group of 13 local banks, but thereafter struggled to make
repayments due to a currency crisis and recession in Nigeria. The Nigerian central bank then
intervened to save the company from collapse, leading to a change in its board and
management and branding it as 9mobile. Media articles suggest that Bharti, another
operator, Globacom and Smile Telecoms, and the private equity firm, Helios Investment
Partners are interested in the deal.
Acquisition of 9mobile will help Bharti increase its subscriber market share to 35.6% and
operating leverage will enable higher EBITDA contribution.
CountryBanking
penetration %
Max. branches
by largest bank
Unique SIM
penetration
DRC 10% 90 26%
Niger 3% 16 26%
Malawi 15% 30 26%
Madagascar 5% 89 23%
Uganda 28% 73 41%
Rwanda 35% 23 52%
Chad 7% 14 30%
Tanzania 19% 60 42%
Kenya 55% 202 59%
Zambia 32% 67 53%
Congo B 15% 16 58%
Nigeria 42% 365 45%
Gabon 30% 19 69%
Seychelles 60% 8 69%
Telecom
6 Edelweiss Securities Limited
Chart 1: Nigeria GSM subscriber market share
Source: Nigerian Communications Commission, Edelweiss research
Fig. 1: Airtel branding
Source: Edelweiss research
MTN Nigeria 40%
Globacom24%
Bharti22%
Etisalat/ 9mobile
14%
Bharti Airtel
7 Edelweiss Securities Limited
Fig`. 2: Airtel money
Source: Edelweiss research
Telecom
8 Edelweiss Securities Limited
Company Description
Bharti is leading provider of telecommunication services with presence in 20 countries
representing India, Bangladesh, Sri Lanka and 17 countries in Africa. It is India’s largest
wireless operator with a pan-India mobility network spanning all 22 telecom circles. The
company has a wireless subscriber base of 282.0mn as on Sep 2017, implying wireless
subscriber market share of ~24%. The enterprise services division, along with voice, data
and video services also provides network integration, data centers, managed services,
enterprise mobility applications and digital media solutions. Investment Theme
All the telecom operators are witnessing strong data volume growth with increasing
penetration of smartphones and improved availability of 3G/4G services. The device and
content ecosystem has also improved leading to high customer awareness driving data
volume growth. However, we expect decline data realization to drive usage leading to
accelerated capex for telecom operators. Apart from data, Bharti, Vodafone and Idea are
increasing their revenue market share (RMS) as the stressed operators are losing the
subscriber base due to lower investment in the network. We believe that this consolidation
would lead to stronger subscriber base for Bharti, Vodafone and Idea.
Key Risks
Increased competition in data may impact data pricing power which may lead to lower data
revenue growth. Further escalation in competitive intensity putting pressure on the
realization would be negative. Further depreciation in African currencies would be another
source of risk.
9 Edelweiss Securities Limited
Bharti Airtel
Financial Statements
Income statement (INR mn)
Year to March FY16 FY17 FY18E FY19E
Net revenue 965,320 954,684 893,940 986,126
Direct costs 413,418 404,700 404,614 440,756
Employee costs 49,108 43,032 40,084 42,239
Other Expenses 162,953 153,653 128,593 134,401
Total operating expenses 625,479 601,385 573,291 617,397
EBITDA 339,841 353,299 320,648 368,729
