1 Bharti Airtel 06feb24 Kotak Inst

RESULT
Bharti Airtel (BHARTI) ADD

Telecommunication Services
CMP(₹): 1,134 Fair Value(₹): 1,200 Sector View: Attractive NIFTY-50: 21,929 February 06, 2024
Good 3Q; focus likely to shift toward monetization soon Company data and valuation summary
Bharti reported an overall in-line 3Q. India wireless was ahead of our Stock data
estimates with 2.5% qoq ARPU uptick amid continued subscriber mix
CMP(Rs)/FV(Rs)/Rating 1,134/1,200/ADD
improvements. Airtel DTH got a boost from the Cricket World Cup, while
52-week range (Rs) (high-low) 1,201-736
Homes and Business (B2B) were slightly weaker. Underlying growth
Mcap (bn) (Rs/US$) 6,670/80.3
remained healthy in Africa, but Naira currency devaluation continued to
ADTV-3M (mn) (Rs/US$) 5,849/70.5
impact reported financials. Net debt declined sharply on improved FCF
generation. Capex was stable qoq and should moderate from FY2025. With Shareholding pattern (%)
5G rollouts completing soon, we believe focus would likely shift toward 5G
monetization (FWA ramp-up, tariff hikes). With favorable LT risk-reward, we
2.9
1.8
maintain ADD rating with a revised FV of Rs1,200. 6.7
11.3
3Q overall in line; India wireless ahead on better ARPU, net debt declines sharply
54.6
Consolidated EBITDA, at Rs198 bn (+1.5% qoq, 7% yoy), was in line with our 22.7
estimate as better India business performance (EBITDA +3% qoq, 1% ahead)
was offset by a tad weaker Africa (EBITDA -1% qoq, ~3% below). India wireless
EBITDA improved ~3.7% qoq (versus 1.5%-2.5% qoq for peers) on sharp ARPU Promoters FPI s MFs BFIs Retail Others
Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
improvement and continued subs mix improvements. Bharti’s overall capex
Price performance (%) 1M 3M 12M
was stable qoq as part of 5G costs are now reflected in P&L. Consolidated net Absolute 8 21 44
debt declined by a further Rs49 bn qoq and FCF (post interest and leases) Rel. to Nifty 7 8 20
improved further to Rs69 bn (versus ~Rs55 bn qoq adjusted for prepayments). Rel. to MSCI India 6 5 14
Bharti continued to gain wireless revenue market share on improving subs mix Forecasts/Valuations 2024E 2025E 2026E
India wireless revenue (+3.3% qoq, +12% yoy) was 1% ahead of our estimate EPS (Rs) 21.4 38.9 52.4
with ARPU rising further ~2.5% qoq (versus flat qoq for R-Jio including FTTH) EPS growth (%) 41.4 82.1 34.6
to industry-leading Rs208 (versus our estimate of Rs205). Bharti’s consistent P/E (X) 53.1 29.1 21.7
focus on premiumization continued to deliver with further improvement in P/B (X) 7.8 5.9 4.8
subscriber mix. Post-paid net adds remained healthy at ~0.9 mn (base up 18% EV/EBITDA (X) 10.1 8.1 6.5
yoy), 4G/5G net adds were resilient at 7.4 mn. Bharti once again outperformed RoE (%) 15.5 23.0 24.4
peers on wireless revenue market share, gaining ~36 bps qoq among private Div. yield (%) 0.4 0.5 0.5
telcos. Wireless EBITDA (+3.7% qoq, +15% yoy) was ~2.5% ahead with margins Sales (Rs bn) 1,512 1,757 2,006
improving further ~20 bps qoq to 55.1% (versus flat qoq for R-Jio at 52.3%). EBITDA (Rs bn) 791 950 1,114
Net profits (Rs bn) 128 232 313
With pan-India 5G rollout to complete by March 2024, we believe focus will shift
toward 5G monetization. With rising subscriber base and increasing customer Source: Bloomberg, Company data, Kotak Institutional Equities estimates
engagement on 5G, we believe there is a case for tariff hikes soon. We continue Prices in this report are based on the market close of
February 06, 2024
to build ~20% smartphone tariff hikes from June 2024 (post general elections).
EBITDA largely unchanged; maintain ADD with revised FV of Rs1,200

Our FY2024-26E EBITDA is largely unchanged as higher India wireless EBITDA
is offset by cut in Airtel Africa (on Naira devaluation). We expect ~16% 3-year
consolidated EBITDA CAGR driven by (1) a ~10.5% 3-year ARPU CAGR and
Related Research
continued market share gains in India wireless, (2) continued ramp-up of fiber
home passes and pan-India FWA launch and (3) robust underlying growth in → A deep dive into Indian telcos’ cost structure
Airtel Business and Airtel Africa. We revise our FV to Rs1,200 (from Rs1,050) → and unit metrics
LT risk-reward remains favorable for Bharti
on higher India wireless ARPU, lower net debt and roll-forward to March 2026E. → Focus could shift toward 5G monetization
Maintain ADD rating as we believe LT risk-reward remains favorable. Potential soon
tariff hike and JPL’s IPO are the key near- to medium-term triggers. Full sector coverage on KINSITE
Aditya Bansal Anil Sharma

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Key takeaways from earnings webinar

