1 November 2017
Q2FY18 Results Update | Sector: Telecom
Bharti Airtel
Buy
BSE SENSEX
33,600
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
our est., but flat EBITDA margin of 34.4% implies a beat of 180bp to our est.
Lean cost structure supports strong EBITDA growth:
Bharti has created a
Financials & Valuations (INR b)
2017 2018E 2019E
lean cost structure. This is evident from Africa’s 800bp margin improvement
Y/E Mar
954.7 875.8 946.3
Net Sales
in the last four quarters, despite a 2% revenue decline YoY. India wireless too
353.3 314.5 348.1
EBITDA
has seen a 7%/1% YoY decline in network/employee cost, despite accelerated
45.3
15.0
25.8
PAT
network rollout. We believe this offers Bharti strong ARPU sensitivity to
11.3
3.8
6.5
EPS (INR)
EBITDA, which should drive healthy operating leverage, as ARPU recovers in
-4.6 -66.9
72.2
Gr. (%)
FY19E.
168.8 171.0 176.3
BV/Sh (INR)
Expect India ARPU recovery in FY19 to drive growth:
RJio has taken four
6.8
2.2
3.7
RoE (%)
price actions since turning paid, signaling ARPU accretion, which has been
5.4
3.8
4.9
RoCE (%)
hostage to competition. Post IUC and Jiophone launch impact in 2HFY18, we
47.5 143.4
83.3
P/E (x)
believe ARPUs should improve from FY19. Bharti’s strong spectrum/data
3.2
3.1
3.1
P/BV (x)
network portfolio and data volume of meager 260m GB (i.e. less than one
fifth of RJio) indicate a huge scope to improve ARPUs (26% below pre-RJio
launch) through value-accretive offerings. Management’s guidance of 25%
Estimate change
capex increase to INR250b should therefore be more front-loading and
TP change
reduce capex beyond 3-4 quarters.
Rating change
Maintain Buy with revised TP of INR680:
We have revised consol. EBITDA by
2/5% for FY18/19E due to higher Africa EBITDA. We expect consol. EBITDA
growth of -11%/11% in FY18/19E on an 8% India wireless EBITDA recovery in
FY19E. We have revised our SOTP-based TP to INR680 v/s INR490 earlier, led
by a) reducing Africa biz’s equity value to -INR25 v/s -INR80 earlier; and b)
improving India biz’s equity value to INR583, assigning 10.5x EV/EBITDA on
Sept’19 EBITDA. Bharti can offer 7-8% FCF yield as the market bottoms out.
Quarterly Performance (Consolidated)
Y/E March
Gross Revenue
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO expense
Extra-Ord expense
PBT
Tax
Rate (%)
MI & P/L of Asso. Cos.
Reported PAT
Adj PAT
YoY Change (%)
Margins (%)
1Q
2Q
2,55,465 2,46,515
7.9
3.4
1,59,985 1,52,113
95,480 94,402
37.4
38.3
50,402 49,560
19,399 19,057
2,787
1,568
28,466 27,353
3,536
66
24,930 27,287
10,089 11,136
40.5
40.8
222
1,544
14,619 14,607
16,724 14,646
70.7
25.9
6.5
5.9
FY17
FY18
FY17
9,54,683
-1.1
6,01,386
3,53,297
37.0
1,97,730
76,974
10,336
88,929
11,697
77,232
34,819
45.1
4,416
37,997
45,291
-4.6
4.7
FY18E
8,75,838
-8.3
5,61,372
3,14,466
35.9
2,01,231
81,267
15,419
47,386
2,289
45,097
21,701
48.1
9,539
13,857
15,008
-66.9
1.7
2QFY18E
2,16,555
-12.2
1,41,536
75,018
34.6
49,282
21,459
3,698
7,975
0
7,975
4,380
54.9
1,458
2,138
2,138
-85.4
1.0
Var (%)
0.6
-2.1
5.6
173.6
3Q
4Q
1Q
2Q
3QE
4QE
2,33,357 2,19,346 2,19,581 2,17,769 2,16,952 2,21,535
-3.0
-12.1
-14.0
-11.7
-7.0
1.0
1,48,542 1,40,746 1,41,997 1,38,549 1,39,102 1,41,724
84,815 78,600 77,584 79,220 77,851 79,811
36.3
35.8
35.3
36.4
35.9
36.0
48,350 49,418 48,192 46,873 53,083 53,083
19,356 19,162 18,274 23,266 19,985 19,742
3,487
2,494
3,698
3,907
3,907
3,907
20,596 12,514 14,816 12,988
8,689
10,893
2,040
6,055
503
1,786
0
0
18,556
6,459
14,313 11,202
8,689
10,893
11,841
1,753
8,136
5,341
3,650
4,575
63.8
27.1
56.8
47.7
42.0
42.0
1,678
972
2,504
2,431
2,043
2,561
5,037
3,734
3,673
3,430
