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Bharti�s growth assured; user base hits 40 mn

Published on Fri, Jun 01, 2007 at 11:35 | Source : Moneycontrol.com

Updated at Mon, Jun 04, 2007 at 12:54

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Bharti Airtel

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Bharti Airtel is buzzing with news. The latest being, it crossing 40 million in mobile customer base. With this it becomes the first Indian mobile service provider and the tenth in the world to join the list of global telecom operators with more than 40 million customers from a single country.

Airtel took 11 years to reach the 20 million customer base landmark and just 13 months to add the next 20 million customers. The company expects the subscriber addition to continue and if it continues in the same way by next year then the total number of mobile customer base would be over 55 million in FY08 and over 74 million in FY09.

This is expected to translate into earnings of around Rs 58 billion and revenue of Rs 260 billion in FY08 and earnings of Rs 74 billion and revenues of Rs 330 billion in FY09 on consolidated basis.

Major contribution will come from the wireless segment. In the previous year the company added over 17.6 million customers. Its total number of subscribers stood at around 37.1 million. In just over month it took the total number of wireless customers to 40 million. At this pace one can easily expect the company to cross customer base of 55 million. At CMP stock trades at PER of 26x and EV/E of 14.5x FY08 earnings.

Bharti Airtel's overall wireless market share rose to over 23.2% as of April 2007 from 20.4% as reported in FY06 and it is expected that the market share would reach 24% by the end of FY08.

On quarterly basis, the company's net profit was up 11.4% to Rs 1353 crore (Rs 13.53 billion) versus Rs 1215 crore (Rs 12.15 billion), QoQ and EBIDTA up to Rs 2,241 crore (Rs 22.41 billion) versus Rs 2,005.5 crore (Rs 20.05 billion) QoQ.

QoQ revenues, margins

	Q3	Q4
Mobility Revenues	37,579	42,431	13%
Mobility EBIDTA Mrgns	37.60%	39.10%

Non-wireless Revenues	17,712	18,711	6%
Non-wireless EBIDTA Mrgns	37.90%	35.40%

Fixed Line Revenues	5,984	6,044	1%
EBIDTA Mrgns	27.00%	28.60%

Long Distance Revenues	9,306	10,156	9%
EBIDTA Mrgns	43.00%	35.80%

Enterprise Business Revenues	2,422	2,511	4%

EBIDTA Mrgns	45.10%	50.10%

The revenues was up 9.8% to Rs 5393 crore (Rs 53.93 billion) versus Rs 4892.9 crore (Rs 48.92 billion), QoQ.

Operating profit margin for fourth quarter stood at 41.6% and cash profit at Rs 2,193 crore (Rs 21.93 billion). ARPU was of Rs 406/month, down 5% to previous quarter and market share at 22.9%. Its Q4 mobile services operating profit margin has improved to 39.1% versus 37.6% and non-mobile OPM has declined to 35.4% from 37.9% QoQ.

This growth was mainly driven by the wireless segment, which also saw strong traction in the EBIDTA margin. Going ahead the margins are expected to strengthen and even breach 41% levels.

The non wireless biz has also done well but long distance segment has negatively impacted the overall margins, which was due to higher promotional expenditure and is expected to recover going ahead. It saw a sharp decline from 43% to 35.8% but the volume growth has been consistent in the segment.

Overall Margins
	Mobile	Non Mobile
Q407	39.10%	35.40%
Q307	37.60%	39.10%
Q207	36.90%	33.90%
Q107	36.40%	34.30%
Q406	36.20%	32.60%

Fixed line revenue growth has been flattish with a moderate increase in EBIDTA and margins. Its enterprise business has seen significant jump in the margins.

Bharti Airtel has been the best-performing stock in the Sensex in the past five years. The company posted a twelveth straight quarter of record profit.

By-Rahul Kundnani

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