 ARPU trends and tariff hike: Management highlighted that ARPU growth continued to be driven by
benefit of premiumization strategy through subscriber mix improvements (feature phone to
smartphone, prepaid to postpaid) and up-trading, increased share of wallet through data monetization
and international roaming. Management reiterated that ARPU should continue to increase modestly
on subscriber mix improvements, but tariff hikes remain key for the step jump in ARPUs. Further, they
believe tariff hikes are a matter of when and not if, given depressed returns on large investments.
 Capex: Management highlighted that capex was elevated in FY2024 driven by vast 5G rollout, rural
expansion in addition to continued investments in transport layer, Home Broadband, data center, etc.
However, they expect capex to peak in FY2024 with gradual tapering off in coming years. Management
indicated that in the long term, Airtel’s capex can be 15-20% of sales, similar to global telcos.
 5G: Bharti has ~65 mn unique 5G (55 mn in 2QFY24) users on its network, accounting for ~15-20% of
handsets on network. Bharti management highlighted that free unlimited data on 5G limits any
monetization from 5G, but reiterated their stance of not charging a premium separately for 5G.
 2G shutdown: 2G is used by several different user types – (1) illiterate, (don’t want smartphones), (2)
very low-income group (can’t afford smartphone) and (3) older people (struggle to use smartphones).
Management indicated that 2G contribution to business has become small (~17%, however higher
versus 16% few quarters back) now. Further markets like Gujarat, Maharashtra, Kerala, Mumbai and
Delhi have single digit contribution from 2G, while it is bit higher in U.P, Bihar and M.P. and could take
few years to migrate completely. However, 2G uses only a small fraction of spectrum for Airtel.
 Cash utilization and leverage: Bharti prepaid further Rs83 bn of deferred spectrum dues pertaining to
2015 auction in Jan 2024 (Rs163 bn in FY2024). Management indicated that priority for cash
deployment remains on deleveraging the balance sheet with target consolidated leverage of ~2X
(versus 2.5X currently) and India leverage of ~2.5X (versus ~2.9X currently). Bharti is yet to formalize
a dividend policy.
 Call on rights issue: Management indicated that given robust organic cashflow generation, there is
no need to issue further calls on pending rights issue money. We note, Bharti is yet to call ~75% of the
rights issue (~Rs150 bn), which was initially expected to be completed by Sep-Oct 2024.
 Rural expansion: Bharti has rolled out targeted 30k sites to expand rural coverage and the initial
response on revenue/cost per site and customer acquisition has been better than management’s
expectations. Management highlighted that the focus on coverage expansion will now shift toward 5
key circles (Maharashtra, Gujarat, M.P, Kerala and West Bengal), where Airtel’s market share gap is
~18% versus #1 player and has ~25k lower sites. This could be beneficial for Indus Towers as well.
 Product to platform shift: Airtel is working on a strategy shift from focusing on product to platforms
to improve efficiency. Further, the company is looking to take two of the mature platforms (like Airtel
Works) to Airtel Africa initially and could look to offer them to other global telcos in future.
 Network densification, switch to SA 5G: Bharti doesn’t envisage a need for network densification in
the foreseeable future, given NSA 5G gives them better propagation capabilities. However, they would
look to gradually transition from NSA to SA with Airtel’s FWA services to be based on SA 5G. Further,
as traffic shifts from 4G to 5G, Bharti would look to re-farm existing 4G spectrum bands to 5G.
 Homes Broadband: Bharti’s Homes BB net adds moderated qoq from high base due to peel back of
entry level standby (Rs199 plan). However, this has led to improvement in acquisition ARPUs. As per
management, ~47% of net adds are now driven by Airtel Black, which leads to lower churn and ~4X
higher average revenue per account (ARPA). The company continued to add ~1.5 mn quarterly home
passes and targets to reach 40 mn homes in the medium term.
 DTH: DTH returned to growth with net subscriber additions and increase in ARPU driven by focus on
key markets such as South, Maharashtra and West Bengal and also increased focus on convergence.
Airtel Xstream Play, OTT aggregator from Airtel, reached ~5 mn customers.
 Enterprise: The global sub-segment continued to remain soft, while growth accelerated in domestic
B2B business. Management highlighted that one of the big growth drivers in domestic segment has
been IoT, where Airtel has recently won two large deals to power up to 20 mn smart meters each with
Bharti Airtel
Telecommunication Services India Research
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IntelliSmart and Adani Energy Solutions. Further, there is a big opportunity to play a major role in
deployment of 250 mn smart meters in coming years.
 IoT: Airtel is the market leader in IoT connectivity business, with ~55%+ market share in rapidly
growing market. Airtel is now looking to move up the stack by offering cloud and analytics with the
recent deal with IntelliSmart and further to get into installation and repairs for these devices through
Airtel’s own fleet.
3Q overall in line, India wireless better; net debt declines sharply on further improved FCF generation
 Consolidated revenue at Rs379 bn (+2% qoq, +6% yoy), was largely in line with our estimates.
 India revenue at Rs278 bn (+3% qoq, +11% yoy) was marginal 0.5% above our estimate on better India
wireless performance (+3.3% qoq, 1% ahead). Africa revenue at Rs103 bn (flat qoq, -7% yoy in reported
currency) was ~1% below our estimate.
 Consolidated EBITDA at Rs198 bn (+1.5% qoq, +7% yoy), was also in line with our estimates.
 India EBITDA at Rs150 bn was 1.5% above our estimate on better India wireless (EBITDA +3.7% qoq,
1.5% ahead), while Africa was a tad weaker at Rs51 bn (-1% qoq, -7% yoy, 2.5% below our estimate)
on Naira devaluation and higher diesel costs.
 Reported EBITDA margin moderated ~40 bps qoq to 52.3% (+75 bps yoy largely on lower SUC
charges) and was 7 bps below our estimate on higher SG&A costs.
 With gradual 5G deployment, 5G-related costs (primarily on depreciation and interest cost) were
visible for Bharti in 3QFY24 (R-Jio still continued to capitalize, on our estimates).
 Depreciation and amortization was up 3.5% qoq (+8% yoy) to Rs101 bn (largely in line with our
estimate), while net finance cost was up 28% qoq (+40% yoy) to Rs62 bn (versus our estimate of Rs50
bn), likely on 5G related costs and also Naira devaluation impact in Africa.
 Reported PBT at Rs35 bn (-28% qoq, -25% yoy) was 26% below our estimate on higher finance cost,
though part of the impact was due to sharp Naira devaluation.
 Reported PAT at Rs24.4 bn (+82% qoq on weak base, +54% yoy) was 23% below our estimate, due to
higher interest cost.
 Adjusted for one-offs, PAT at Rs25 bn declined 16% qoq (+19% yoy) and was 21% below our estimate
of Rs32 bn.
 Consolidated capex was broadly stable qoq at Rs93 bn (flat yoy) and was 13% below our estimates
on lower India wireless capex (18% below).
 Bharti’s consolidated free cash flow (post leases and interest payments) improved sharply to Rs69
bn (versus negative Rs25 bn in 2QFY24 on ~Rs83 bn prepayment of spectrum liabilities).
 Bharti’s consolidated net debt (ex-leases) moderated by further ~Rs49 bn qoq to Rs1.42 tn.
 Including the impact of leases, Bharti’s consolidated net debt to EBITDA (annualized) declined to
2.52X (versus 2.63X qoq). India SA net debt to EBITDA stood at 2.92X (versus 3.08X qoq).
India wireless: Strong quarter on sharp qoq ARPU improvement, revenue market share gains continued
 Bharti’s India wireless ARPU inched up 2.5% qoq (versus flat/+2% qoq for R-Jio/Vi) and was 1.5%
above our estimate at Rs208 (+7.5% yoy) on continued benefits of Bharti’s premiumization strategy.
 Bharti reported 3.3 mn paying net adds (versus 3.7 mn qoq, our estimate of +3 mn and ~11.2 mn net
adds for R-Jio (including FTTH).
 Subscriber mix continues to improve as Bharti added further 0.87 mn postpaid net adds (+4% qoq,
+18% yoy). Further, Bharti’s 4G/5G net additions remained robust at ~7.4 mn (versus ~7.7 mn 4G net
adds qoq).
 Bharti’s India wireless revenue was up 3.3% qoq (versus 2.5% qoq for R-Jio including FTTH and 0.7%
qoq for Vi) to Rs216 bn (+12% yoy) and was 1% above our estimate.
Bharti Airtel
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 EBITDA improved further 3.7% qoq (versus 1.5-2.5% qoq for peer Vi and R-Jio including FTTH) to
Rs119 bn (+15% yoy) and was 2.5% above our estimate.
 With likely impact of 5G costs, we expected ~35 bps qoq decline in India wireless EBITDA margin.
However, reported EBITDA margin improved further 20 bps qoq to 55.1% (+130 bps yoy, versus flat
qoq for R-Jio at 52.3%) and was ~60 bps above our estimate.
 Incremental margin was healthy at 61% (versus 60% qoq in 2QFY24 and higher than 53% for R-Jio).
 India wireless capex remained stable qoq and relatively moderate at Rs57 bn (-10% yoy) and was 18%
below our estimate.
 On our estimates, Bharti continued to gain wireless revenue market share among private telcos in
3QFY24 with further ~36 bps qoq (+118 bps yoy) gain, R-Jio lost ~7 bps qoq (but +12 bps yoy), while
Vi lost ~29 bps qoq (and 131 bps yoy).
 However, R-Jio was the biggest gainer on paying subscriber market share among three private telcos
with further ~63 bps qoq (+196 bps yoy) gain with Bharti gaining modest ~2 bps qoq (and 15 bps yoy),
while Vi lost further ~64 bps qoq (and 211 bps yoy).
Homes: Slightly below estimates on lower reported ARPU and marginally weaker net adds
 Bharti’s Homes BB net adds moderated qoq but still healthy at 359k net adds (versus 471k net adds
qoq and our estimate of 420k net adds) to reach 7.3 mn subs (+29% yoy).
 However, reported ARPU decline continued with further 2% qoq dip to Rs583/month (-7% yoy), and
was ~1% below our estimate of Rs590.
 Homes revenue was up 4% qoq to Rs12.7 bn (+23% yoy), and was 2% below our estimate, while Homes
EBITDA at Rs6.4 bn (+5% qoq, +23% yoy) was modest ~1% below our estimate, as margins improved
~45 bps qoq to 50.2% (+18 bps yoy, ~60 bps above our estimate).
 Capex in Homes business further increased by 3% qoq to Rs7.8 bn (+57% yoy).
Other businesses: World Cup boost for Airtel DTH, AAF continued to be impacted by Naira devaluation
 Airtel DTH revenue at Rs7.8 bn (+4% qoq, +6% yoy) was 4% ahead of our estimate on 2.5% higher
ARPU at Rs163 (+2.5% qoq, +6% yoy) and also better subscriber net adds (388k net adds versus 169k
net decline qoq and our estimate of 50k net declines) likely on Cricket World Cup boost. DTH EBITDA
at Rs4.3 bn (+2% qoq. +4% yoy) was also 4% above our estimate.
 Airtel Business (Enterprise) revenue at Rs52 bn (+8.7% yoy, better versus 6.6% yoy underlying growth
as TCOM, +1.7% qoq) was ~2% below us, while EBITDA at Rs20.6bn (+8% yoy, flat qoq) was ~3%
below our estimate as margins moderated ~57 bps qoq to 39.7% (versus our estimate of 40.1% and
39.9% yoy). Capex for Airtel business was up 12% yoy to Rs8.5 bn (-11% qoq). Bharti’s M2M/IoT subs
base increased by further 3.5 mn qoq to 25.9 mn.
 Airtel Africa (AAF) continued strong double digit yoy constant currency growth, but due to continued
impact of Naira devaluation, reported revenue/ EBITDA (in rupee terms) was flat / -1% qoq (1-3% below
our estimate).
Other highlights: Similar to peers, Bharti’s data volume growth moderated qoq despite CWC in 3QFY24
 Similar to peers, Bharti also didn’t see any significant benefit of Cricket World Cup on its wireless data