2,997
3,757
5,775
8,146
3,890
4,364
2,997
3,757
-54.6
-45.5
-76.7
-70.2
-48.1
-53.9
2.5
3.7
1.8
2.0
1.4
1.7
S&P CNX
10,441
BHARTI IN
Cost-structuring measures show results
3,997
Africa delivers, finally:
Consol. EBITDA of INR79.2b was up only 2% QoQ (-
2,152.2 / 33.3
16% YoY, 6% beat) due to a 1% QoQ drop in revenue. Africa surprised with a
545 / 284
7% QoQ revenue jump (-2% YoY) to INR52b, backed by a 5% dollar ARPU rise;
31/44/49
Africa EBITDA surged 23% QoQ to INR16.8b on a leaner cost structure. India
1,733.5
wireless revenue drop of 5% QoQ (-17% YoY) to INR122.5b was in line with
32.9
CMP: INR538
TP: INR680 (+26%)
62.9
40.5
60.4
Aliasgar Shakir – Research analyst
(Aliasgar.Shakir@motilaloswal.com); +91 022 6129 1565
Hafeez Patel – Research analyst
(Hafeez.Patel@motilaloswal.com); +91 22 3010 2611
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Bharti Airtel
Valuation and view
We expect India wireless EBITDA to recover, with 8% growth in FY19E after a
steep 27% fall in FY18E. This is on the back of 6% India revenue growth.
We expect Africa EBITDA growth of 28%/18% for FY18/19E, largely coming from
280bp/420bp margin accretion for FY18/19E.
Subsequently, consolidated EBITDA should recover by 11% in FY19E after an
11% fall in FY18E.
Our SOTP-based TP of INR680 values a) India business at 10.5x EV/EBITDA on
Sept’19 EBITDA, with equity value/share of INR583, b) Africa business at 6x
EV/EBITDA on Sept’ 19 EBITDA, and c) Tower business value at INR121/share.
The stock is trading at 9x EV/EBITDA on FY19E, with potential to offer 7-8% FCF
yield as the market bottoms out. This should support the stock price.
Exhibit 1: Bharti Airtel: SOTP based on Sept-19
EBITDA
(INR b)
India SA business (excl. towers)
Tower business (15% discount to fair value)
Africa business
Less net debt
Total Value
Shares o/s (b)
CMP
Upside (%)
256
81
Ownership
(%)
100%
58%
100%
Proportionate
EBITDA
(INR b)
256
81
EV/
EBITDA (x)
10.5
6.0
Fair Value
(INR b)
2690
401
485
858
4434
Value/
Share (INR)
673
100
121
215
680
4.0
538
26
Source: Company, MOSL
Concall highlights
Key takeaways: Focus on market share; capex guidance up
Focus is to grab and maintain the higher share of high-ARPU subscribers.
Keenly monitoring market share of total 4g shipments, which is growing
consistently.
In Africa, improving market condition is expected to support ARPU growth.
EBITDA margins are sustainable at current elevated levels.
Capex guidance for FY18 has increased from INR200b to INR250b to boost 4g
data network coverage and capacity; however, this will be modular and taper
over time. Spectrum acquisition is largely done.
In two years, 75% of the customers will move to bundled plans in India. This
may drive consumption at higher ARPUs.
Cut in IUC rate should impact 4% of consolidated EBITDA.
1QFY18 performance
Down-trading of subscribers to lower price plans has impacted ARPU.
War on waste is high priority, resulting in rationalizing cost base.
Industry landscape
Indian telecom sector saw dramatic price erosion in the last 12 months.
Bundling offers and higher data demand is driving the market.
In order to justify high investments, operators will have to improve ARPUs.
1 November 2017
2

Bharti Airtel
Airtel has led consolidation of the sector. Acquisition of Tata Tele and Tikona will
bolster spectrum and improve revenue market share.
TRAI reduced IUC by 57%, which will impact the industry.
Current value offering given to consumers is unsustainable. In the short term,
competitive intensity continues unabated, but in the long term, will have to
reduce offerings, which should improve ARPUs.
