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

[email protected]

Pranav Kshatriya +91 22 4040 7495

[email protected]

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


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


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


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


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


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


Table 6: Higher RMS driving higher EBITDA margin


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


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


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


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


Fig`. 2: Airtel money


Telecom


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.


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


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 (%)


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


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)


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


Cash flow metrics


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


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


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


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)


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


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


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


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

[email protected]

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


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