volumes. Data volume for India wireless business inched up 4% qoq (versus 6% qoq in 3QFY24, ~5%
qoq for R-Jio including FTTH and 2% qoq decline for Vi).
 Data usage per sub improved qoq to 22 GB/month (versus 21.7 GB qoq , 27.3GB reported by R-Jio
including FTTH).
 Voice usage on network in India wireless was up 1% qoq (1%/3% qoq for Vi/R-Jio), with minute of
usage (MoU) per subscriber stable qoq at 1,125 mins/month, but remains ahead of 614 / 981 mins
for Vi/R-Jio.
 Bharti added further ~12.3k towers qoq (versus 11.1k in 2QFY24) to take the total towers to ~308k.
However, revenue per site declined further 1% qoq to Rs237k/month (-4% yoy).
Bharti Airtel
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Bharti’s consolidated 3Q results were in line with our estimates with better India performance offset by slightly weaker Africa
Exhibit 1: Bharti - 3QFY24 results, March fiscal year-ends (Rs mn)
Change (%)
3QFY24 3QFY24 3QFY23 2QFY24 vs KIE yoy qoq 9MFY24 9MFY23 (% chg.) FY2024E
Consolidated results
Revenues 378,995 378,348 358,044 370,438 0.2 5.9 2.3 1,123,833 1,031,358 9.0 1,511,633
Access charges (18,568) (18,417) (19,352) (18,144) 0.8 (4.1) 2.3 (56,684) (57,360) (1.2) (75,582)
License and spectrum fee (30,205) (30,089) (28,421) (29,643) 0.4 6.3 1.9 (89,251) (89,238) 0.0 (120,931)
Network operating costs (75,926) (76,865) (73,284) (74,240) (1.2) 3.6 2.3 (224,202) (211,415) 6.0 (301,571)
Employee costs (13,230) (13,718) (12,353) (13,790) (3.6) 7.1 (4.1) (39,592) (35,674) 11.0 (52,907)
SG&A expenses (42,918) (41,183) (40,102) (39,484) 4.2 7.0 8.7 (124,834) (111,907) 11.6 (169,412)
Total costs (180,847) (180,272) (173,512) (175,301) 0.3 4.2 3.2 (534,563) (505,594) 5.7 (720,402)
EBITDA 198,148 198,076 184,532 195,137 0.0 7.4 1.5 589,270 525,764 12.1 791,231
EBITDA margin (%) 52.3 52.4 51.5 52.7 (7)bps 74 bps (39)bps 52.4 51.0 146 bps 52.3
Depreciation and amortization (100,743) (100,381) (92,977) (97,343) 0.4 8.4 3.5 (294,624) (270,259) 9.0 (396,284)
EBIT 97,405 97,695 91,555 97,794 (0.3) 6.4 (0.4) 294,646 255,505 15.3 394,947
EBIT margin (%) 25.7 25.8 25.6 26.4 (12)bps 13 bps (70)bps 26.2 24.8 144 bps 26.1
Net finance cost (62,051) (49,845) (44,280) (48,554) 24.5 40.1 27.8 (163,259) (134,851) 21.1 (211,416)
PBT 35,354 47,849 47,275 49,240 (26.1) (25.2) (28.2) 131,387 120,654 8.9 183,532
Tax provision (12,320) (14,355) (10,756) (18,465) (14.2) 14.5 (33.3) (34,112) (34,853) (2.1) (47,168)
PAT before minority interest 23,034 33,495 36,519 30,775 (31.2) (36.9) (25.2) 97,275 85,801 13.4 136,364
Share of associates / JVs 7,032 5,926 (3,684) 5,860 18.7 NM 20.0 18,791 1,511 1,143.6 24,821
Minority interest (4,342) (7,725) (10,255) (7,525) (43.8) (57.7) (42.3) (10,944) (27,211) (59.8) (12,082)
Extraordinary items (1,302) — (6,698) (15,703) (51,168) (6,698) (51,168)
Reported net income 24,422 31,696 15,882 13,407 (22.9) 53.8 82.2 53,954 53,403 1.0 97,935
Adjusted net income 24,917 31,696 20,894 29,598 (21.4) 19.3 (15.8) 83,536 58,415 43.0 127,517
Reported EPS (Rs) 4.3 5.6 2.8 2.4 (22.9) 52.5 81.5 9.5 9.4 0.6 16.4
Adjusted EPS (Rs) 4.4 5.6 3.7 5.2 (21.4) 18.2 (16.1) 14.7 10.3 42.5 21.4
Source: Company, Kotak Institutional Equities estimates
Bharti’s net debt (ex-leases) declined by further ~Rs49 bn qoq; net debt (including leases) to annualized EBITDA declined to 2.52X
Exhibit 2: Bharti – gross debt, cash and leverage trend, March fiscal year-ends, June 2021 onwards
Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
Debt and cash trends
Reported gross debt 1,355 1,453 1,331 1,328 1,301 1,655 1,672 1,655 1,660 1,578 1,588
LT debt 451 404 416 425 405 407 414 401 395 333 332
ST debt (inc. current maturities) 116 156 156 194 167 173 172 135 128 162 161
Deferred payment liabilities 788 893 759 709 729 1,075 1,086 1,119 1,138 1,084 1,095
Cash and Cash Equivalents 90 140 91 92 106 83 123 128 172 103 164
Net Debt excluding Lease Obligations 1,265 1,313 1,239 1,235 1,195 1,573 1,548 1,527 1,488 1,475 1,424
Lease Obligation 331 349 352 368 478 524 549 605 589 596 597
Net Debt including Lease Obligations 1,596 1,662 1,591 1,603 1,673 2,096 2,097 2,131 2,077 2,070 2,021
Net debt (including leases) to EBITDA 3.03 2.96 2.67 2.51 2.52 2.96 2.82 2.83 2.63 2.63 2.52
Bharti’s FCF post lease and interest payments improved to Rs69 bn (versus Rs55 bn qoq adjusted for Rs80 bn spectrum prepayments)
Exhibit 3: Bharti's quarterly FCF calculation, March fiscal year-ends, 1QFY22 onwards (Rs bn)
1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24
Cashflow from operations 122 127 157 144 179 129 190 155 208 191 214
Lease payments (18) (16) (20) (22) (21) (19) (19) (17) (20) (21) (20)
Capex in tangible assets (72) (61) (68) (50) (70) (54) (64) (72) (91) (97) (99)
Capex in intangible assets (4) (8) (132) (39) (4) (88) (32) (4) (13) (44) (4)
Paid finance cost (19) (11) (41) (60) (18) (12) (17) (20) (23) (55) (23)
FCF, post lease and interest payment 11 30 (104) (28) 67 (44) 57 42 62 (25) 69
Spectrum prepayments — — 155 88 — 88 — — — 80 —
Adjusted FCF post leases and interest 11 30 51 60 67 44 57 42 62 55 69
Bharti Airtel
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India wireless performance was stronger than our estimate on sharper uptick in wireless ARPU, Airtel Business a tad weaker
Exhibit 4: Bharti - 3QFY24 segmental performance, March fiscal year-ends (Rs bn)
Change (%)
3QFY24 3QFY24E 3QFY23 2QFY24 vs KIE yoy qoq 9MFY24 9MFY23 (% chg.) FY2024E
Segmental revenue (Rs bn)
India 278 277 250 270 0.5 11.4 3.0 812 726 11.8 1,094
Wireless 216 214 194 209.5 1.3 11.8 3.3 630 564 11.7 848
Homes 12.7 13.0 10.3 12.2 (2.4) 23.0 4.2 37 30 23.9 50
DTH 7.8 7.5 7.4 7.5 4.0 6.0 4.3 23 22 2.7 31
Airtel Business 52 53 48 51 (1.6) 8.7 1.7 154 138 11.2 206
South Asia 0.9 0.9 0.8 0.9 0.9 21.7 1.3 3 2 31.5 4
Africa 103 104 111 103 (1.1) (7.1) 0.2 319 312 2.1 427
Consolidated 379 378 358 370 0.2 5.9 2.3 1,124 1,031 9.0 1,512
Eliminations (14) (14) (13) (14) (41) (37) 10.9 (54)
Segmental EBITDA (Rs bn)
India 150 148 132 146 1.5 13.9 3.0 437 377 16.1 589
Wireless 119 116 104 115 2.5 14.5 3.7 346 296 17.1 466
Homes 6.4 6.5 5.2 6.1 (1.3) 23.4 5.1 18 15 22.4 25
DTH 4.3 4.1 4.1 4.2 3.9 3.7 1.7 13 13 (3.8) 17
Airtel Business 20.6 21.2 19.0 20.6 (2.6) 8.3 0.2 61 54 13.0 82
South Asia (0.2) (0.1) (0.1) (0.1) (34.8) (15.2) (26.0) (0) (0) 0.9 (1)
Africa 51 52 54 51 (2.5) (7.1) (1.1) 158 153 3.1 211
Consolidated 198 198 185 195 0.0 7.4 1.5 589 526 12.1 791
Eliminations (3) (2) (2) (2) (6) (5) (9)
Segmental EBITDA margin (%)
India 53.9 53.4 52.7 53.9 50 bps 119 bps (0)bps 53.9 51.9 199 bps 53.8
Wireless 55.1 54.5 53.8 54.9 63 bps 130 bps 20 bps 54.9 52.4 251 bps 54.9
Homes 50.2 49.6 50.0 49.8 59 bps 18 bps 44 bps 50.1 50.7 (61)bps 50.3
DTH 54.7 54.7 55.9 56.1 (4)bps (124)bps (138)bps 56.1 59.9 (377)bps 55.8
Airtel Business 39.7 40.1 39.9 40.3 (40)bps (17)bps (57)bps 39.8 39.2 62 bps 39.6
South Asia (16.0) (12.0) (16.9) (12.8) (402)bps 90 bps (313)bps (13.6) (17.8) 414 bps (14.2)
Africa 49.1 49.8 49.1 49.8 (67)bps 1 bps (65)bps 49.5 49.0 46 bps 49.4
Consolidated 52.3 52.4 51.5 52.7 (7)bps 74 bps (39)bps 52.4 51.0 146 bps 52.3
Segmental capex (Rs bn)
India 78 89 81 78 (13) (4) (0) 249 191 30.4 329
Wireless 57 70 64 57 (18) (10) 1 193 138 39.2 251
Homes 7.8 8.3 5.0 7.6 (5) 57 3 20.4 17.7 15.1 32
DTH 3.7 3.7 4.5 3.8 1 (18) (1) 11.3 10.1 12.5 15
Airtel Business 8.5 7.5 7.7 9.6 14 12 (11) 24.3 24.6 (1.1) 32
South Asia 0.0 0.1 0.1 0.1 (58) (70) (65) 0.2 0.5 (54.3) 0
Africa 15.1 16.7 12.1 14.2 (9) 25 7 40.8 36.5 12.0 68
Consolidated 92.7 106.1 93.1 92.1 (13) (0) 1 290 228 27.3 398
Bharti Airtel
7
Wireless ARPU increase sharp ~2.5% qoq to Rs208, wireless subs mix continued to improve further on robust postpaid/4G net adds
Exhibit 5: Bharti - Key operating metrics, March fiscal year-ends
Change (%)
3QFY24 3QFY24E 3QFY23 2QFY24 KIE est. yoy qoq 9MFY24 9MFY23 (% chg.) FY2024E
Operating metrics
India wireless
Wireless ARPU 207.9 204.9 193.4 202.8 1.5 7.5 2.5 203.3 188.0 8.2 204.3
EoP reported subs (mn) 345.6 345.3 332.2 342.3 0.1 4.0 1.0 345.6 332.2 4.0 349.6
Net adds (mn) 3.3 3.0 4.9 3.7 10.2 6.2 14.2
EoP prepaid subs 323.2 323.1 313.3 320.8 0.0 3.2 0.7 323.2 313.3 3.2 326.5
EoP post paid subs 22.3 22.2 19.0 21.5 0.5 17.6 4.1 22.3 19.0 17.6 23.1
EoP data subs (mn) 253.2 251.9 225.3 245.9 0.5 12.4 3.0 253.2 225.3 12.4 260.7
Data net adds (mn) 7.3 6.0 6.2 7.7 20.5 16.8 28.0
Data subs proportion (%) 73.3 72.9 67.8 71.8 31 bps 545 bps 143 bps 73.3 67.8 545 bps 74.6
EoP 4G subs (mn) 244.9 244.0 216.7 237.5 0.4 13.0 3.1 244.9 216.7 13.0 252.7
4G net adds (mn) 7.4 6.5 6.4 7.7 20.8 15.9 28.5
Data volume (bn MBs) 16,770 17,317 13,853 16,127 (3.2) 21.1 4.0 48,170 39,900 20.7 65,481
Data usage per data sub (GB/month) 22.0 22.6 20.3 21.7 (3.1) 8.2 1.2 21.5 20.0 7.8 21.6
Average data realization (Rs/GB) 13.1 12.5 14.1 13.2 4.6 (7.5) (0.6) 13.2 14.3 (7.3) 13.1
Voice usage on network (bn mins) 1,161 1,163 1,082 1,148 (0.2) 7.3 1.1 3,457 3,224 7.2 4,644
Minute of usage per sub (min/month) 1,125 1,128 1,093 1,124 (0.2) 2.9 0.1 1,128 1,088 3.7 1,130
Network towers ('000) 307.7 305.3 262.6 295.3 0.8 17.2 4.2 307.7 262.6 17.2 317.7
MBB network towers ('000) 307.0 305.0 261.8 294.7 0.7 17.3 4.2 307.0 261.8 17.3 317.1
MBB sites ('000) 905.6 896.6 806.2 876.1 1.0 12.3 3.4 905.6 806.2 12.3 925.8
Revenue per tower (Rs/month) 236,817 234,592 246,976 238,415 0.9 (4.1) (0.7) 237,632 247,446 (4.0) 236,049
Homes
Cities covered (#) 1,267 1,140 1,239 11.1 2.3 1,267 1,140
Reported ARPU (Rs/month) 583 590 624 595 (1.2) (6.5) (2.0)
Calculated ARPU (Rs/month) 596 603 635 608 (1.1) (6.2) (1.9) 609 648 (6.0) 604
EoP reported subs (mn) 7.3 7.4 5.6 6.9 (0.8) 29.2 5.2 7.3 5.6 29.2 7.7
Net adds ('000) 359 420 432 471 1,244 1,159 1,654
DTH*
ARPU (Rs/month) 163.0 159.0 154.0 159.0 2.5 5.8 2.5 157.6 153.8 2.5 159.2
EoP active DTH subs (mn) 16.1 15.7 16.0 15.7 2.8 1.0 2.5 16.1 16.0 1.0 16.1
Net adds ('000) 387.7 (50.0) 214.2 (168.6) 191.5 (42.6) 141.5
Airtel Business
M2M subs (mn) 25.9 13.5 22.4 92.2 15.6 25.9 13.5 92.2
Net adds ('000) 3,500 250 2,534 10 3,537
Airtel Africa
Reported ARPU (US$) 2.6 2.8 3.1 2.5 (7.6) (17.3) 2.7 3.0 3.3 (9.1) 2.9
EoP subscriber base (mn) 151.2 150.7 138.5 147.7 0.3 9.1 2.4 151.2 138.5 9.1 156.0
Net adds (mn) 3.5 3.0 3.8 4.6 11.2 10.1 16.0
EoP data subscriber base (mn) 62.7 51.3 59.8 22.4 4.9 62.7 51.3 22.4 64.7
Net adds (mn) 2.9 2.7 3.0 8.1 4.6 10.1
Data subs proportion (%) 41.5 37.0 40.5 448 bps 100 bps 41.5 37.0 448 bps 41.5
EoP mobile money subs base (mn) 37.5 31.4 36.5 19.5 2.5 37.5 31.4 19.5 39.3
Net adds (mn) 0.9 1.7 2.2 6.0 5.2 7.8
Notes:
Bharti has started disclosing DTH ARPU and subs based on active customers from 2QFY23
Bharti Airtel
8
Share of data subs in Bharti’s subs mix has been on a rising … non data subs share in paying subs mix declined to modest
trend… ~27% (versus 60% in Mar 2019)
Exhibit 6: Bharti’s subscriber base segmental split, June 2018 Exhibit 7: Bharti’s quarterly subscriber mix, June 2018 onward (%)
onward (mn)
(%) Non-data subs Prepaid data subs Postpaid subs
(mn) Non-data subs Prepaid data subs Postpaid subs
100
4
4
5
5
5
5
5
5
5
5
5
5
400
5
5
5
5
6
6
6
6
6
6
6
22
24
80
32
35
22
76 15
21
38
20
39
20
19
79 14
18
18
44
18
17
18
17
17
47
48
50
52
300
16
54
55
56
57
58
60
15
61
62
64
15
14
64
14
14
15
14
66
14
60
67
172
176
183
106
89
191
159
185
195
110
206
213
201
218
224
97
231
124
147
134
134
200 40
73
72
63
60
57
56
51
250
48
47
45
235
43
41
20
40
38
37
36
35
33
100
32
31
30
177
28
27
167
161
155
145
135
133
133
132
131
128
123
120
118
114
109
107
103
100
96
92
0
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
Dec-23
Jun-20
Jun-21
Jun-18
Jun-19
Jun-22
Jun-23
0
Dec-19
Dec-20
Dec-22
Jun-18
Dec-18
Jun-19
Jun-21
Dec-21
Dec-23
Jun-20
Jun-22
Jun-23