Value players will continue to lose market share.
FTTH is a sticky business. Unlike mobile wireless, where consumption shift is
easy through 2nd simcard, FTTH switch may be difficult unless there is a major
value proposition. Airtel is improving quality of service through V Fiber-based
improved speeds and more offerings.
In two years, 75% of the customers will move to bundled plans in India.
Company Outlook
Focus is to grab and maintain high-ARPU subscribers.
Management keenly monitors Airtel’s market share of total 4g shipments, which
is growing consistently.
Providing more services to consumers through a.) offering payment bank,
reaching 20m accounts in just 9 months, b.) Airtel TV app reached in top 10
apps, with 20m downloads, c.) Among the top apps offering video/audio
consumption.
Launched VOLTE services in Mumbai and Gujarat. Will be expanding it across the
country. This will increase capacity and spectral efficiency.
HD subscriber penetration in the DTH business is increasing.
The IUC impact is at 4% of consolidated EBITDA.
Bharti has sub ghz spectrum across major circles.
VoLTE network will not have any opex savings, but offer better customer
experience as it would use both voice and data on same 4g network and also
improve spectral efficiency.
Karbonn handset launch has seen very good response, but is out of stock.
Working on increasing inventory with the handset maker.
Bharti spectrum portfolio is adequate. It is yet to fully lay down the spectrum
across the country. So, in the short term, need for spectrum will be lower.
Market share in India is important from the point that leader makes
disproportionate margin, but Bharti will need to balance it with profitability.
Africa Operations
Underlying margin improvement has created sustainable cash flows.
Supplementing the focus to only remain in countries with no 1or 2 ranking, the
company merger with Ghana has received regulatory approval.
In Africa, costs saving are due to restructuring of processes and cost base.
Africa capex reduction is due to refarming in 900mhz, 1800mhz. Africa capex will
see a step-up in coming quarters.
Africa improvement is on the back of better bundled, higher ARPUs offerings.
Expect improving market condition to support industry growth. Margins are
sustainable at current levels.
1 November 2017
3

Bharti Airtel
Balance Sheet/acquisition/Capex/Investments
In the face of huge data upsurge from bundled and unlimited plans, capex
guidance for FY18 is increased from INR200b to 250b to expedite the 4g data
network coverage and capacity.
The increase in capex guidance is to support massive growth in data throughput.
Investment is done in upgrading network, fiber backhaul and data capacity
expansion.
Since the spectrum acquisition is largely done, bulk of the investment is over
and now investment requirement is modular that can be stepped up as
required.
Deploying massive MIMO technology, which will increase capacity 5-10x times
and move toward 5g technology.
CCI approvals received for Telenor merger. The loss of revenues from Telenor
acquisition will be lower due to the near-term closure of the deal. Tata Tele can
see higher dilution as it will take some time. Both the deals should be margin-
accretive.
Net debt to EBITDA of 2.9x is comfortable.
The spectrum acquired from the recent acquisitions will support requirement
for the next two years.
3g network capex is negligible; may shut down 3g network in 3-4 years, much
before 2g shut down. Most of the new 3g BTS is fungible, but the older 3g BTS is
not compatible to upgrade and will therefore require replacement of BTS.
