Bharti Airtel Result Update–1Q FY11 Jaypee Research Desk

  Aug 11 ’10 equityresearch@jaypeeindia.com

research@jaypeeusa.com

 
  1QFY11     Result Update Bharti Airtel
 

As on Aug 10, 2010..  Bharti  Airtel declared  its results for the  Q1FY11 on  11th  August,  2010. 

Market Price (10/08/10)  324.3  We  believe  that  the  results  were  positive  with  the  rise  in  Minutes  of 
Market Cap. (Rs. cr.)  123152.9 
Face Value   
Usage  and  decline  in  ARPU  much  less  than  that  observed  in  previous 
5 
Beta (3 year avg.)  0.97  quarter. The company reported an EBITDA margin of 36% as compared 
52 Week High/Low  467/229.5  to 28%  in the  previous quarter.  However  the PAT margins reduced to 
Target Price  Under Review  14%  from  20%  the  previous  quarter  mainly  on  the  basis  of  losses  on 
  Codes  account  of  Zain  (23  days)  and  the  forex  loss  which  resulted  in  higher 
BSE Code  532454  Finance charges impacting the PAT margins.   
ISIN No  INE397D01024 
NSE Symbol  BHARTIARTL  Key highlights: 
Bloomberg Code  BHARTI IN 
• Rise in Sales: Consolidated net sales for 1QFY11 grew 17% Y‐o‐
Reuters Code  BRTI.BO 
     Y  and  14%  Q‐o‐Q  to  ` 122308  million.  These  included  the 
Share Price Trend revenues from Spice and 23 day revenues from Zain.   
450 6,000.00

•
400
350
300
5,000.00

4,000.00
EBITDA  rose  by  8%  QoQ:  Consolidated  EBITDA  for  1QFY11 
250
200
3,000.00 grew  3%  Y‐o‐Y  and  fell  by  8%  Q‐o‐Q  to  `  44140  million,  with 
150 2,000.00
100
Bharti
Nifty 1,000.00
margins  falling  marginally  to  36%  as  against  38%  in  the  last 
50
0 0.00 quarter.  
Dec'09
Aug'09

Oct'09

Apr'10
Nov'09

Jan'10
Feb'10

May'10
Jun'09
Jul'09

Sept'09

Mar'10

Jun'10
Jul'10

    
• Fall in PAT: PAT for the quarter stood at `.16969 million which 
Shareholding pattern as on 30th  was  19%  lower  QoQ.  This  was  due  to  the  increase  in  the 
June, 2010.
Others Finance charges for this year on the account of forex loss. The 
6%

DII
forex loss for this quarter was `. 2161 million as compared to a 
9%
forex gain of `. 1597 million in the previous quarter. 
FII
17%
Promoter
68% • Marginal  Decline  in  ARPU  &  Rise  in  MOU:  ARPU  for  Bharti 
declined 2.2% Q‐o‐Q to ` 215 which was less than the previous 
  decline  of  4%.  The  MOU  improved  by  3%  to  480  minutes 
  indicating  that  the  minutes  are  coming  back  to  incumbents 
Abbas Merchant  (similar  was  the  trend  in  Idea  Cellular).  The  ARPM  for  the 
Sr.AVP Research 
quarter fell to 0.45 showing a downtrend of 4.25% 
amerchant@jaypeeindia.com 
Direct No  :    +91‐22‐4354 2009 
Mobile No :   +91‐9820718605  • Change  in  accounting:  The  Company  has  started  reporting  its 
  financials  according  to  IFRS  from  this  quarter  due  to  which 
Archit Singhal 
Research Analyst  there is change in the key numbers of previous quarters.  The 
asinghal@jaypeeindia.com  accounting for Indus has been done on the Equity basis for the 
Direct No  :   +91‐22‐4062 1017 
42% holding in Indus. 
Mobile No :  +91‐9769154762 

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Distribution
 
 Bharti Airtel Result Update–1Q FY11 Jaypee Research Desk
  Aug 11 ’10 equityresearch@jaypeeindia.com
research@jaypeeusa.com

 
 

• Improved performance in Telemedia services: The  ARPU for Telemedia  services has increased to 961  from 

937 in the previous quarter which is a turn‐around after 7 quarters.  

• Consolidation of results: The Company has started reporting combined results for India and Asia and has also 
combined the Zain financials from this quarter. 

• Net debt: The net debt stood at `. 602308 million due to the debt taken this quarter for the acquisition of 
Zain and for acquiring 3G and BWA licenses. 

• Capex: The Capex for this fiscal has been planned as $ 3.1 billion out of which $ 2 billion has to be for Indian 
operations, $ 800 billion for Africa and remaining for Indus. 