Bharti continued to gain revenue market share, R-Jio leads in subscriber market share
 On our estimates, Bharti continued to gain wireless revenue market share among private telcos in
3QFY24 with further ~36bps qoq (+118 bps yoy) gain, R-Jio lost ~7bps qoq (but +12bps yoy), while
Vi lost ~29bps qoq (and 131bps yoy).
 However, R-Jio was the biggest gainer on paying subscriber market share among three private telcos
with further ~63bps qoq (+196bps yoy) gain with Bharti gaining modest ~2bps qoq (and 15bps yoy),
while Vi lost further ~64bps qoq (and 211bps yoy).
Bharti was once again the biggest gainer in revenue market R-Jio extended its lead on subscriber market share with further
share with ~36bps qoq gain, while R-Jio / Vi lost 7 / 29 bps qoq ~63bps qoq gain, Bharti gained 2bps while Vi lost 64bps qoq
Exhibit 8: Private telcos wireless revenue market share, March Exhibit 9: Private telcos wireless revenue market share, March
fiscal year-ends, March-2019 onwards fiscal year-ends, March-2019 onwards
Bharti India wireless Vi wireless R-Jio wireless Bharti Vi R-Jio

% %
100 100
33.2
35.0
36.7
35.7
38.3
38.5
37.6
39.4
38.7
40.3
42.2
42.4
42.4
43.2
43.3
41.4
41.5
43.5
43.4
41.5
43.5
41.7
41.8
43.5
43.6
43.6
43.6
43.7
42.1
44.0
42.2
42.4
44.2
42.8
43.1
43.1
43.4
80
43.9
44.4
45.0
80
60 60
33.6
27.9
17.3
31.4
17.6
17.9
18.6
18.1
36.2
18.8
19.6
19.3
20.0
29.7
28.4
22.9
20.1
21.9
23.9
20.5
34.5
24.9
25.0
32.9
24.5
31.8
23.9
23.2
25.1
22.8
26.5
25.3
22.2
27.3
21.7
30.3
21.1
28.0
25.2
29.2
40 40
39.1
38.8
38.6
38.1
38.0
37.7
37.1
37.1
36.6
35.9
35.3
34.9
34.8
20
33.9
33.7
33.0
32.2
31.8
31.7
31.3
20
33.8
33.9
33.9
33.8
33.7
33.5
33.4
33.4
32.8
32.3
31.7
31.8
31.2
30.6
30.3
29.8
29.6
29.5
29.5
29.2
0 0
Dec-19
Dec-20
Dec-21
Dec-22
Dec-23
Mar-19
Mar-20
Mar-21
Mar-22
Mar-23
Jun-19
Jun-20
Jun-21
Jun-22
Jun-23
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Dec-19
Dec-20
Dec-21
Dec-22
Dec-23
Mar-21
Mar-22
Mar-23
Mar-19
Mar-20
Jun-21
Jun-22
Jun-23
Jun-19
Jun-20
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Note: Note:
Market share among three private telcos based on our estimate for R-Jio’s Market share among three private telcos based on our estimate for R-Jio’s
wireless subs. wireless revenue.
Source: Companies, TRAI, Kotak Institutional Equities estimates Source: Companies, TRAI, Kotak Institutional Equities estimates
Bharti Airtel
9
Bharti continued to be the biggest gainer on RMS, while R-Jio extended its lead further on SMS during 3QFY24
Exhibit 10: Comparison of private telcos on key operational and financial parameters, March fiscal year-ends
FY2020-23
Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 qoq yoy FY2020 FY2021 FY2022 FY2023 yoy
CAGR
Wireless subs, EOP (mn)
Bharti 327.3 327.8 332.2 335.4 338.6 342.3 345.6 1.0 4.0 283.7 321.4 326.0 335.4 2.9 5.7
Vodafone Idea 240.4 234.4 228.6 225.9 221.4 219.8 215.2 (2.1) (5.9) 291.1 267.8 243.8 225.9 (7.3) (8.1)
R-Jio (inc. FTTH) 419.9 427.6 432.9 439.3 448.5 459.7 470.9 2.4 8.8 387.5 426.2 410.2 439.3 7.1 4.3
R-Jio - wireless 413.7 420.8 425.3 431.0 439.3 450.0 460.4 2.3 8.3 387.5 423.6 404.9 431.0 6.4 3.6
Wireless revenues (Rs bn)
Bharti 181.4 188.8 193.5 195.5 203.9 209.5 216.4 3.3 11.8 459.7 555.7 631.1 759.2 20.3 18.2
Bharti - wireless 179.1 186.5 191.4 193.7 201.7 207.3 214.2 3.3 11.9 460.5 555.5 619.8 750.6 21.1 17.7
Vodafone Idea (inc. Enterprise) 104.1 106.1 106.2 105.3 106.6 107.2 106.7 (0.4) 0.5 449.6 419.5 385.2 421.8 9.5 (2.1)
Vodafone Idea - wireless 93.0 93.3 93.8 92.0 93.3 94.0 94.6 0.7 0.9 360.0 345.3 342.4 372.1 8.7 1.1
R-Jio (inc. FTTH) 218.7 225.2 230.0 233.9 240.4 247.5 253.7 2.5 10.3 543.2 698.9 769.8 907.9 17.9 18.7
R-Jio - wireless 210.2 215.5 219.1 222.0 227.3 233.3 238.5 2.2 8.8 543.2 692.7 746.3 866.7 16.1 16.9
Wireless ARPU (Rs/sub/month)
Bharti 183.0 189.8 193.4 193.3 199.8 202.8 207.9 2.5 7.5 135.5 153.0 159.6 189.1 18.5 11.7
Vodafone Idea 128.0 131.0 135.0 135.0 139.0 142.0 145.0 2.1 7.4 96.0 103.0 111.5 132.0 18.4 11.2
R-Jio (inc. FTTH) 175.7 177.2 178.2 178.8 180.5 181.7 181.7 0.0 2.0 130.4 143.1 153.4 178.1 16.1 11.0
R-Jio 171.1 172.1 172.7 172.8 174.1 174.9 174.7 (0.1) 1.1 130.4 142.3 150.1 172.8 15.1 9.8
Wireless EBITDA (Rs bn)
Bharti 92.7 98.7 104.1 105.2 111.7 115.0 119.2 3.7 14.5 169.6 242.6 313.0 400.8 28.0 33.2
Vodafone Idea 43.3 41.0 41.8 42.1 41.6 42.8 43.5 1.6 4.1 148.0 169.5 160.4 168.2 4.9 4.4
R-Jio 109.6 114.9 120.1 122.1 125.8 129.5 132.8 2.5 10.6 215.7 309.1 376.3 466.7 24.0 29.3
Wireless EBITDA margin (%)
Bharti 51.1 52.3 53.8 53.8 54.8 54.9 55.1 20 bps 130 bps 36.9 43.7 49.6 52.8 318 bps 1,590 bps
Vodafone Idea 41.6 38.6 39.4 40.0 39.0 40.0 40.8 80 bps 140 bps 32.9 40.4 41.6 39.9 (176)bps 696 bps
R-Jio (inc. FTTH) 50.1 51.0 52.2 52.2 52.3 52.3 52.3 0 bps 12 bps 39.7 44.2 48.9 51.4 252 bps 1,170 bps
Wireless EBIT (Rs bn)
Bharti 30.9 36.4 40.3 40.8 45.2 46.8 47.9 2.5 18.9 (31.9) 33.0 79.2 148.5 87.5 nm
Vodafone Idea (14.8) (15.6) (17.1) (14.9) (14.6) (13.8) (12.5) (9.9) (26.8) (95.6) (66.9) (75.5) (62.3) 17.4 13.3
R-Jio (inc. FTTH) 67.3 69.7 72.0 72.3 74.2 77.0 78.7 2.2 9.3 141.7 193.8 240.2 281.3 17.1 25.7
Wireless revenue market share among private telcos
Bharti 37.1 37.7 38.0 38.1 38.6 38.8 39.1 36 bps 118 bps 33.8 34.9 36.3 37.7 145 bps 396 bps
Vi 19.3 18.8 18.6 18.1 17.9 17.6 17.3 (29)bps (131)bps 26.4 21.7 20.0 18.7 (134)bps (770)bps
R-Jio 43.6 43.5 43.5 43.7 43.5 43.6 43.6 (7)bps 12 bps 39.8 43.5 43.7 43.6 (12)bps 374 bps
Wireless paying subs market share among private telcos
Bharti 33.3 33.3 33.7 33.8 33.9 33.8 33.8 2 bps 15 bps 29.5 31.7 33.4 33.8 35 bps 432 bps
Vi 24.5 23.8 23.2 22.8 22.2 21.7 21.1 (64)bps (211)bps 30.3 26.4 25.0 22.8 (225)bps (749)bps
R-Jio 42.2 42.8 43.1 43.4 44.0 44.5 45.1 63 bps 196 bps 40.3 41.8 41.5 43.4 189 bps 316 bps
Note:
Our estimate for R-Jio’s wireless revenue, ARPU and subs excluding the contribution from FTTH.
Source: Companies, TRAI, Kotak Institutional Equities estimates
Bharti Airtel
10
Data volume growth was relatively modest for all three telcos (versus 2QFY24) despite CWC during 3QFY24, MoU broadly stable qoq
Exhibit 11: Comparison of telcos across other key metrics, March fiscal year-ends
FY2020-
Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 qoq yoy FY2020 FY2021 FY2022 FY2023 yoy
23 CAGR
Voice traffic (bn min)
Bharti 1,051 1,079 1,063 1,082 1,124 1,149 1,148 1,161 1.1 7.3 3,035 3,603 4,104 4,348 6.0 12.7
Vodafone Idea 452 450 428 424 425 420 406 401 (1.2) (5.4) 2,547 2,210 1,901 1,727 (9.2) (12.1)
R-Jio (inc. FTTH) 1,200 1,246 1,230 1,270 1,313 1,335 1,334 1,370 2.7 7.9 3,301 3,835 4,500 5,059 12.4 15.3
Minutes of Usage (min/month/sub)
Bharti 1,083 1,104 1,082 1,094 1,122 1,138 1,123 1,127 0.3 3.0 893 992 1,056 1,096 3.7 7.1
Vodafone Idea 610 620 599 613 623 627 613 614 0.2 0.2 679 659 619 613 (1.0) (3.4)
R-Jio (inc. FTTH) 962 1,013 968 984 1,004 1,002 979 981 0.2 (0.3) 793 786 897 993 10.7 7.8
Data traffic (bn MB)
Bharti 11,849 12,561 13,485 13,853 14,248 15,273 16,127 16,770 4.0 21.1 21,020 32,541 45,203 54,148 19.8 37.1
Vodafone Idea 5,237 5,425 5,718 5,762 5,802 6,002 6,119 6,004 (1.9) 4.2 14,594 18,208 21,493 22,707 5.6 15.9
R-Jio (inc. FTTH) 25,190 26,522 28,908 29,645 31,007 33,997 37,171 39,014 5.0 31.6 49,603 63,990 93,570 116,081 24.1 32.8
Data subs (mn)
Bharti 208 213 219 225 233 238 246 253 3.0 12.4 148.6 188.6 208.4 232.7 11.6 16.1
Vodafone Idea 136 136 135 135 136 136 137 137 0.1 1.6 139.5 139.9 135.7 136.2 0.4 (0.8)
R-Jio (inc. FTTH) 410 420 428 433 439 449 460 471 2.4 8.8 387.5 426.2 410.2 439.3 7.1 4.3
Data usage per data sub (MB/month)
Bharti 19,202 19,858 20,793 20,782 20,741 21,623 22,208 22,402 0.9 7.8 13,284 16,083 18,973 20,458 7.8 15.5
Vodafone Idea 12,859 13,326 14,072 14,201 14,247 14,705 14,937 14,576 (2.4) 2.6 8,511 10,861 12,998 13,919 7.1 17.8
R-Jio (inc. FTTH) 20,202 21,300 22,739 22,967 23,700 25,529 27,286 27,949 2.4 21.7 11,909 13,107 18,645 22,774 22.1 24.1
Blended churn (% per month)
Bharti 2.8 3.0 3.3 3.0 2.8 2.8 2.9 2.9 (7)bps (11)bps 2.5 2.0 2.9 3.0 12 bps 52 bps
Vodafone Idea 3.4 3.5 4.3 4.4 3.8 3.9 4.1 4.3 20 bps (10)bps 3.4 2.4 3.3 4.0 73 bps 54 bps
R-Jio (inc. FTTH) 3.6 2.9 1.9 2.2 1.9 1.8 1.7 1.7 3 bps (46)bps 1.1 1.2 2.7 2.2 (46)bps 113 bps
Note:
R-Jio’s data usage and per sub data usage metrics are boosted by contribution from FTTH
Source: Companies, TRAI, Kotak Institutional Equities estimates
R-Jio extended its lead on wireless subscriber base, Vi’s R-Jio’s net adds remained elevated at 10.4mn, Bharti’s net adds
subscriber losses increased qoq robust at 3.3mn, while Vi lost 4.6mn qoq in 3QFY24
Exhibit 12: Wireless subs trends across three private telcos Exhibit 13: Wireless net adds trends across three private telcos
mn Bharti Vi R-Jio wireless mn Bharti Vi R-Jio wireless