1 November 2017
4

Bharti Airtel
Story in charts
Exhibit 2: India mobile KPIs
Mobile MoU (mins)
Mobile ARPU (INR)
Source: Company, MOSL
Exhibit 3: Bharti India: YoY mobile traffic growth (%)
39
34
24
11
11
14
Exhibit 4: Bharti India: Mobile data traffic (b MB)
8 8 6
7 7 9
5 5 5 5 5
8
Source: Company, MOSL
Source: Company, MOSL
Exhibit 5: Bharti India: Mobile churn rate per month (%)
Exhibit 6: Bharti v/s Idea: QoQ India mobile traffic growth
(%)
Bharti QoQ growth
9
3
2
-5
4
-3
1
4
5
2
-2
-2
5
8
4
-3
-3
Idea QoQ growth*
15
6
4
5
3
6
2
1
0
-1 -2
7
11
10
5
8
4
-3
1
Source: Company, MOSL
*Idea estimated
Source: Company, MOSL
1 November 2017
5

Bharti Airtel
Exhibit 7: India mobile revenue and EBITDA margin
India mobile revenue (INR b)
EBITDA margin (%)
Exhibit 8: Africa revenue and EBITDA margin
EBITDA margin (%)
32
28
26 27 26 25
26
24 24
22 21 21 20 21 22 22 23 23
Africa mobile revenue (INR b)
44 43
39 37
38 38 38 40 40 40 40 41
35 35
33 35 35 36
Source: Company, MOSL
Source: Company, MOSL
Exhibit 9: Bharti: Mobile cell site base and quarterly
additions
Cellsites ('000)
3.6
1.9
Sites added ('000)
2.9 3.0
1.7
1.9
1.3
0.3
0.6
1.8
Exhibit 10: Consolidated net debt and net debt/EBITDA
Net Debt (INR b)
Net Debt/EBITDA (x)
3.1 3.2 3.0 3.1
2.5 2.5
2.6 2.5
2.4 2.4
1.7 1.7
1.0
0.7
1.1
1.6
1.4
2.4 2.4
2.1 2.2
1.9
2.1
2.2 2.1
1.1
Source: Company, MOSL
Source: Company, MOSL
Exhibit 11: Bharti Africa: PBT in constant currency (USD)
14
(23)
(22)
(20)
27
49
92
Source: Company, MOSL
1 November 2017
6

Bharti Airtel
Exhibit 12: Bharti Airtel - Capex trend (INR b)
India wireless
80
60
40
20
0
9.6
8.7
10.9
9.6
22.9
17.6
34.6
Passive Infra
Telemedia services
Others
22.2
16.0
9.5
22.3
Digital TV
South Asia
12.1 18.7 7.5 6.8
10.7
Enterprise
Africa
4.4
9.0
44.1
31.1 32.8 33.8 31.9 37.1
20.5
3.2
3.1
50.7
61.1
7.2 13.5 12.9
14.9 20.7
Source: Company, MOSL
Exhibit 13: Summary of Estimate change
FY18E
Revenue consolidated (INRb)
Old
New
Change (%)
EBITDA consolidated (INRb)
Old
New
Change (%)
EBITDA margin consolidated (%)
Old
New
Change (bp)
Net Profit (INRb)
Old
New
Change (%)
EPS (INR)
Old
New
Change (%)
879
876
-0.3
307
314
2.3
35.0
35.9
0.9
9
14
48.1
2.3
3.5
48.1
FY19E
945
946
0.2
330
348
5.4
34.9
36.8
1.8
13
26
101.6
FY20E
1040
1047
0.6
372
399
7.0
35.8
38.1
2.3
20
38
94.9
3.2
4.9
6.5
9.5
101.6
94.9
Source: Company, MOSL
1 November 2017
7

Bharti Airtel
Exhibit 14: Consolidated Segment wise Summary as per IFRS (INR m)
2QFY17
Revenue
Mobile India
Telemedia
Enterprise
Passive Infrastructure
South Asia
Others (incl South Asia)
Africa
Eliminations
Consolidated Revenue
EBITDA
Mobile India
Telemedia
Enterprise
Passive Infrastructure
South Asia
Others (incl. South Asia)
Africa
Eliminations
Consolidated EBITDA
EBITDA margin (%)
Mobile India
Telemedia
Enterprise
Passive Infrastructure
Mobile South Asia
Africa
Consolidated EBITDA margin
Depreciation and amortization
Operating income
Other income and share of JV/Associate
Net finance cost
Pro forma Profit Before Taxes
Exceptional Items
Pro forma Tax
Effective Tax Rate (%)
Pro forma Profit After Tax
Pro forma Minority Interest
Pro forma Net Profit
1,47,353
7,063
29,816
14,962
4,169
9,273
53,048
-19,172
2,46,513
62,492
3,347
8,440
7,106
210
2,956
12,383
-2,533
94,402
42.4
47.4
28.3
47.5
5.0
23.3
38.3
49,560
44,842
1,568
19,057
27,353
66
11,136
40.7
16,151
1,544
14,607
1QFY18
1,29,146
6,703
27,787
15,982
972
9,994
48,528
-19,531
2,19,581
44,281
3,014
9,342
7,954
-62
2,359
13,377
-2,682
77,584
34.3
45.0
33.6
49.8
-6.4
27.6
35.3
48,192
29,392
3,698
18,274
14,816
503
8,136
54.9
6,177
2,504
3,673
2QFY18
1,22,451
6,368
28,231
16,614
1,027
10,341
52,029
-19,292
2,17,769
42,087
2,715
9,881
8,130
-15
2,623
16,467
-2,667
79,220