Depreciation 174,498 197,730 191,642 211,756
EBIT 165,343 155,569 129,006 156,973
Add: Other income (153.00) (113.00) 2,143.75 1,424.00
Less: Interest Expense 69,135 76,974 84,328 98,571
Add: Exceptional items 21,741 (11,697) (2,289) -
Profit Before Tax 117,796 66,785 44,533 59,826
Less: Provision for Tax 59,533 34,819 23,691 30,271
Less: Minority Interest 3,552 4,416 9,852 7,134
Associate profit share 10,666 10,449 14,513 14,513
Reported Profit 65,377 37,999 25,504 36,935
Exceptional Items 14,132 (7,603) (1,488) -
Adjusted Profit 51,246 45,602 26,992 36,935
Shares o /s (mn) 3,998 3,998 3,998 3,998
Adjusted Basic EPS 12.8 11.4 6.8 9.2
Diluted shares o/s (mn) 3,998 3,998 3,998 3,998
Adjusted Diluted EPS 12.8 11.4 6.8 9.2
Adjusted Cash EPS 56.5 60.9 54.7 62.2
Dividend per share (DPS) 1.4 1.0 1.0 -
Dividend Payout Ratio(%) 29.9 20.1 17.3 12.7
Common size metrics
Year to March FY16 FY17 FY18E FY19E
Operating expenses 64.8 63.0 64.1 62.6
Materials costs 42.8 42.4 45.3 44.7
Staff costs 5.1 4.5 4.5 4.3
S G & A expenses 16.9 16.1 14.4 13.6
Depreciation 18.1 20.7 21.4 21.5
Interest Expense 7.2 8.1 9.4 10.0
EBITDA margins 35.2 37.0 35.9 37.4
Net Profit margins 5.7 5.2 4.1 4.5
Growth ratios (%)
Year to March FY16 FY17 FY18E FY19E
Revenues 5.8 (1.1) (6.4) 10.3
EBITDA 11.8 4.0 (9.2) 15.0
PBT 28.7 (43.3) (33.3) 34.3
Adjusted Profit 17.9 (11.0) (40.8) 36.8
EPS 17.9 (11.0) (40.8) 36.8
Key Assumptions
Year to March FY16 FY17 FY18E FY19E
Macro
GDP(Y-o-Y %) 7.9 6.6 6.8 7.4
Inflation (Avg) 4.9 4.5 4.0 4.5
Repo rate (exit rate) 6.8 6.3 5.8 5.8
USD/INR (Avg) 65.5 67.1 65.0 66.0
Company
India
India Subs. Base (mn) 251.2 273.6 299.6 309.2
Total Minutes (mn)-India 1,171,638 1,349,981 1,780,295 1,786,936
India MOU per subscriber 412 427 515 489
India RPM (INR) 0.5 0.5 0.3 0.3
ARPU (INR) - India 197 194 142 152
Africa
Africa Subs. Base (mn) 79 83 89 94
Total Minute (mn)-Africa 139,164 135,505 147,258 156,463
Africa MOU per sub. 143.9 136.7 138.1 138.1
Africa RPM (USD) 0.02 0.02 0.02 0.02
ARPU (USD) - Africa 3.1 2.5 2.1 2.1
Financial assumptions 1 1 1 1
Employee (% of net rev) 5.1 4.5 4.5 4.3
Avg. Interest rate (%) 10.6 10.4 8.6 9.1
Depreciation rate (%) 10.1 11.7 9.0 9.0
Tax rate (%) 62.0 44.4 50.6 50.6
Capex (INR mn) (278,563) (400,089) (251,202) (189,424)
Debtor days 27 24 20 20
Incremental debt 286,758 123,850 50,000 (38,895)
10 Edelweiss Securities Limited
Telecom
Peer comparison valuation
Market cap Diluted P/E (X) EV / EBITDA (X) ROAE (%)
Name (USD mn) FY18E FY19E FY18E FY19E FY18E FY19E
Bharti Airtel 33,081 78.9 57.7 10.3 8.9 4.6 5.1
Bharti Infratel 10,576 23.2 20.9 10.1 9.3 18.7 20.4
Idea Cellular 5,366 (9.3) (13.6) 11.6 9.3 (16.4) (13.1)
Reliance Communication 449 147.6 (190.5) 7.2 6.2 0.3 0.2
Median - 51.1 3.7 10.2 9.1 2.4 2.6
AVERAGE - 60.1 (31.4) 9.8 8.4 1.8 3.1
Source: Edelweiss research
Cash flow metrics
Year to March FY16 FY17 FY18E FY19E
Operating cash flow 198,163 196,842 193,691 237,170
Investing cash flow (146,036) (315,554) (241,061) (191,452)
Financing cash flow (34,419) 91,952 45,322 (43,573)
Net cash Flow 17,708 (26,760) (2,047) 2,144
Capex (278,563) (400,089) (251,202) (189,424)
Dividend paid (15,304) (9,168) (4,678) (4,678)
Profitability and efficiency ratios
Year to March FY16 FY17 FY18E FY19E
ROAE (%) 8.0 6.9 4.6 5.1
ROACE (%) 11.0 8.9 6.9 8.0
Inventory Days 1 1 - 1
Debtors Days 27 24 20 20