500 30
R-Jio inactive
subs clean-up 25 COVID wave
450 R-Jio inactive
COVID 20 1 impact subs clean-up
wave 1
400 15
impact
10
350
5
300 0
-5
250
-10
200 -15
Jun-21
Jun-23
Dec-19
Jun-20
Mar-20
Dec-20
Dec-21
Jun-22
Dec-22
Mar-21
Mar-23
Mar-22
Sep-20
Sep-21
Sep-22
Sep-23
Dec-19
Dec-20
Dec-21
Mar-20
Dec-22
Mar-23
Dec-23
Mar-19
Mar-21
Mar-22
Jun-21
Jun-22
Jun-19
Jun-20
Jun-23
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Note: Note:
Dec 2023 wireless subs base for R-Jio based on KIE estimates Dec 2023 wireless net adds for R-Jio based on KIE estimates
Source: Companies, Kotak Institutional Equities estimates Source: Companies, Kotak Institutional Equities estimates
Bharti Airtel
11
Bharti (+2.5%) reported sharpest qoq ARPU uptick, followed by Bharti grew ahead of the peers once again in 3QFY24, Vi lost
Vi (+2% qoq); while ARPU remained flat qoq for R-Jio further ground on continued subscriber base declines
Exhibit 14: Wireless ARPU trends across three private telcos Exhibit 15: Wireless revenue qoq change for three telcos
Rs/month R-Jio Bharti Bharti India wireless

% Vi wireless
Vi R-Jio wireless
220 20 R-Jio wireless
Dec'21 tariff
200 Dec'19 hikes 15
tariff hikes
180 10
160 5
140 0
120 -5
100 IUC regime -10

change impact
80 -15
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
Mar-22
Mar-23
Dec-23
Mar-19
Mar-20
Mar-21
Jun-19
Jun-23
Sep-19
Jun-20
Sep-20
Jun-21
Sep-21
Jun-22
Sep-22
Sep-23
Dec-19
Dec-20
Dec-21
Dec-23
Mar-21
Dec-22
Mar-23
Mar-19
Mar-20
Mar-22
Jun-19
Jun-21
Jun-23
Jun-20
Jun-22
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Note: Note:
Wireless ARPU for R-Jio based on KIE estimates Wireless revenue for R-Jio based on KIE estimates
R-Jio and Bharti continued to gain revenue market share at Vi’s Bharti and Vi saw qoq margin expansion on higher ARPU, while
expense in 2QFY24 R-Jio’s margin was flattish qoq for second successive quarter
Exhibit 16: Wireless revenue trend across three private telcos Exhibit 17: EBITDA margin trend across three private telcos
Bharti India wireless
Rs bn Vi wireless % Bharti India wireless Vi R-Jio
250 R-Jio wireless 60
230
55
210
190 50
170
45
150
130 40
110
35
90
70 30
Dec-18
Dec-19
Mar-19
Dec-20
Dec-21
Dec-22
Mar-22
Dec-23
Mar-20
Mar-21
Mar-23
Jun-19
Jun-21
Jun-23
Jun-20
Jun-22
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Dec-19
Dec-20
Dec-21
Dec-22
Dec-23
Mar-23
Mar-20
Mar-21
Mar-22
Jun-22
Jun-23
Jun-20
Jun-21
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Note:
Source: Companies, Kotak Institutional Equities estimates
Wireless revenue for R-Jio based on KIE estimates
Bharti Airtel
12
Data volume growth moderated qoq (versus 2QFY24) across the Bharti’s data usage per sub improved qoq to 22GB/month
three telcos despite of CWC during 3QFY24 (versus 21.7 qoq and 27.3 GB/month for R-Jio) in 3QFY24
Exhibit 18: Data consumption across three private telcos Exhibit 19: Data usage per subs across three telcos
bn MBs GB/sub/month R-Jio Bharti Vi

R-Jio Bharti Vi
45,000 30.0
40,000
25.0
35,000
30,000 20.0
25,000
15.0
20,000
15,000 10.0
10,000
5.0
5,000
- -
Dec-18
Dec-19
Mar-19
Dec-20
Dec-21
Mar-21
Dec-22
Mar-23
Dec-23
Mar-20
Mar-22
Jun-19
Jun-22
Jun-18
Jun-20
Jun-21
Jun-23
Sep-18
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Jun-20
Jun-21
Jun-22
Jun-18
Mar-19
Jun-19
Mar-20
Mar-21
Jun-23
Dec-18
Dec-19
Dec-20
Dec-21
Mar-22
Dec-22
Mar-23
Dec-23
Sep-18
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Note: Note:
R-Jio’s reported data consumption also includes contribution from FTTH R-Jio’s reported data usage per sub also includes contribution from FTTH
subs
Voice usage on Bharti’s network was up 1% qoq (versus ~3% MoU was broadly stable qoq, Bharti remains market leader in
qoq growth for R-Jio, but better versus 1% qoq decline for Vi) MoU per sub with 1,127min/month (versus 981 min for R-Jio)
Exhibit 20: Voice usage on network trends across Indian telcos Exhibit 21: Minutes of Use (MoU) trends across Indian telcos
bn mins MoU/sub/month R-Jio Bharti Vi