34.4
42.6
35.0
48.9
-1.5
31.6
36.4
46,873
32,347
3907
23,266
12,988
1,786
5,341
41.1
5,861
2,431
3,430
YoY%
-16.9
-9.8
-5.3
11.0
-75.4
11.5
-1.9
0.6
-11.7
-32.7
-18.9
17.1
14.4
-107.3
-11.3
33.0
5.3
-16.1
-804bps
-476bps
669bps
144bps
-652bps
831bps
-192bps
-5.4
-27.9
149.2
22.1
-52.5
-52.0
41.0
-63.7
57.4
-76.5
QoQ%
-5.2
-5.0
1.6
4.0
5.7
3.5
7.2
-1.2
-0.8
-5.0
-9.9
5.8
2.2
-75.3
11.2
23.1
-0.5
2.1
8bps
-234bps
138bps
-84bps
489bps
408bps
105bps
-2.7
10.1
5.7
27.3
-12.3
-34.4
-1379.1
-5.1
-2.9
-6.6
2QFY18E
1,23,050
6,479
28,621
16,287
991
10,318
50,242
-19,035
2,16,952
40,100
2,913
9,623
8,106
-53
2,500
14,221
-2,587
74,824
v/s Est (%)
-0.5
-1.7
-1.4
2.0
3.6
0.2
3.6
1.3
0.4
5.0
-6.8
2.7
0.3
-70.9
4.9
15.8
3.1
5.9
32.6
178bps
45.0
-234bps
33.6
138bps
49.8
-84bps
-5.3
382bps
28.3
334bps
34.5
189bps
49,282
-4.9
25,542
26.6
3,698
5.7
21,459
8.4
7,781
66.9
0
4,273
25.0
54.9
-1379bps
3,508
67.1
1,422
70.9
2,086
64.4
Source: MOSL, Company
Exhibit 15: India Mobile: Operating Metrics
India - Wireless KPIs
Wireless traffic (b min)
Voice subscribers (m)
Data subscribers (m)
ARPU (INR)
MOU (min)
Data Traffic (b MB)
Monthly churn (%)
2QFY17
314.0
259.9
62.7
188
406
178
3.7
1QFY18
421.5
280.6
62.6
154
507
472
3.8
2QFY18
437
282
65.8
145
518
784
3.9
YoY%
39.3
8.5
5.0
-23.0
27.7
340.0
26bps
QoQ%
3.8
0.5
5.1
-6.3
2.2
65.9
12bps
2QFY18E
417
285
71.9
144
492
583
3.8
v/s Est (%)
4.8
-1.0
-8.6
0.4
5.4
34.5
12bps
Source: MOSL, Company
1 November 2017
8

Bharti Airtel
Exhibit 16: Bharti Africa: Quarterly Performance (INRm)
Revenue (INR m)
EBITDA (INR m)
EBITDA margin (%)
EOP Subs (m)
MOUs
ARPUs (USD)
Total Minutes (m)
2QFY17
53,048
12,383
23.3
78.1
158.8
3.9
36570
1QFY18
48,528
13,377
27.6
80.0
149.2
3.1
35773
2QFY18
52,029
16,467
31.6
82
163
3
39609
YoY%
-1.9
33.0
831bps
4.8
2.6
-17.5
8.3
QoQ%
7.2
23.1
408bps
2.4
9.3
4.8
10.7
2QFY18E
50,242
14,221
28.3
82
154
3
37367
v/s Est (%)
3.6
15.8
334bps
0.4
5.8
2.4
6.0
Source: Company, MOSL
Exhibit 17: Key assumptions and value drivers
Mobile segment
Mobile - India
Subs (m)
YoY (%)
Total voice traffic (b min)
YoY%
Total data traffic (b MB)
YoY%
Average Rev Per User (INR/month)
YoY%
Minutes of Use/Sub/Month
YoY%
Mobile - Africa
Subs (m)
YoY (%)
Net adds per month (m)
ARPU (USD/month)
YoY (%)
EBITDA margin (%)
Exhibit 18: Business Mix
Revenue (INR b)
Mobile
Telemedia
Enterprise
Passive Infrastructure
Others (incl. South Asia)
Africa
Total revenue
Eliminations and others
Consolidated revenue
YoY%
EBITDA (INR b)
Mobile
Telemedia
Enterprise
Passive Infrastructure
Others (incl. South Asia)
Africa
Total EBITDA
Eliminations and others
Consolidated EBITDA
YoY%
Capex (INR b)
Consolidated capex
YoY%
Capex/Sales (%)
FY12
181
12
889
12
10
187.8
-7
431
-5
53
20
0.7
7.1
-3
26.5
FY13
188
4
965
9
72
621
185.1
-1
436
1
64
20
0.9
6.3
-11
26.2
FY14
206
9
1030
7
151
109
193.9
5
436
0
69
9
0.5
5.6
-11
26.1
FY15
226
10
1081
5
287
91
198.1
2
417
-4
76
10
0.6
5.0
-10
22.7
FY16
251
11
1171
8
498
73
192.9
-3
409
-2
81
6
0.4
4.0
-21
21.1
FY17
274
9
1340
14
733
47
177.0
-8
426
4
80
-1
0.0
3.2
-20
23.3
FY18E
291
6
1763
32
3260
345
144.1
-19
520
22
85
6
0.4
3.2
0
31.3
FY19E
303
4
1832
4
5848
79
145.8
1
514
-1
92
8
0.6
3.2
2
33.6
FY20E
312
3
1857
1
9256
58
158.8
9
503
-2
100
8
0.6
3.2
-1
34.5
Source: MOSL, Company
FY12
403
37
45
95
16
198
794
-80
715
20
137
16
8
36
-9
53
240
-4
237
17.1
150
-46
21.0
FY13
431
36
53
50
32
240
842
-73
769
8
130
15
9
0
-12
63
205
-5
200
-15.4
130
-13
16.9
FY14
467
39
63
51
41
272
934
-77
857
11
158
15
14
0
2
71
259
-6
254
26.8
175
34
20.4
FY15
520
44
67
54
43
269
998
-77
920
7
194
18
14
0
5
61
292
-5
287
13.0
210
20
22.8
FY16
561
25
97
56
49
251
1039
-76
963
5
219
11
30
26
8
53
347
-7
340
18.6
271
29
28.1
FY17
566