• Valuation: We are increasingly becoming positive on the sector as we believe the competitive intensity has 
reduced and incumbent large players like Bharti are in an advantageous position given their scale. We believe 
the results were in line to marginally better than our expectations. We reiterate our BUY rating on the stock 
and the target price is under review which would be updated after the concall. 

Key Indicators: 

Q‐o‐Q % Y‐o‐Y % 
Jun‐10 Mar‐10 Change Jun‐09 Change
Mobile Services

Subscribers (mn) 136.620 127.619 7.1% 102.368 33.5%

ARPU (Rs) 215 220 ‐2.0% 278 ‐22.5%
MOU (minutes) 480 468 2.7% 478 0.5%
RPM (Rs) 0.45 0.47 ‐4.6% 0.58 ‐22.9%
Minutes Carried (mn) 197718 180052 9.8% 151290 30.7%

Telemedia Services

Subscribers (mn) 3.153 3.067 2.8% 2.828 11.5%

ARPU (Rs) 961 937 2.6% 1027 ‐6.4%
Minutes Carried (mn) 4696 4,515 4.0% 4746 ‐1.1%

Enterprise Services: NLD and ILD

Minutes Carried  NLD (mn minutes) 17,333 15,875 9.2% 11781 47.1%

Minutes Carried  ILD (mn minutes) 3,044 3,173 ‐4.1% 2869 6.1%
Source: Company, Jaypee Research
 
Key Notes: 
• The figures in the table show the performance indicators for Bharti in India. 
• The total subscriber base for Bharti is 183.3 million including the Zain subscribers. The total Mobile subscriber 
base is 176.9 million. 

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               www.jaypeeusa.com
www.jaypeeindia.com
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Distribution
 
 Bharti Airtel Result Update–1Q FY11 Jaypee Research Desk
  Aug 11 ’10 equityresearch@jaypeeindia.com
research@jaypeeusa.com

Bharti Airtel
Q‐o‐Q % Y‐o‐Y % 
Rs million Jun‐10 Mar‐10 Change Jun‐09 Change

Mobile Services (India and Asia) 88,237 83174 6% 84,301 5%

(% of Total Gross Sales) 63% 67% 69%
Mobile Services (Africa) 9,583 0.00 0.00
(% of Total Gross Sales) 7% 0% 0%
Telemedia Services 8,960 8511 5% 8,551 5%
(% of Total Gross Sales) 6% 7% 7%
Enterprise Services 10,186 10768 ‐5% 11,627 ‐12%
(% of Total Gross Sales) 7% 9% 10%
Others 1,949 2094 ‐7% 1,027 90%
(% of Total Gross Sales) 1% 2% 1%
Passive Infrastructure Services 20,412 19459 5% 15,937 28%
(% of Total Gross Sales) 15% 16% 13%
Total Gross Sales 139,327 124,006 12% 121443 15%
Less: Intersegment Eliminations 17,019  16515 3% 17300 ‐2%

Total Net Sales 122308 107,491 14% 104143 17%

Total Income 122,856 107,705 14% 104254 18%
Access charges 14,227 11570 23% 11,372 25%
(% of Total Net Sales) 12% 11% 11%
Licence fees and spectrum charge 11,742 10594 11% 10,125 16%
(% of Total Net Sales) 10% 10% 10%
Network operations costs 27,268 24365 12% 21,230 28%
(% of Total Net Sales) 22% 23% 20%
Employee costs 5,601 4547 23% 5,127 9%
(% of Total Net Sales) 5% 4% 5%
SG&A 19,330 15586 24% 13,315 45%
(% of Total Net Sales) 16% 14% 13%
Total Operating Expenditure 78,168 66662 17% 61,169 28%

EBITDA 44,140 40,829 8% 42974 3%

(% of Total Net Sales) 36.09% 37.98% 41.26%
Depreciation 19,467 16,954 15% 14,754 32%
EBIT 24,673 23,875 3% 28220 ‐13%
(% of Total Net Sales) 20.17% 22.21% 27.10%
Interest (net) 4198 (356) ‐1279% ‐1284 ‐427%

EBT 20,475 24231 ‐16% 29504 ‐31%

(% of Total Net Sales) 17% 23% 28%
Other Income 548 214 156% 111 394%
PBT 20,719 24411 ‐15% 29483 ‐30%
(% of Total Net Sales) 17% 23% 28%
Tax 3750 3415 10% 4305 ‐13%
(% of PBT) 18% 14% 4%
PAT 16,969 20996 ‐19% 25178 ‐33%
(% of Total Net Sales) 14% 20% 24%
Source: Company, Jaypee Research
 

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               www.jaypeeusa.com
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 Bharti Airtel Result Update–1Q FY11 Jaypee Research Desk
  Aug 11 ’10 equityresearch@jaypeeindia.com
research@jaypeeusa.com

 
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