R-Jio Bharti Vi
1600 1200
1400
1000
1200
800
1000
800 600
600
400
400
200
200
0 0
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
Mar-21
Mar-22
Dec-23
Mar-19
Mar-20
Mar-23
Jun-20
Jun-23
Jun-18
Jun-19
Jun-21
Jun-22
Sep-18
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
Mar-21
Mar-22
Dec-23
Mar-19
Mar-20
Mar-23
Jun-20
Jun-23
Jun-18
Jun-19
Jun-21
Jun-22
Sep-18
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Bharti Airtel
13
Exhibit 22: Key assumptions for Bharti, March fiscal year-ends, 2018-26E
2019 2020 2021 2022 2023 2024E 2025E 2026E

India wireless business
Paying subscriber base ('000s) 282,640 283,667 321,374 326,043 335,412 349,570 367,500 381,500
Net monthly additions ('000s) (1,796) 86 3,142 389 781 1,180 1,494 1,167
Data subscribers ('000s) 115,147 148,578 188,635 208,448 232,678 260,659 290,059 316,559
Net monthly additions ('000s) 2,422 2,786 3,338 1,651 2,019 2,332 2,450 2,208
Wireless ARPU (Rs/sub/month) 116 136 153 160 189 204 234 256
Change (%) (12.2) 16.6 12.9 4.3 18.5 8.0 14.6 9.3
Data volumes (bn MB) 11,733 21,020 32,541 45,203 54,148 65,481 77,971 91,709
Change (%) 200.7 79.2 54.8 38.9 19.8 20.9 19.1 17.6
Data consumption (MB/sub/month) 9,718 13,284 16,083 18,973 20,458 22,122 23,597 25,197
Change (%) 114.4 36.7 21.1 18.0 7.8 8.1 6.7 6.8
Voice traffic (bn mins) 2,811 3,035 3,603 4,104 4,348 4,644 4,957 5,320
Change (%) 44.4 7.9 18.7 13.9 6.0 6.8 6.8 7.3
MOU (min/sub/month) 798 893 992 1,056 1,096 1,130 1,152 1,184
Change (%) 42.2 11.9 11.1 6.4 3.7 3.1 2.0 2.7
Homes business
EoP subscriber base ('000s) 2,270 2,414 3,067 4,483 6,046 7,700 9,100 10,500
Net monthly additions ('000s) 8.2 12.0 54.4 118.0 130.3 137.8 116.7 116.7
Implied ARPU (Rs/month) 840 799 710 671 641 604 587 587
Change (%) (14.2) (4.9) (11.1) (5.5) (4.5) (5.7) (2.8) -
FWA EoP subscriber base ('000s) 0.3 2.4 5.0
Net monthly additions ('000s) 0.0 0.2 0.2
Implied ARPU (Rs/month) 466.1 776.8 799.0
Change (%) 66.7 2.9
Airtel DTH*
EoP subscriber base ('000s) 15,392 16,613 17,716 16,028 15,946 16,087 15,887 15,687
Net monthly additions ('000s) 99.4 101.7 92.0 (140.7) (6.8) 11.8 (16.7) (16.7)
Implied ARPU (Rs/month) 231 152 148 156 154 159 163 163
Change (%) (0.5) (34.1) (2.5) 5.0 (1.4) 3.7 2.4 (0.0)
Capex (Rs mn)
India (ex-spectrum) 233,793 198,003 192,570 204,433 280,567 329,737 323,801 307,238
As % of revenues 39.1 31.0 26.1 24.9 28.7 30.1 24.8 20.5
Consolidated (ex-spectrum) 286,872 252,224 237,918 253,324 341,946 398,243 394,913 380,643
As % of revenues 35.5 28.8 23.6 21.7 24.6 26.3 22.5 19.0
Consolidated overall 336,872 252,224 237,918 436,399 772,796 398,243 394,913 380,643
As % of revenues 41.7 28.8 23.6 37.4 55.5 26.3 22.5 19.0
Notes:
(a) India wireless subs reporting changed to paying subs from 2019
(b) DTH subs reporting changed to active subs from 2022
(c) DTH ARPU net of content cost from 2020
Bharti Airtel
14
Exhibit 23: Key changes to Bharti’s earnings model, March fiscal year-ends, 2024-26E
Revised Earlier Change (%)
2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E
Consolidated
Revenue (Rs mn) 1,511,633 1,757,184 2,005,848 1,508,781 1,762,658 2,010,539 0.2 (0.3) (0.2)
EBITDA (Rs mn) 791,231 950,413 1,114,260 793,375 954,388 1,107,817 (0.3) (0.4) 0.6
EBITDA margin (%) 52.3 54.1 55.6 52.6 54.1 55.1 -25 bps -6 bps 45 bps
EBIT (Rs mn) 394,947 508,384 617,347 396,585 506,052 605,028 (0.4) 0.5 2.0
Recurring EPS (Rs/share) 21.4 39.2 52.7 25.8 39.4 50.5 (17.1) (0.5) 4.2
India wireless
Revenue (Rs mn) 848,371 1,016,424 1,159,550 846,136 1,012,532 1,156,000 0.3 0.4 0.3
EBITDA (Rs mn) 466,079 586,085 686,375 462,657 577,397 670,334 0.7 1.5 2.4
EBITDA margin (%) 54.9 57.7 59.2 54.7 57.0 58.0 25 bps 63 bps 120 bps
Capex (Rs mn) 250,538 219,773 199,935 264,953 219,908 200,811 (5.4) (0.1) (0.4)
EOP subscribers base (mn) 349.6 367.5 381.5 350.3 367.5 381.0 (0.2) (0.0) 0.1
Wireless ARPU (Rs/sub/month) 204.3 234.1 255.8 203.5 232.9 255.2 0.4 0.5 0.2
Africa
Revenue (US$ mn) 5,153 5,552 6,227 5,115 5,598 6,165 0.7 (0.8) 1.0
EBITDA (US$ mn) 2,551 2,751 3,101 2,547 2,805 3,104 0.1 (1.9) (0.1)
EBITDA margin (%) 49.5 49.6 49.8 49.8 50.1 50.4 -30 bps -57 bps -56 bps
Capex (US$ mn) 825 849 872 834 856 878 (1.1) (0.8) (0.8)
Source: Kotak Institutional Equities estimates
For every Rs10/month change in ARPU, FY2025E consolidated EBITDA could change by Rs28 bn (~3%) and
for every 10mn paying subs change, FY2025E consolidated EBITDA could change by Rs9-10 bn (~1)
Exhibit 24: Sensitivity of FY2025E consolidated EBITDA to FY2025E India wireless ARPU and paying wireless
subs, March fiscal year-ends
FY2025E India wireless ARPU (Rs)
214 224 234 244 254
348 878 905 932 959 987
FY2025E India 358 886 914 941 969 996

wireless paying 368 894 922 950 978 1,006
subs (mn) 378 903 931 960 988 1,016
388 911 940 969 997 1,026
Bharti Airtel
15
We expect Bharti’s net debt to EBITDA to decline sharply Bharti’s capex (ex-spectrum) likely to peak in FY2024
Exhibit 25: Bharti’s gross debt build-up, March fiscal year-ends Exhibit 26: Bharti’s capex and capex to sales, March fiscal
year-ends
(Rs bn) Lease liabilities (LHS) (X)
Net debt excluding leases (LHS) Spectrum capex (LHS)
(Rs bn) (X)
Net debt (including leases) to EBITDA (RHS) Capex (ex-spectrum) (LHS)
Capex (ex-spectrum) as % of sales (RHS)
2,500 5 1,000 40
2,000
4 800 35
1,500
600 30
3
1,000
400 25
2
500
200 20
- 1
2024E
2025E
2026E
2019
2020
2021
2022
2023
- 15
2024E
2025E
2026E
2023
2019
2020
2021
2022
Bharti Airtel
16
Exhibit 27: Segment-wise revenue, EBITDA, margin and capex trends and forecasts, March fiscal year-ends
2019 2020 2021 2022 2023 2024E 2025E 2026E
Segmental revenue (Rs bn)
India 599 639 737 821 979 1,094 1,303 1,494
Wireless 416 460 556 629 759 848 1,016 1,160
Homes 22 22 23 30 40 50 72 105
DTH 41 29 31 32 29 31 31 31
Airtel Business 125 132 144 161 186 206 230 256
Passive infra 68 67 — — — — — —
South Asia 4 5 4 4 3 4 4 4
Africa 215 242 289 351 423 427 464 523
Consolidated 808 875 1,006 1,165 1,391 1,512 1,757 2,006
Eliminations (84) (82) (40) (41) (49) (54) (60) (72)
Segmental EBITDA (Rs bn)
India 179 263 339 410 511 589 729 863
Wireless 94 170 243 312 401 466 586 686
Homes 11 11 13 16 20 25 38 58
DTH 16 20 21 21 17 17 16 16
Airtel Business 41 43 55 62 74 82 91 104
Passive infra 32 37 — — — — — —
South Asia 0 0 0 (1) (1) (1) (1) (1)
Africa 84 107 133 172 207 211 230 260
Consolidated 258 366 454 575 713 791 950 1,114
Eliminations (15) (22) (11) (7) (6) (9) (10) (10)
Segmental EBITDA margin (%)
India 29.9 41.2 46.1 49.9 52.2 53.8 56.0 57.8
Wireless 22.7 36.9 43.7 49.6 52.8 54.9 57.7 59.2
Homes 48.3 50.4 57.6 52.3 50.6 50.3 53.2 56.0
DTH 38.3 68.3 68.0 66.6 58.9 55.8 52.7 50.7
Airtel Business 32.6 32.2 38.2 38.7 39.7 39.6 39.4 40.7
Passive infra 47.6 55.1
South Asia 2.8 9.4 3.1 (16.0) (17.6) (14.2) (19.5) (22.5)
Africa 38.9 44.3 46.1 49.1 49.0 49.4 49.6 49.8
Consolidated 32.0 41.8 45.1 49.4 51.2 52.3 54.1 55.6
Segmental Capex ex-spectrum (Rs bn)
India 242 207 196 204 281 329 324 307
Wireless 201 151 147 145 205 251 220 200
Homes 8 6 11 17 22 32 56 57
DTH 11 11 13 13 14 15 15 15
Airtel Business 14 30 22 32 40 32 33 35
Passive infra 9 9 — — — — — —
South Asia 1 1 4 3 1 0.2 0.2 0.2
Africa 44 46 45 49 60 68 71 73
Consolidated 287 254 245 257 342 397 395 381
Notes:
Homes segment includes contribution of Airtel’s AirFiber (FWA offering) from FY2024
Bharti Airtel
17
LT risk-reward favorable for Bharti, reiterate ADD with revised FV of Rs1,200/share