28
109
61
49
220
1032
-78
955
-1
227
13
34
29
10
51
364
-11
353
4.0
384
42
40.2
FY18E
490
26
115
67
46
209
953
-77
876
-8
165
11
40
33
10
65
325
-11
314
-11.0
250
-35
28.6
FY19E
521
28
129
71
51
230
1030
-83
946
-1
179
12
45
35
12
77
360
-12
348
-1.5
195
-22
20.6
FY20E
587
30
145
75
55
246
1140
-93
1047
20
213
13
51
37
13
85
412
-13
399
26.8
195
-22
18.6
Source: Company, MOSL
1 November 2017
9

Bharti Airtel
Financials and Valuations
Income Statement
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
2013
7,69,045
7.6
2,32,154
30.2
1,48,147
84,007
40,084
423
0
44,346
25,183
56.8
-88
19,251
19,251
-54.8
2013
18,988
4,84,229
5,03,217
40,886
6,67,363
-45,935
11,65,531
12,86,663
77,098
1,70,001
1,109
67,824
16,078
84,990
3,68,231
3,56,719
11,512
-1,98,230
11,65,531
2014
8,57,461
11.5
2,76,596
32.3
1,56,496
1,20,100
48,381
6,385
538
78,642
48,449
61.6
2,467
27,726
27,519
43.0
2014
19,987
5,77,573
5,97,560
42,102
7,58,958
-45,777
13,52,843
14,06,145
1,55,308
2,07,692
1,422
62,441
49,808
94,021
4,16,302
4,04,533
11,769
-2,08,610
13,52,843
2015
9,20,394
7.3
3,12,276
33.9
1,55,311
1,56,965
48,463
6,588
-7,960
1,07,130
54,047
50.4
1,248
51,835
55,779
102.7
2015
19,987
5,99,577
6,19,564
48,525
8,06,839
-44,392
14,30,536
15,01,440
1,70,357
2,26,519
1,339
67,252
11,719
1,46,209
4,67,781
4,59,472
8,309
-2,41,262
14,30,535
2016
9,65,321
4.9
3,40,062
35.2
1,74,498
1,65,564
68,865
9,501
14,505
1,20,705
59,368
49.2
6,495
54,842
47,471
-14.9
2016
19,987
6,36,314
6,56,301
51,984
9,50,430
-32,382
16,26,333
18,17,263
1,14,498
2,70,173
1,692
73,106
37,087
1,58,289
5,75,601
5,65,925
9,676
-3,05,427
16,26,333
2017
9,54,683
-1.1
3,53,297
37.0
1,97,730
1,55,567
76,974
10,336
-11,697
77,232
34,819
45.1
4,416
37,997
45,291
-4.6
2017
19,987
6,54,576
6,74,562
68,750
10,74,281
-18,791
17,98,802
15,28,712
1,46,746
2,63,758
488
49,838
12,817
2,00,614
5,02,439
4,77,889
24,550
-2,38,681
17,98,802
2018E
8,75,838
-8.3
3,14,466
35.9
2,01,231
1,13,234
81,267
15,419
-2,289
45,097
21,701
48.1
9,539
13,857
15,008
-66.9
2018E
19,987
6,63,621
6,83,607
78,289
10,54,989
-18,791
17,98,094
19,39,755
1,29,824
2,28,762
1,512
70,140
293
1,56,817
5,00,246
4,93,397
6,849
-2,71,484
17,98,094
2019E
9,46,287
8.0
3,48,059
36.8
2,22,776
1,25,282
(INR Million)
2020E
10,46,758
10.6
3,98,676
38.1
2,42,276
1,56,400
68,415
15,561
0
72,428
28,971
40.0
17,616
25,841
25,841
72.2
65,305
15,561
0
1,06,656
42,662
40.0
25,941
38,052
38,052
47.3
Balance Sheet
Y/E Mar
Share Capital
Reserves
Net Worth
Minority Interest
Debt
Deferred Tax
Total Capital Employed
Net Fixed Assets
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
2019E
2020E
19,987
19,987
6,84,650 7,17,891
7,04,637 7,37,877
95,905 1,21,847
10,33,768 9,96,043
-18,791
-18,791
18,15,519 18,36,977
(INR Million)
19,11,978 18,64,702
1,29,824 1,29,824
3,33,834 4,17,706
649
1,741
59,489
83,903
60,796 1,57,724
2,12,901 1,74,339
5,60,118 5,75,256
5,33,042 5,64,805
27,076
10,451
-2,26,283 -1,57,549
18,15,519 18,36,976
1 November 2017
10

Bharti Airtel
Financials and Valuations
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
Y/E Mar
Adjusted EBITDA
Non cash opr. exp (inc)
(Inc)/Dec in Wkg. Cap.
Tax Paid
Other operating activities
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax) & Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
Ratios
2013
4.8
41.9
125.9
0.9
22.9
2014
6.9
46.0
149.5
1.8
30.2
2015
14.0
52.8
155.0
2.2
19.9
2016
11.9
55.5
168.8
1.4
11.9
45.3
3.2
3.2
9.0
0.3
2017
11.3
60.8
168.8
1.0
12.7
47.5
3.2
3.4
9.1
0.2
6.8
5.4
5.5
0.5
19
0
183
1.4
2017
3,53,297
17,132
-27,429
-31,587
-19,104
2,92,309
-3,84,045
-91,736
-1,264
92,452
-2,92,857
1,245
9,353
-58,566
43,698
-4,270
-4,818
17,635
12,817
2018E
3.8
54.1
171.0
1.0
34.7
143.4
