Motilal Oswal is bullish on Bharti Airtel has recommended buy rating on the stock with a target price of Rs 470 in its research report dated October 12, 2017.
Motilal Oswal's research report on Bharti Airtel
Bharti Airtel (BHARTI) has announced the acquisition of Tata Teleservices' (TTSL) consumer telecom business at a potential EV of INR20b (as per media sources). The deal implies EV/sales of meager 0.2x. The move is expected to expand Bharti's gross revenue market share to ~39% and subscriber market share to 30%. The acquisition will allow BHARTI to further strengthen its spectrum portfolio by adding 71.3mhz of liberalized spectrum (40%) in the 2,100mhz and 1,800mhz bands (also adds 2nd and 3rd carrier spectrum). We believe the company may not retain the rest of the administered spectrum (60%), which is valid for meager 2-3 years (expiry in 2021), restricting capex.
Our workings indicate potential EBITDA of INR30b from the TTSL acquisition in 2-3 years, which is ~9% of BHARTI's consolidated EBITDA. At 7x EV/EBITDA, it offers potential upside of 12%. We remain positive on BHARTI, with a target price of INR470.
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