Base case: In our base case scenario, we assume the status quo (3+1 market construct) to continue
beyond 2HFY26, with GoI allowing some relief (deferral/conversion of spectrum and AGR dues) to ensure
Vi’s survival and a 3+1 (or 2+2) market construct. However, given the significant gap in 4G/5G coverage
with peers, we expect Bharti and R-Jio to continue gaining market share at Vi’s expense.
Bull case 1/Duopoly: In our first bull case scenario, we assume an effective duopoly in the Indian telecom
sector, with Bharti and R-Jio proportionately gaining Vi’s subscriber base after FY2026. We believe ability
to raise tariffs would theoretically be higher in a duopoly, but we assume only modest (Rs30 higher)
increase in ARPU in duopoly scenario as compared to our base case.
Bull case 2/Sharper tariff hikes: In our second bull case scenario, we assume a much sharper tariff hike
for Vi to be able to partly service GoI dues post-moratorium and a waiver/conversion for part dues. In a
waiver, the company could continue as a going concern, with the current promoters or GoI could look to
merge Vi with public sector telcos. Furthermore, we believe rather than a sharp hike in headline tariffs,
telcos could implement this by changing the tariff construct from unlimited data plans to bulk data plans
(effectively monetizing higher data usage). However, we believe sharper tariff hikes would benefit Vi’s
competitors more and it would continue to lose market share.
Bear case/Higher competitive intensity and stronger third player: In our bear case scenario, we assume
a deep-pocketed strategic investor taking over Vi to maintain a 3+1 market construct and a higher
competitive intensity as a result. However, Vi’s revival would require significant equity infusion and
waive-off of the past GoI dues, which could be difficult, in our view. Although we build in higher
competitive intensity and lower tariff hike, we believe the gap between Vi and peer telcos would be too
far to bridge even for a deep-pocketed strategic investor; we continue to assume market share gains for
Bharti and R-Jio.
We ascribe an enterprise value of Rs1,091/share to Bharti’s India wireless business in our base case (implies ~9.5X FY2026 EBITDA)
Exhibit 28: Calculation of Bharti’s India wireless enterprise value using discounted cash flow analysis in base case scenario (Rs bn)
2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E
Assumptions
Paying subscriber base (mn) 350 368 382 394 404 414 422 429 435 440
Net adds 14.2 17.9 14.0 12.0 10.0 10.0 8.0 7.0 6.0 5.0
ARPU (Rs/month) 204 234 256 272 286 299 311 322 331 340
y-y 8.0 14.6 9.3 6.5 5.0 4.5 4.0 3.5 3.0 2.5
DCF model
EBITDA 466 586 686 763 828 892 952 1,006 1,055 1,097
Adjusted tax expense (117) (147) (172) (191) (207) (223) (238) (251) (264) (274)
Change in working capital 7 14 12 10 8 8 8 7 6 5
Operating cash flow 357 453 527 582 630 677 721 761 797 828
Capital expenditure (251) (220) (200) (270) (275) (280) (285) (290) (295) (300)
Free cash flow 106 234 327 312 355 397 436 471 502 529 550 572
Discounted cash flow-now 106 211 267 231 238 241 239 234 226 215
Discounted cash flow-1 year forward 234 295 255 263 266 264 259 250 238 224
Discounted cash flow-2 year forward 327 282 291 294 292 286 276 263 247 233
Now +1-year +2-years

Discount rate (%) 10.5% 10.5% 10.5%
Total PV of free cash flow 2,209 2,547 2,789
Terminal value assumption
Growth in perpetuity 4.0% 4.0% 4.0% Sensitivity of 12-month fair value to WACC and perpetual growth
FCF in terminal year 529 550 572 Perpetual growth (%)
Exit FCF multiple (X) 16.0 16.0 16.0 1,091 2.0% 3.0% 4.0% 5.0% 6.0%
Exit EV/EBITDA multiple (X) 7.7 8.0 8.3 9.5% 1,037 1,142 1,286 1,493 1,819
WACC (%)
Terminal value 8,458 8,796 9,148 10.0% 972 1,061 1,180 1,347 1,597
PV of terminal value 3,441 3,578 3,721 10.5% 915 991 1,091 1,227 1,423
Value of India wireless 5,649 6,125 6,510 11.0% 864 930 1,014 1,127 1,285
Implied EV/EBITDA 12.1 10.5 9.5 11.5% 819 876 948 1,043 1,172
Enterprise value (Rs bn) 5,649 6,125 6,510

Shares outstanding (mn) 5,967 5,967 5,967
EV/share for India wireless (Rs/share) 947 1,026 1,091
Bharti Airtel
18
Exhibit 29: Summary of valuation for Bharti’s India wireless business and upside/downside skew
Base Strong 3rd player Duopoly Higher tariffs

Bharti - India wireless
10-year subscriber CAGR 2.7% 2.2% 3.9% 1.8%
10-year ARPU CAGR 6.0% 4.7% 6.9% 8.8%
Rs 300 ARPU achieved by FY2030 FY2033 FY2029 FY2027
10-yr revenue CAGR 9.0% 7.1% 11.2% 10.8%
10-yr EBITDA CAGR 10.6% 8.3% 13.0% 12.4%
Enterprise value (Rs bn) 6,510 4,797 8,583 8,226
Implied FY2026E EBITDA 9.5 8.0 12.5 11.5
India wireless Enterprise value (Rs/share) 1,091 804 1,438 1,379
Bharti SoTP based Fair value (Rs/share) 1,200 904 1,551 1,514
Upside / downside to CMP 6% -20% 37% 33%
Our SoTP-based Fair Value of Bharti is Rs1,200

Exhibit 30: Bharti’s sum-of-the-parts valuation based on March 2026 estimates
Valuation base (Rs bn) Multiple (X) Valuation
EBITDA Other EBITDA Other (Rs bn) (Rs/share)
India business
India wireless 686 9.5 DCF implied 6,510 1,091
Less: Hexacom minority (30% minority) 48 9.5 DCF implied 137 23
India wireless attributable value 6,374 1,068
Homes 58 9.5 DCF implied 555 93
DTH 16 5.0 78 13
Enterprise 104 9.0 938 157
Indus Towers attributable value 317 0.75 237 40
Other investments 133 1 133 22
India business enterprise value 8,315 1,393
India business net debt (including leases) 1,259 211
Network I2I perps 124 21
India business equity value (a) 6,933 1,162
International business
Airtel Africa attributable value 280 0.75 210 35
Robi Axiata attributable value 25 0.75 19 3
International business equity value (b) 229 38
Bharti Airtel Fair Value (c) = (a) + (b) 7,162 1,200
Notes:
(a) Homes segment also includes contribution from Airtel’s AirFiber (FWA offering)
Bharti Airtel
19
LT risk-reward appears favorable with ~33-36% upside in bull cases and ~20% downside in bear case
Exhibit 31: Bharti’s risk-reward skew
Bharti Valuation scenarios Base Strong 3rd player Duopoly Higher tariffs
India business
India wireless 1,091 804 1,438 1,379
Less: Hexacom minority (30% minority) 23 17 30 29
India wireless attributable value 1,068 787 1,408 1,350
Homes 93 78 98 98
DTH 13 10 13 13
Enterprise 157 140 175 175
Indus Towers attributable value 40 59 28 50
Other investments 22 22 22 22
India business enterprise value 1,393 1,097 1,744 1,707
India business net debt 211 211 211 211
Network I2I perps 21 21 21 21
India business equity value (a) 1,162 865 1,512 1,476
International business
Airtel Africa attributable value 35 35 35 35
Robi Axiata attributable value 3 3 3 3
International business equity value (b) 38 38 38 38
Bharti Airtel Fair Value (c) = (a) + (b) 1,200 904 1,551 1,514
Bharti is trading at ~10% premium to its LT average 12-month forward EV/EBITDA

Exhibit 32: Bharti rolling 12-month forward EV/EBITDA
(X) 12-month forward EV/EBITDA for Bharti (X)

18 LT average (X)
+1 standard deviation (x)
16 -1 standard deviation
14
12
10
4
Apr-05
Apr-08
Apr-09
Apr-13
Apr-17
Apr-21
Apr-22
Apr-06
Apr-07
Apr-10
Apr-11
Apr-12
Apr-14
Apr-15
Apr-16
Apr-18
Apr-19
Apr-20
Apr-23
Source: Bloomberg, Company, Kotak Institutional Equities estimates
Bharti Airtel
20
For every Rs10/month change in ARPU, FV could change by Rs45/share (3.7%) and for every 10mn paying
subs change, FV could change by Rs14/share (~1.2%)
Exhibit 33: Sensitivity of FV to FY2025E India wireless ARPU and paying wireless subs, March fiscal year-
ends
FY2025E India wireless ARPU (Rs)
214 224 234 244 254
348 1,085 1,128 1,171 1,214 1,258
FY2025E India 358 1,098 1,142 1,186 1,230 1,273
wireless paying 368 1,111 1,156 1,200 1,245 1,289
subs (mn) 378 1,124 1,170 1,215 1,260 1,305
388 1,138 1,183 1,229 1,275 1,321
Bharti should command a premium valuation to global telcos, given its superior EBITDA growth and margin profile, in our view
Exhibit 34: Global telcos valuation comparables
Enterprise Value Market cap EBITDA margin

