RESEARCH REPORT

PREPARED BY:
RISHIRAJ SINGH
GENERAL OVERVIEW
Company Highlights Revenue Mix(FY 18-19)
OVERVIEW-
Bharti Airtel Ltd is world’s leading provider of telecommunication
services with presence in 16 countries across Asia and Africa. It had
over 444 million customers across its operations at the end of
September 2018. The company's product offerings include 2G, 3G
and 4G wireless services, mobile commerce, fixed line services, high
speed home broadband, Digital TV (DTH), enterprise services
including national & international long-distance services to carriers.
Under Homes services, it offer fixed-line telephone and broadband
(DSL) services across pan-India while under Direct-To-Home (DTH)
platform it offers both standard and high definition (HD) digital TV
services with 3D capabilities and Dolby surround sound. It is India’s
leading and most trusted provider of ICT services with a diverse
portfolio of services to enterprises, governments, carriers and small
and medium businesses. The company also owns Tower Infrastructure
pertaining to telecom operations. It owns and operate more than
39,523 telecom towers under our subsidiary Bharti Infratel Limited (on
a standalone basis) with presence across all 22 telecom circles. In FINANCIALS (INR MN)
Africa, the company is present in 14 countries and offer post-paid, pre- Year to March FY18 FY19 FY20E FY21E
paid, roaming, internet services, content, media & entertainment, and Net revenue 8,39,367 8,16,270 8,61,495 9,59,994
corporate solutions. EBITDA 3,03,279 2,61,101 3,53,479 4,18,951
Bharti Tele-Ventures was incorporated on July 7, 1995 as a company Adjusted Profit 10,990 4,095 -30,128 30,931
with limited liability under the Companies Act, for promoting Adjusted diluted
2.7 1 -5.9 6
telecommunications services. Bharti Tele-Ventures received certificate EPS (INR)
for commencement of business on January 18, 1996. The Company EV/EBITDA (x) 5 5.7 5.5 4.7
was initially formed as a wholly-owned subsidiary of Bharti Telecom ROAE (%) 2.9 2.1 -1.5 4.4
Limited.
EXECUTIVE LEADERSHIP AND KEY FIGURES
NAME DESIGNATION NAME DESIGNATION
Mr. Sunil Bharti
Chairman Mr. Craig Ehrlich Independent Director
Mittal
Managing Director and
CEO (India and South
Mr. Gopal Vittal Mr. Manish Kejriwal Independent Director
Asia)

Ms. Chua Sock Non-Executive Director

Non-Executive Director Mr. Rakesh Bharti Mittal
Koong
Ms. Tan Yong Independent Director
Non-Executive Director Mr. Dinesh Kumar Mittal
Choo
SUNIL BHARTI MITTAL

Public PRICE PERFORMANCE (%)

Others
7% EW
Other 0%
FII Period Stock Nifty Telecommunication
Institutions 16%
5% Index
Promoter
1 month 9 1.2 1
63%
MF 3 months 9.8 2.9 -0.9
9%
12 months 37.2 14.4 -4.3

Source: Annual Report FY18-19

• Renowned Telecom company: With its 19+
years of rich experience in telecom industry ,it
has become 3rd largest telecom operator
overseas with operations in nearly 20
countries.
• High Brand Equity
• Extensive infrastructure: With the formation of
Indus tower & due to its partnership with Idea &
Vodafone, the infrastructure of Airtel has
extended in all parts of the country resulting
into nationwide penetration.
• Strategic Alliances: The company has top
notch stakeholders, namely Sony Ericsson,
Nokia and singtel, and Apple.
• New technologies, increasing consumer
interest and a decrease in competition are
just a few external opportunities that can
really help in the long run.
• Opportunities are beneficial, outside
events that a company can use to boost
its existing strengths.
• Sterlite Technologies is keen on rapidly
adopting new technologies, for example,
would highly benefit from immediately
investing in new fiber optics the moment
they're introduced in the marketplace,
especially if they speed up service.
• Stock with Low PE (PE < = 10)
• Venturing into African
operations: Although it’s been 4
years that Airtel has acquired
Zain’s Africa business, but Airtel
is still struggling to turn around
the unit which was bought at a
whoppy 9 billion dollars.
• High Debt: With its acquisitions
turning out to bad investment,
and credit being high and
margins being low, Airtel group
is under high debt. Airtel does
not have as deep pockets as
Vodafone.
• A sluggish economy, increasing
competition and increased government
regulations against the
telecommunications industry are just a
few external threats that can limit Sterlite
Technologies.
• Degrowth in Revenue, Profits and
Operating Profit Margin in recent results
(QoQ)
• Company with negative growth and
promoters decreasing shareholding
 RECENT TRENDS AND FUTURE OUTLOOK
IMPACT OF COVID-19 :
• Telecom operators like Airtel are likely to witness some challenges in subscriber (sub) addition and ARPU
growth, given the lockdown and extension of validity. However, higher data usage in the interim will offset ARPU
challenges.

• On the other hand, players like Bharti Infratel will have minimal impact and the earnings estimates are likely to
be stable. Tata Communication is likely to face challenges in terms of usage based segment such as TTPSL
and TCTS as well as new deal closures. Sterlite Tech, which was already facing product demand challenges, is
likely to face issues in terms of exports as well as execution of services/solutions in the interim period.

• Given the lockdown, the net sub addition of telcos is likely to be impacted coupled with some SIM consolidation
phenomenon on account of tariff hike taken in December, 2019. Furthermore, to protect these low income
subscribers (~80 mn), Airtel has extended free incoming calls until April 17, 2020 with additional | 10 talk-time.

• On the contrary, higher data usage in the interim will offset the ARPU challenges. Furthermore, the recent sharp
decline in crude could result in a muted performance in crude dependent economies of Nigeria, Congo and
Chad.
 COMPARABLE ANALYSIS AND VALUATION
60000
50000 We can see that
Market Capitalization (In Rs Cr)
273459.81
40000 earnings of all the
30000 companies have been
20000
negative in the last
10000
0
quarter due to economic
-10000 slowdown, price
454.86 221.24 545.42 11379.21 -20000 competition from Jio and
Corona Pandemic.
Quarter Revenue Quarter Earnings

AGR verdict led penalty (if levied in totality) will be

huge stress on balance sheet of Bharti Airtel.
It is expected that government will relent on overall
demand and possibly forgo penalty and/or interest
amount given the sector stress
Maintain BUY rating due to strong fundamentals.

Source: Moneycontrol
 CONCLUSION AND WAY FORWARD
Airtel has diversified its product portfolio like DTH ,
xtream(Android TV box) , business security solutions
,banking etc. to keep itself ahead of the market
competition .Now, the lockdown imposed by
government has led users to work from home which
has led to a huge demand in data usage . Besides, with
the advent of OTT platforms in India like Amazon
Prime, Netflix and others, there has been a rapid
growth in consumption by users. Airtel, being the
pioneers in this sector to diversify its market and
venture into Africa will benefit it during crisis situations.

We can see from the latest news that the Jio Facebook will be a major setback for Airtel in the short run , as the
prices and earnings will be impacted.
However, In my perspective, in the long run Airtel will be able to bounce back, due to its strong brand name and
huge customer reach.
Hence, I recommend a BUY for a short term and SELL in the long run.