Payable Days 212 226 214 184
Cash Conversion Cycle (184) (202) (193) (164)
Current Ratio 0.6 0.6 0.7 0.7
Gross Debt/EBITDA 2.8 3.0 3.5 2.9
Gross Debt/Equity 1.3 1.4 1.3 1.2
Adjusted Debt/Equity 1.3 1.4 1.3 1.2
Interest Coverage Ratio 2.4 2.0 1.5 1.6
Operating ratios
Year to March FY16 FY17 FY18E FY19E
Total Asset Turnover 0.6 0.5 0.5 0.5
Fixed Asset Turnover 0.6 0.5 0.5 0.5
Equity Turnover 1.4 1.3 1.1 1.1
Valuation parameters
Year to March FY16 FY17 FY18E FY19E
Adj. Diluted EPS (INR) 12.8 11.4 6.8 9.2
Y-o-Y growth (%) 17.9 (11.0) (40.8) 36.8
Adjusted Cash EPS (INR) 56.5 60.9 54.7 62.2
Diluted P/E (x) 41.6 46.7 78.9 57.7
P/B (x) 3.2 3.2 2.8 2.6
EV / Sales (x) 3.2 3.4 3.7 3.3
EV / EBITDA (x) 9.0 9.2 10.3 8.9
Dividend Yield (%) 0.3 0.2 0.2 -
Balance sheet (INR mn)
As on 31st March FY16 FY17 FY18E FY19E
Share capital 19,987 19,987 19,987 19,987
Reserves & Surplus 636,314 654,577 753,705 785,962
Shareholders' funds 656,301 674,564 773,692 805,949
Minority Interest 51,984 68,750 78,602 85,736
Short term borrowings 107,093 177,908 177,908 169,012
Long term borrowings 843,337 896,373 946,373 916,373
Total Borrowings 950,430 1,074,281 1,124,281 1,085,385
Long Term Liabilities 101,412 48,940 69,838 76,417
Def. Tax Liability (net) (32,382) (16,833) (16,833) (16,833)
Sources of funds 1,727,745 1,849,702 2,029,579 2,036,654
Gross Block 1,598,503 1,778,448 2,029,650 2,219,074
Net Block 661,815 644,030 800,167 798,398
Intangible Assets 1,162,450 1,246,706 1,226,143 1,205,579
Total Fixed Assets 1,824,265 1,890,736 2,026,309 2,003,978
Non current investments 84,439 126,464 140,977 155,491
Cash and Equivalents 67,146 33,100 20,910 25,083
Inventories 1,692 488 607 791
Sundry Debtors 73,106 49,838 49,116 56,883
Loans & Advances 48,832 117,664 117,664 117,664
Other Current Assets 102,454 82,950 78,906 75,063
Current Assets (ex cash) 226,084 250,941 246,293 250,402
Trade payable 387,456 357,345 315,310 308,699
Other Current Liab 86,733 94,194 89,601 89,601
Total Current Liab 474,189 451,538 404,910 398,299
Net Curr Assets-ex cash (248,105) (200,598) (158,618) (147,897)
Uses of funds 1,727,745 1,849,702 2,029,579 2,036,654
BVPS (INR) 164.2 168.7 193.5 201.6
Free cash flow (INR mn)
Year to March FY16 FY17 FY18E FY19E
Reported Profit 65,377 37,999 25,504 36,935
Add: Depreciation 174,498 197,730 191,642 211,756
Interest (Net of Tax) 44,938 50,033 54,813 64,071
Others (82,478) (61,490) (57,186) (71,451)
Less: Changes in WC 4,172 27,430 21,082 4,141
Operating cash flow 198,163 196,842 193,691 237,170
Less: Capex 278,563 400,089 251,202 189,424
Free Cash Flow (80,400) (203,247) (57,511) 47,746
11 Edelweiss Securities Limited
Bharti Airtel
Holding - Top10
Perc. Holding Perc. Holding
Life Insurance Corp Of India 3.96 ICICI Prudential Life Insurance 1.61
ICICI Prudential Asset Mgmt Co 1.59 Capital Group 1.59
Vanguard Group 1.12 SBI Funds Management 1.11
Blackrock 1.08 Comgest SA 0.98
Dodge & Cox 0.92 Templeton Asset Management 0.77
*as per last available data
Insider Trades
Reporting Data Acquired / Seller B/S Qty Traded
22 Dec 2016 Srikanth Balachandran Sell 32000.00
*in last one year
Bulk Deals Data Acquired / Seller B/S Qty Traded Price
No Data Available
*in last one year
Additional Data
Directors Data Mr. Sunil Bharti Mittal Chairman Mr. Gopal Vittal Managing Director and CEO (India and South Asia)