EV/EBITDA (X) Net debt/EBITDA (X) (%) RoE (%) EBITDA CAGR (%)
Global Telco comps (US$ bn) (US$ bn) 2024 2025 2024 2025 2024 2025 2024 2025 2023-26E
Bharti Airtel 100 79 11.2 9.3 2.4 1.7 52.3 54.1 8.8 17.5 16.1
Vodafone Idea 37 8 17.9 16.3 14.3 13.9 40.1 41.6 n/a n/a 1.5
Indian telcos average (a) 14.6 12.8 8.4 7.8 46.2 47.8 8.8 17.5 8.8
Verizon Inc 348 174 8.6 7.2 4.3 3.6 30.2 35.8 12.7 19.7 7.7
AT&T 291 127 6.9 6.5 3.9 3.7 34.5 36.2 14.1 14.0 3.3
T-Mobile 300 192 9.4 9.5 3.4 3.4 40.8 39.0 12.4 17.0 3.5
US telcos average 8.3 7.7 3.9 3.6 35.2 37.0 13.1 16.9 4.8
Deutsche Telecom 302 121 7.0 6.4 4.2 3.8 36.3 39.1 19.7 15.4 n/a
Vodafone Plc 79 23 5.7 5.7 4.3 4.3 29.9 30.2 3.2 3.3 (21.4)
Orange 76 31 5.4 5.3 3.2 3.1 29.5 30.0 8.5 8.7 0.9
Telefonica 69 23 5.0 4.9 3.4 3.3 31.6 31.9 6.2 7.5 n/a
Telenor 24 15 7.3 7.1 2.6 2.6 43.2 43.6 24.5 15.4 n/a
European telcos average 6.1 5.9 3.5 3.4 34.1 35.0 12.4 10.1 (10.2)
China Mobile 155 186 3.2 3.0 (1.0) (0.9) 34.6 34.2 10.2 10.5 5.5
China Unicom 70 70 3.7 3.5 (0.3) (0.3) 26.5 26.1 6.9 7.5 5.4
China Telecom 17 21 1.2 1.1 (0.4) (0.4) 27.1 26.5 5.4 5.7 3.3
China telcos average 2.7 2.5 (0.6) (0.6) 29.4 28.9 7.5 7.9 4.7
SK Telecom 15 8 3.9 3.7 1.8 1.7 30.5 30.9 9.7 9.5 2.0
KT Corp 14 7 3.4 3.4 1.6 1.6 20.5 20.3 6.9 7.2 1.8
LG Uplus 9 3 3.2 3.1 1.9 1.9 25.6 25.6 8.0 7.9 2.2
Korea telcos average 3.5 3.4 1.8 1.7 25.5 25.6 8.2 8.2 2.0
Axiata 13 5 6.1 5.9 3.7 3.6 46.6 46.0 2.1 3.0 5.2
Maxis 8 6 9.8 9.6 2.3 2.2 39.8 39.6 20.5 22.5 1.8
Celcom Digi 13 10 10.3 10.1 2.1 2.0 46.8 46.8 11.2 12.4 28.8
Malaysia telcos average 8.7 8.5 3.0 2.9 43.2 42.8 11.3 12.7 3.5
Chungwa Telecom 30 30 11.1 10.8 0.1 0.1 38.6 38.8 9.7 9.9 2.6
SingTel 36 29 12.9 12.2 2.5 2.4 25.7 26.3 9.1 9.9 3.9
Telekom Indonesia 29 25 5.7 5.4 0.8 0.7 53.0 53.5 18.5 18.9 7.1
XL Axiata 5 2 4.7 4.3 2.7 2.5 49.2 49.4 4.9 6.1 n/a
Indosat 8 5 5.4 4.8 2.1 1.9 46.6 48.1 11.7 14.4 5.0
Other regional telcos average 7.9 7.5 1.6 1.5 42.6 43.2 10.8 11.9 4.7
Global telcos average 7.0 6.6 2.8 2.6 36.2 36.8 10.6 11.4 3.0
Notes:
(a) KIE estimates for India telcos, Bloomberg consensus estimates for other telcos
Source: Bloomberg, Kotak Institutional Equities estimates
Bharti Airtel
21
Airtel Africa trades at a discount to peers, Underlying growth remains robust but reported financials impacted by Naira devaluation
Exhibit 35: African telcos valuation comps
African Telco comps Enterprise Value Market cap EV/EBITDA (X) Net debt/EBITDA (X) EBITDA margin (%) RoE (%) EBITDA CAGR (%)
(US$ bn) (US$ bn) 2024 2025 2024 2025 2024 2025 2024 2025 2023-26E
Airtel Africa 8 5 3.3 3.1 1.7 1.6 49.4 46.8 17.1 19.6 4.8
Vodacom 13 10 4.4 4.2 0.9 0.9 37.9 38.1 20.6 21.6 11.4
Safaricom 5 3 4.9 4.5 1.6 1.4 48.3 47.9 32.5 34.4 12.1
MTN 15 9 3.2 3.3 1.3 1.3 41.6 40.8 14.8 13.7 n/a
African telcos average 3.9 3.7 1.4 1.3 44.3 43.4 21.3 22.3 9.5
Source: Bloomberg, Kotak Institutional Equities
Exhibit 36: Bharti’s condensed financials, Ind AS, March fiscal year-ends, 2018-26E (Rs mn)
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Profit and loss statement
Revenues 826,388 807,802 875,390 1,006,158 1,165,469 1,391,448 1,511,633 1,757,184 2,005,848
EBITDA 300,791 258,189 366,095 453,717 575,339 712,735 791,231 950,413 1,114,260
EBIT 108,360 44,714 89,199 159,673 244,432 348,417 394,947 508,384 617,347
PBT 29,992 (50,162) (32,731) 15,191 83,614 164,784 183,532 311,010 441,250
Recurring PAT 18,921 (25,193) (36,390) (28,758) 25,564 90,157 127,517 232,200 312,529
Recurring EPS (Rs/share) 4.7 (6.3) (6.7) (5.2) 4.6 15.9 21.4 38.9 52.4
Balance sheet
Total equity 783,483 849,480 1,021,295 812,266 919,350 1,064,443 1,172,270 1,475,467 1,767,511
Borrowings 1,141,676 1,254,283 1,176,190 1,297,899 1,329,145 1,655,448 1,569,388 1,396,873 1,218,920
Other liabilities 580,657 648,212 1,410,305 1,350,113 1,388,065 1,746,441 1,746,234 1,875,933 1,977,883
Total equity and liabilities 2,505,816 2,751,975 3,607,790 3,460,278 3,636,560 4,466,332 4,487,893 4,748,273 4,964,314
Net fixed assets 758,168 903,661 917,545 901,711 948,111 1,062,534 1,137,359 1,173,879 1,162,788
Net intangibles 1,211,348 1,200,996 1,158,784 1,102,233 1,229,983 1,659,192 1,586,326 1,502,690 1,397,510
Cash and equivalents 135,684 127,287 296,606 175,442 143,557 181,231 220,250 411,523 648,365
Other assets 400,616 520,031 1,234,855 1,280,892 1,314,909 1,563,375 1,543,958 1,660,181 1,755,651
Total assets 2,505,816 2,751,975 3,607,790 3,460,278 3,636,560 4,466,332 4,487,893 4,748,273 4,964,314
Net debt (including leases) 1,003,748 1,129,813 1,209,372 1,552,290 1,620,214 2,149,664 1,905,805 1,590,515 1,220,978
Cash flow statement
Operating cash flow 232,153 124,531 23,554 346,550 342,150 510,367 643,851 757,649 814,149
Capex (267,262) (306,495) (222,592) (335,816) (434,690) (388,184) (398,243) (394,913) (380,643)
Other income 16,039 16,286 4,748 27,370 3,963 17,500 14,675 13,671 17,093
Free cash flow (19,070) (165,678) (194,290) 38,104 (88,577) 139,683 260,282 376,407 450,599
Key ratios
EBITDA margin (%) 36.4 32.0 41.8 45.1 49.4 51.2 52.3 54.1 55.6
Avg. RoAE (%) 1.4 0.5 NM NM 4.9 8.4 8.8 17.5 19.3
Avg. RoACE (%) 3.8 0.7 3.0 NM 5.9 10.5 10.7 14.3 18.2
Net debt to EBITDA (X) 3.3 4.4 3.3 3.4 2.8 3.0 2.4 1.7 1.1
Notes:
(a) Pro forma numbers for FY2021, adjusted for de-consolidation of Bharti Infratel
Bharti Airtel
DISCLAIMERS, DISCLOSURES & LEGAL
Ratings and other definitions/identifiers
Definitions of ratings
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
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Our Fair Value estimates are also on a 12-month horizon basis.

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Distribution of ratings/investment banking relationships

Kotak Institutional Equities Research coverage universe
Percentage of companies covered by Kotak Institutional

70%
Equities, within the specified category.
60%
Percentage of companies within each category for which
Kotak Institutional Equities and or its affiliates has
50%
provided investment banking services within the previous
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40% * The above categories are defined as follows: Buy = We
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20% 12 months; Sell = We expect this stock to deliver less than
-5% returns over the next 12 months. Our target prices
10% 6.7% are also on a 12-month horizon basis. These ratings are
3.1% 2.4% used illustratively to comply with applicable regulations. As
0.0% of 31/12/2023 Kotak Institutional Equities Investment
0%
Research had investment ratings on 255 equity securities.
BUY ADD REDUCE SELL
Source: Kotak Institutional Equities

As of December 31, 2023
Coverage view
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RESULT

Bharti Airtel (BHARTI) ADD

EBITDA largely unchanged; maintain ADD with revised FV of Rs1,200

Aditya Bansal Anil Sharma

Key takeaways from earnings webinar

 Capex in Homes business further increased by 3% qoq to Rs7.8 bn (+57% yoy).

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Bharti India wireless Vi wireless R-Jio wireless Bharti Vi R-Jio

Source: Companies, TRAI, Kotak Institutional Equities estimates

Source: Companies, TRAI, Kotak Institutional Equities estimates

mn Bharti Vi R-Jio wireless mn Bharti Vi R-Jio wireless

Rs/month R-Jio Bharti Bharti India wireless

100 IUC regime -10

Source: Companies, Kotak Institutional Equities estimates

bn MBs GB/sub/month R-Jio Bharti Vi

bn mins MoU/sub/month R-Jio Bharti Vi

2019 2020 2021 2022 2023 2024E 2025E 2026E

Source: Company, Kotak Institutional Equities estimates

Source: Kotak Institutional Equities estimates

FY2025E India 358 886 914 941 969 996

Source: Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

LT risk-reward favorable for Bharti, reiterate ADD with revised FV of Rs1,200/share

Now +1-year +2-years

Enterprise value (Rs bn) 5,649 6,125 6,510

Source: Company, Kotak Institutional Equities estimates

Base Strong 3rd player Duopoly Higher tariffs

Source: Company, Kotak Institutional Equities estimates

Our SoTP-based Fair Value of Bharti is Rs1,200

Source: Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Bharti is trading at ~10% premium to its LT average 12-month forward EV/EBITDA

(X) 12-month forward EV/EBITDA for Bharti (X)

Source: Bloomberg, Company, Kotak Institutional Equities estimates

Source: Kotak Institutional Equities estimates

Enterprise Value Market cap EBITDA margin

Source: Bloomberg, Kotak Institutional Equities estimates

Source: Bloomberg, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities estimates

Our Fair Value estimates are also on a 12-month horizon basis.

Distribution of ratings/investment banking relationships

Percentage of companies covered by Kotak Institutional

Source: Kotak Institutional Equities

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

DISCLAIMERS, DISCLOSURES & LEGAL

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