Bharti Airtel equity in the last one year is living in artificial fear psychosis created by pundits about the entry of Reliance Jio. Reliance Jio last year successfully managed to get the license from government and can offer voice services. It impacted all listed Telecom Operators but Bharti Airtel was caught up in cross fire. Some of the Analyst talks about Airtel mounting debt level, some talk about their concern about upfront payout to government of India for just concluded spectrum auction, some talk about their Africa business, some talk about growing competition from Idea and Vodafone. I feel that in competitive economic environment, above mentioned points would always revolve around market leader but is it fair to create an environment of negative news by continuously talking about threats. I would like to highlight the following and would appreciate reader view
- Who is the leader in the Indian telecom sector both on revenue and subscribers
- Who commands highest ARPU in India
- Who is generating maximum Cashflow
- Who is generating maximum revenue from Mobile services
- Who would get benefitted by lowered Spectrum usages charges
- Who owns maximum Data user
- Who is having one of the best data ARPU
- Who is having minimum churn rate among the Incumbent
- Who launched 4G in multiple cities
- Who is maintaining continuous innovation in Product positioning
- Who cleaned up their management within Six months with all new faces and having a guts to give well established business to a person from FMCG
- Who is aggressive in Broadband services
- Who spent Millions of $ in acquiring Qualcomm BWA without having plans for it
I must admit that Vodafone is the only competitor generating nearly same APRU like Bharti Airtel. On Bharti Airtel Africa business, one must be rest assured that once US picks then it will have cascading positive impact on Europe and other continents including Africa. Once that happen then the currently so called African operation would generate the same kind of result the way Jaguar is generating for struggling Tata Motors.
Regarding Reliance Jio entry into voice and data segment of telecom sector would carry no to little impact. I have been hearing for the last two and half year that Reliance Jio is near to launch but they are still on the design table. In my point of view, they are minimum 4 quarter away from full launch and by that time Bharti Airtel would sweep up license area with their 4G launch. One must not ignore that Bharti is having running system in place to do soft launch to realign infrastructure to refine the service defects but that’s not the case with Reliance Jio. The nearest competitor Vodafone and Idea is entangled with Tax authorities. Any tax penalty on both the companies would change their financial dynamics.
In conclusion, potential investor must read the analyst report from all leading analyst firm and their targets for Bharti ranges from 360 to 430 INR but they criticize Bharti Airtel when its trading below INR 310.
In conclusion, any investor must do their own analysis and invest particularly in the case of Bharti Airtel if they really wanna to get rewarded.
2 comments
Write commentsYour theory certainly holds some possibility but all said and done the interest cost of debt that Airtel carries on its books will certainly influence its EBITA. That being said all investment are made for future incremental net revenue and the Africa story that Airtel has bought into should bear fruit in the future. So Airtel would have to ride out the medium term with some deft financial jugglery and only time will tell whether their long term bet will bear fruit.
ReplyThe rationalization of SUC would help Airtel in servicing their debt and increase EBITA margin. The recent auction result and marginalization of regional player is going to give incumbent an opportunity to increase tariff, reduce free voice minutes which in-turn will bring in revenue growth & higher profitability.
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