[vc_row][vc_column][vc_column_text css=”.vc_custom_1670147403563{margin-top: 1px !important;margin-right: 1px !important;margin-bottom: 1px !important;margin-left: 1px !important;border-top-width: 2px !important;border-right-width: 2px !important;border-bottom-width: 2px !important;border-left-width: 2px !important;padding-top: 2px !important;padding-right: 1px !important;padding-bottom: 1px !important;padding-left: 1px !important;border-left-color: #000000 !important;border-left-style: solid !important;border-right-color: #000000 !important;border-right-style: solid !important;border-top-color: #000000 !important;border-top-style: solid !important;border-bottom-color: #000000 !important;border-bottom-style: solid !important;border-radius: 1px !important;}”]

Valuation of Bharti Airtel Ltd.

[/vc_column_text][vc_single_image image=”72176″ img_size=”large” alignment=”center” css=”.vc_custom_1670147414653{margin-top: 50px !important;margin-bottom: 50px !important;}”][vc_column_text css=”.vc_custom_1670219016689{border-bottom-width: 20px !important;}”]Bharti Airtel Limited (Airtel) is one of the largest homegrown consumer brands and India’s premier integrated communications solutions provider. Headquartered in India, Airtel is a global communications solutions provider with over 491 Mn customers in 17 countries across South Asia and Africa. The company ranks amongst the top three mobile operators globally and its networks cover over two billion people. Airtel is India’s largest integrated communications solutions provider and the second largest mobile operator in Africa. 

In India, they have focused $46 Bn+ worth of investments in creating a massive digital highway. As a result, they have been able to created a formidable presence on the ground in the form on towers, spectrum, fiber and data centre assets. They have 237,577 network towers, 355,000 kilometers of optical fibres and, Rs. 1211 billion of spectrum investment. The company is headed Sunil Bharti Mittal who serves as the Chairman and Gopal Mittal who is the MD and CEO.

• Mobile Services: Airtel offers postpaid, prepaid, roaming, internet and other value-added services. Its distribution channel is spread across 1.13 Mn outlets with network presence in 7,913 census and 795,126 non-census towns and villages in India, covering approximately 95.7% of the country’s population. Airtel’s offerings include high-speed internet access and a host of innovative services like Mobile TV, video calls, live-streaming videos, gaming, buffer-less HD video streaming, among others. Its national-long distance infrastructure provides a pan-India reach with 355,079 RKms of optical fiber.
• Homes Services: Airtel provides fixed-line telephone and broadband services for homes in 847 cities (including LCOs) pan-India. The product offerings include high-speed broadband, upto 1 Gbps speed and voice connectivity.
• Digital TV Services: Airtel’s Direct-To-Home (DTH) platform offers both standard and high definition (HD) digital TV services with 3D capabilities and Dolby surround sound. It currently offers a total of 670 channels including 84 HD channels (1 HD SVOD services), 56 SVOD services, 5 international channels and 4 interactive services.
• Airtel is India’s leading provider of ICT services with a diverse portfolio of offerings to enterprises, governments, carriers, and small and medium business. For small and medium businesses, Airtel provides fixed-line voice (PRIs), data and other connectivity solutions like MPLS, VoIP, SIP trucking.
• Additionally, it offers voice, video and web conferencing solutions. Cloud portfolio is also an integral part of its office solutions suite, which offers storage, compute, Microsoft Office 365, ecommerce package through Shopify and CRM packages on a pay-as-you-go model. Its services also include network integration, data centres, managed services, enterprise mobility applications and digital media. Airtel Business provides ‘one solution, bill, support, face’ experience to its customers. It offers global services in both voice and data including International Toll Free Services and SMS hubbing. Its strategically located submarine cables and satellite network enable its customers to connect across the world including hard-to-reach areas. Its global network runs across 365,000 Rkms+ (including IRU), covering 50 countries and 5 continents.
• They are already offering 5G services in 12 cities across the country. They launched 5G services in Delhi, Mumbai, Chennai, Bengaluru, Hyderabad, Siliguri, Nagpur and Varanasi. The offering is also currently available in parts of Gurugram, Panipat, Guwahati and Patna.

