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Bharti Airtel Ltd. | Q3FY13 Result Update




IndiaNivesh Securities Pvt Ltd


01 Feb 2013





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Bharti Airtel Ltd. | Q3FY13 Result Update Mixed performance - growth in major KPI’s Bharti Airtel Ltd (BAL) Q3FY13 revenue and EBITDA was in-line with our estimates; however, PAT was significantly below our and consensus due to higher tax rate and negative currency impact. Excluding inter-connect revenue of Rs.5.4bn in Q2FY13, BAL’s consolidated revenue during the quarter grew by 2.9% qoq to Rs.203bn (INSPL est.Rs.202bn). Revenue from ‘mobile services’ - India & South Asia, grew by 3.9% qoq to Rs.109.3bn (v/s Rs.105.3 bn) led by 2.8% qoq (to Rs102.7 bn) increase in India segment and 22.5% qoq (to Rs.7.3bn) increase in South Asia segment. In ‘mobile services’ - India segment, revenue was driven by 2.1%/13.2%/0.5%/16.7% q-o-q increase in Voice/Data/VAS/Others (83%/6%/10%/2% of India Rev) revenue. However, overall India & South Asia geography revenue grew by 3.1% q-o-q driven by Mobile Services (+3.9% qoq) Telemedia Services (+0.4% qoq), Digital TV (+8.7% qoq), Enterprise (+2.0% qoq), Passive Infra (+3.1% qoq), partially offset by 17.4% qoq decline in Others. Average revenue per user (ARPU)/ Minutes of Usage per User (MOU) went up 4.3%/4.4% qoq, respectively. Average revenue per minutes (ARPM) and subscribers base went down. Outlook & Valuation: At CMP of Rs330, the stock is trading at 7.9x FY13E and 6.9x FY14E EV/EBITDA estimates. The current quarter performance was below our expectations largely due to forex and one-offs. However, on the operational front company performed well backed by favourable performance from remaining SBUs. Increase in network operating charges was due to increase in the diesel prices. The surge in Data revenue and ARPU looks positive for margin outlook. We believe BAL’s initiatives to expand 3G cell sites would bode well 3G/4G and 2G data revenue growth. We downgrade our rating to HOLD but maintain our target price of Rs.368 due to limited upside potentail.

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