Ms. Chua Sock Koong Non-Executive Director Mr. Craig Ehrlich Non-Executive Director
Mr. Manish Kejriwal Non-Executive Director Mr. Rajan Bharti Mittal Non-Executive Director
Ms. Tan Yong Choo Non-Executive Director Mr. Shishir Priyadarshi Non-Executive Director
Mr. Bernardus Verwaayen Non-Executive Director Mr. Dinesh Kumar Mittal Non-Executive Director
Sheikh Faisal Thani Al-Thani Non-Executive Director Mr. V. K. Viswanathan Non-Executive Director
Auditors - S.R.Batliboi & Co., Chartered Accountants
*as per last annual report
12 Edelweiss Securities Limited
Company Absolute
reco
Relative
reco
Relative
risk
Company Absolute
reco
Relative
reco
Relative
Risk
Bharti Airtel BUY SO L Bharti Infratel HOLD SP L
Idea Cellular HOLD SP M Reliance Communication HOLD SU H
RATING & INTERPRETATION
ABSOLUTE RATING
Ratings Expected absolute returns over 12 months
Buy More than 15%
Hold Between 15% and - 5%
Reduce Less than -5%
RELATIVE RETURNS RATING
Ratings Criteria
Sector Outperformer (SO) Stock return > 1.25 x Sector return
Sector Performer (SP) Stock return > 0.75 x Sector return
Stock return < 1.25 x Sector return
Sector Underperformer (SU) Stock return < 0.75 x Sector return
Sector return is market cap weighted average return for the coverage universe
within the sector
RELATIVE RISK RATING
Ratings Criteria
Low (L) Bottom 1/3rd percentile in the sector
Medium (M) Middle 1/3rd percentile in the sector
High (H) Top 1/3rd percentile in the sector
Risk ratings are based on Edelweiss risk model
SECTOR RATING
Ratings Criteria
Overweight (OW) Sector return > 1.25 x Nifty return
Equalweight (EW) Sector return > 0.75 x Nifty return
Sector return < 1.25 x Nifty return
Underweight (UW) Sector return < 0.75 x Nifty return
13 Edelweiss Securities Limited
Bharti Airtel
Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.
Board: (91-22) 4009 4400, Email: [email protected]
Aditya Narain
Head of Research
Coverage group(s) of stocks by primary analyst(s): Telecom
Bharti Airtel, Bharti Infratel, Idea Cellular, Reliance Communication
Distribution of Ratings / Market Cap
Edelweiss Research Coverage Universe
Rating Distribution* 161 67 11 240 * 1stocks under review
Market Cap (INR) 156 62 11
Date Company Title Price (INR) Recos
Recent Research
28-Nov-17 Telecom TRAI on net neutrality: Advantage integrated players; EdelFlash
14-Nov-17 Idea Cellular Soft quarter; merger to be key swing factor; Result Update
92 Hold
02-Nov-17 Bharti Airtel Structural changes underway; Result Update
539 Buy
> 50bn Between 10bn and 50 bn < 10bn
Buy Hold Reduce Total
Rating Interpretation
Buy appreciate more than 15% over a 12-month period
Hold appreciate up to 15% over a 12-month period
Reduce depreciate more than 5% over a 12-month period
Rating Expected to
-
149
297
446
594
743
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Jul-
14
Au
g-1
4
Sep
-14
Oct
-14
No
v-1
4
De
c-1
4
(IN
R)
One year price chart
200
280
360
440
520
600
De
c-1
6
Jan
-17
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
De
c-1
7
(IN
R)
Bharti Airtel
14 Edelweiss Securities Limited
Telecom
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15 Edelweiss Securities Limited
Bharti Airtel
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16 Edelweiss Securities Limited
Telecom
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