3.1
3.7
10.2
0.2
2.2
3.8
3.6
0.5
29
1
206
1.4
2018E
3,14,466
23,135
20,280
-21,701
0
3,36,179
-2,50,250
85,929
16,923
22,697
-2,10,630
0
-19,292
-91,272
-4,811
-1,15,375
10,173
-9,880
293
2019E
6.5
62.2
176.3
1.0
18.6
83.3
3.1
3.3
9.0
0.2
3.7
4.9
4.6
0.5
23
0
206
1.2
2020E
9.5
70.1
184.6
1.0
12.6
56.6
2.9
2.9
7.5
0.2
5.3
5.9
5.9
0.6
29
1
197
1.0
3.8
3.1
3.3
0.7
32
1
169
1.1
2013
2,32,154
9,034
19,634
-31,294
-1,829
2,27,699
-1,30,063
97,636
-56,568
-130
-1,86,761
-579
-24,026
-34,339
11,665
-47,279
-6,341
7,652
1,311
5.0
3.8
4.2
0.6
27
1
172
0.9
2014
2,76,596
17,331
17,533
-35,039
-14,095
2,62,326
-1,74,659
87,667
-36,886
-38,188
-2,49,733
67,956
14,252
-37,620
-18,917
25,671
38,264
1,311
39,575
9.2
5.8
6.5
0.6
27
1
182
1.0
2015
3,12,276
23,417
-1,639
-46,111
-11,925
2,76,018
-2,09,786
66,232
-11,649
954
-2,20,481
0
-72,451
-33,887
9,811
-96,527
-40,990
39,575
-1,415
7.4
5.9
6.2
0.6
28
1
214
1.2
2016
3,40,062
40,183
-4,172
-46,836
-46,032
2,83,205
-2,70,967
12,238
68,060
56,871
-1,46,036
984
-1,17,833
-32,890
30,278
-1,19,461
17,708
-73
17,635
Cash Flow Statement
2019E
2020E
3,48,059 3,98,676
33,659
33,659
15,301
28,194
-28,971
-42,662
0
0
3,68,048 4,17,867
-1,95,000 -1,95,000
1,73,048 2,22,867
0
0
22,697
22,697
-1,72,303 -1,72,303
0
0
-21,221
-37,725
-86,513
-83,403
-4,811
-4,811
-1,12,545 -1,25,939
83,199 1,19,625
-22,404
38,099
60,796 1,57,724
(INR Million)
1 November 2017
11

Bharti Airtel
Corporate profile
Company description
Bharti Airtel is an integrated telecom operator with
presence in wireless, fixed-line and broadband, long
distance, enterprise, and passive infrastructure
services across India, Sri Lanka, Bangladesh and
Africa. Bharti is the largest Indian wireless operator
with revenue market share of ~31% and population
coverage of 86%. Bharti is the fourth largest
wireless company globally by subscribers.
Source: MOSL/Bloomberg
Exhibit 1: Sensex rebased
Exhibit 2: Shareholding pattern (%)
Sep-17
Promoter
DII
FII
Others
67.1
9.9
16.4
6.6
Jun-17
67.1
10.3
16.2
6.4
Sep-16
67.1
15.8
15.7
1.4
Source: Capitaline
Exhibit 3: Top holders
Holder Name
Three Pillars Pte Ltd
Life Insurance Corporation Of India Through
Various Accounts
Icici Prudential Life Insurance Company
Limited
Icici Prudential - Mutual Fund Units
% Holding
5.0
4.0
2.1
1.0
Source: Capitaline
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Sunil B Mittal
Gopal Vittal
Rajendra Chopra
Designation
Chairman
Managing Director & CEO
Company Secretary
Exhibit 5: Directors
Name
Chua Sock Koong
Sheikh Faisal Thani Al-Thani
Bernardus Johannes Maria
Verwaayen
Dinesh Kumar Mittal
Shishir Priyadarshi
Name
Rakesh Bharti Mittal
Tan Yong Choo
Craig Edward Ehrlich
Manish Kejriwal
V K Viswanathan
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
ANB & Co
Chandrasekaran Associates
KPMG
R J Goel & Co
S R Batliboi & Associates LLP
Type
Internal
Secretarial Audit
Internal
Cost Auditor
Statutory
Source: Capitaline
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY18
FY19
FY20
MOSL
forecast
3.8
6.5
9.5
Consensus
forecast
4.9
11.3
18.6
Variation (%)
-23.2
-42.7
-48.9
Source: Bloomberg
1 November 2017
12

Bharti Airtel
NOTES
1 November 2017
13

Disclosures:
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
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public company, the details in respect of which are available on
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the subject company at the end of the month immediately preceding the date of publication of the Research Report.
MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a)
from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and
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Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have received any compensation from the subject company in
the past 12 months.
In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:
a)
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b)
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c)
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d)
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MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure
of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do business including investment banking with
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Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
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copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and information that are considered
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been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice.
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disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by virtue of their receiving this report.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or
indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Bharti Airtel
Disclosure of Interest Statement
Analyst ownership of the stock
Bharti Airtel
No
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary
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investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional
investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and
interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S.
registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and
therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in
the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following
representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person
or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of
offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or
appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations
as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to
determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative
products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the
views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time
without any prior approval. MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities
mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities
functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is
being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not
directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would
be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to
certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or
representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The
person accessing this information specifically agrees to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or
employees responsible for any such misuse and further agrees to hold MOSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this
information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring
Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:
na@motilaloswal.com,
Contact No.:022-30801085.
Registration details of group entities.: MOSL: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE(F&O): INF011041257; BSE(CD); MSE(Cash): INB261041231;
MSE(F&O): INF261041231; MSE(CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100. Motilal Oswal Asset
Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth
management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities
Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products
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