Because we believe in the future of Bharti Airtel and more broadly the telecom space, we valued the business of Bharti Airtel to arrive upon a fair value for its share. And I am sure, the results will satisfy you.[/vc_column_text][vc_column_text]

Valuation of Bharti Airtel Ltd

[/vc_column_text][vc_column_text]Bharti Airtel has had trouble in the past with generating a net profit. However since the past couple of years, the company has been able to turn net positive on a growing revenue.[/vc_column_text][vc_single_image image=”72193″ img_size=”full” alignment=”center” css=”.vc_custom_1670217419387{margin-top: 40px !important;margin-right: 40px !important;margin-bottom: 40px !important;margin-left: 40px !important;border-top-width: 2px !important;border-right-width: 2px !important;border-bottom-width: 2px !important;border-left-width: 2px !important;border-left-color: #000000 !important;border-left-style: solid !important;border-right-color: #000000 !important;border-right-style: solid !important;border-top-color: #000000 !important;border-top-style: solid !important;border-bottom-color: #000000 !important;border-bottom-style: solid !important;border-radius: 1px !important;}”][vc_column_text]For our model, we have selected a weighted average cost of capital of 8.3% and a terminal EBITDA multiple of 7.2x. Following are excerpts from the actual model:[/vc_column_text][vc_single_image image=”72194″ img_size=”full” alignment=”center” css=”.vc_custom_1670218426169{margin-top: 40px !important;margin-right: 40px !important;margin-bottom: 40px !important;margin-left: 40px !important;border-top-width: 2px !important;border-right-width: 2px !important;border-bottom-width: 2px !important;border-left-width: 2px !important;border-left-color: #000000 !important;border-left-style: solid !important;border-right-color: #000000 !important;border-right-style: solid !important;border-top-color: #000000 !important;border-top-style: solid !important;border-bottom-color: #000000 !important;border-bottom-style: solid !important;border-radius: 1px !important;}”][vc_single_image image=”72195″ img_size=”full” alignment=”center” css=”.vc_custom_1670218436319{margin-top: 40px !important;margin-right: 40px !important;margin-bottom: 40px !important;margin-left: 40px !important;border-top-width: 2px !important;border-right-width: 2px !important;border-bottom-width: 2px !important;border-left-width: 2px !important;border-left-color: #000000 !important;border-left-style: solid !important;border-right-color: #000000 !important;border-right-style: solid !important;border-top-color: #000000 !important;border-top-style: solid !important;border-bottom-color: #000000 !important;border-bottom-style: solid !important;border-radius: 1px !important;}”][vc_single_image image=”72196″ img_size=”full” alignment=”center” css=”.vc_custom_1670218450411{margin-top: 40px !important;margin-right: 40px !important;margin-bottom: 40px !important;margin-left: 40px !important;border-top-width: 2px !important;border-right-width: 2px !important;border-bottom-width: 2px !important;border-left-width: 2px !important;border-left-color: #000000 !important;border-left-style: solid !important;border-right-color: #000000 !important;border-right-style: solid !important;border-top-color: #000000 !important;border-top-style: solid !important;border-bottom-color: #000000 !important;border-bottom-style: solid !important;border-radius: 1px !important;}”][vc_column_text]As one can see, the model gives out a fair value of Rs. 1174 per share for shares of Bharti Airtel, which translates to an upside of 38% from current levels. And mind you, this is the base case. In the scenario where we decrease the cost of capital and/or increase the growth rate, there are chances for share price to reach 1300 levels as well.

Telecom sector is slowly becoming a duopoly and Bharti Airtel, being the more mature of the players, has an advantage over Reliance Jio. With the advent of 5G, the average revenue per user is set to increase too. Apart from that, Airtel has a bunch of other offerings which the company is slowly moving to monetize.

We are hopeful about growth prospects of the company, and against the backdrop of a strong economy and other tailwinds, we can see the stock price rise to the levels mentioned.[/vc_column_text][vc_zigzag][vc_column_text]Disclosure:

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SEBI-NSE-INB/F/E231435737,BSE-INB011435733/INF011435833, DP-IN-DP-CDSL-679-2013 SEBI- REG.NO- MCX & NCDEX – INZ000015731[/vc_column_text][/vc_column][/vc_row]