Bharti Airtel - Q4FY13 Result Review - Angel Broking

For 4QFY2013, Bharti Airtel's (Bharti) revenue as well as bottomline came in below expectations while operating margins performance surprised positively. Bharti's consolidated top line came in at Rs. 20,460cr, up just 1.0% qoq. The Indian mobility business reported decent KPIs with MOU growing by 4.8% to 455min and 5.1% qoq rise in network traffic. Voice average revenue per minute (ARPM) declined slightly by 0.5% to 35paise/min; consequently the average revenue per user (ARPU) grew by 4.2% qoq to Rs. 159/month. VAS as a percentage to revenue remained flat almost flat at 17.4%. Churn level came back to comfortable position after seven quarters and stood at 3.2%. In USD terms, the revenue from Zain Africa declined by 1.1% qoq to US$1,120mn, as MOU declined significantly by 14.2% qoq to 123min.

Bharti's consolidated EBITDA margin grew by ~115bp qoq to 31.7%, led by expansion in margins in its domestic business segments. Mobile- India and South Asia - EBITDA margin grew by 100bp qoq to 31.3%, while Africa margins declined by 103bp qoq to 25.5% due to increase in competitive pressure. Profitability was hit due to higher tax expense with tax rate coming in at ~61%. PAT came in at Rs. 509cr, down 50% yoy.

The company cited that despite the fact that the number of major telecoms players has fallen from more than a dozen to just seven, due to a Supreme Court ruling that scrapped the licenses of a number of smaller firms due to a scandal-tarnished sale, significant competition prevails in the domestic market as promotions and discount packs for customers have continued to be available. Going ahead, we are positive on the Indian operations and expect tariff to inch up but there are concerns regarding the African operations which might weigh upon Bharti Airtel's performance. Elevated costs are likely to exert pressure on Bharti' Airtel's margins in the next couple of quarters. The stock is currently under review.

Source : Equity Bulls

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