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In the last
one month or so, the stock of Bharti Airtel Limited has attracted investors’
wrath and naturally the stock price has fallen from a level of around Rs 450 to
the present level of a little less than Rs 300 as at the end of October 30th,
2009, giving a negative return of around 35 per cent to investors. At this
point of time, there’s an intense battle between bulls and bears and they’ve
found another stock to beat out of shape or take it upwards. In the ultimate
analysis, who will be the winner? Only time will tell. But, in the meantime, as
investors, what shall we do? Shall we sell/hold the stock or start accumulating
the stock at the current level of Rs 293? I try to answer these questions in a
comprehensive manner. In the following pages,
you’ll find my analysis. Basically, Bharti Airtel is a GREAT company despite
its attempt at diversification into Africa and
other countries. Though investors should be cautious with all acquisitions and
diversifications, the stock on Indian bourses is providing interesting and
compelling options to long-term investors.
(Please don’t forget to read the
author’s disclaimer on the last page)
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THE BEST OF MY STUFF ON
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Reads
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1. Income Tax Slabs 2009-10 for Salaried Class
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1 928
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2. Direct
Taxes Code Bill 2009
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922
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3. Public Provident Fund PPF ac-Little Known Facts
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886
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4. Interest
Rate Futures-NSE launches IRFs
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619
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5. Good and Services Tax-GST-an introduction
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598
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6. Nifty
Bees-Exchange Traded Fund
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524
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Photograph:
By the author Airtel logo: Company’s website
PROMOTER SHAREHOLDING:
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The promoters are Bharti Enterprises Ltd led by
Sunil Bharti Mittal and his family members. The total promoting shareholding
stands at 68 per cent. Interestingly, their stake has consistently gone up in
the last three from 61 per cent to the present 68 per cent.
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SHAREHOLDING PATTERN
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Sep-09
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%
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Promoters-Foreign
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22.40
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Promoters-Indian
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45.30
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FIIs
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18.40
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DIIs
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8.10
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Others
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5.80
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Holding more than 1% stake
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LIC of
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4.60
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ICICI Prudential Life Ins Co
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1.35
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MUTUAL FUND HOLDINGS:
The following equity mutual fund schemes hold large chunk of shares
in Bharti Airtel Limited as of September 30, 2009: ICICI Infrastructure Fund,
Franklin India Flexi Cap, DSP BR TIGER Fund, Franklin India Bluechip Fund,
Reliance Vision Fund, SBI Magnum Contra Fund, SBI Infrastructure Fund, SBI
Magnum Tax Gain Scheme, HDFC Top 200, Reliance Growth Fund and more than 200
other mutual fund schemes. (The picture as of October 31, 2009 will be more
useful as its share price has fallen sharply between September 30th
and October 31st. This MF holdings data as on October 31st
will be available in the next few days). Most of the equity mutual fund schemes
are good funds with a long-term track record. But what we need to see is how
they’ve been in and out of the stock over different months.
PLDEGE OF EQUITY SHARES BY
PROMOTERS:
The promoters have not pledged any of their equity shares as on
September 30, 2009.
EQUITY SHARES:
The total outstanding shares are at 379.68 crore, with paid-up
equity being Rs 1,898 crore (face value
– Rs 5 per share).
MANAGEMENT TEAM:
The company’s chairman is Sunil Bharti Mittal and the Chief
Executive Office is Manoj Kohli. Sunil Bharti Mittal is the promoter and the
main architect for the phenomenal success of the company in the last ten years.
As an entrepreneur, he had taken greater risks and proved his business acumen
and vision in the face of tough competition from several GSM and CDMA players.
PAST TRACK RECORD:
ü
Net sales went up from Rs 7,900 crore in 2004-05 to Rs 34,000 crore
in 2008-09, a CAGR (compounded annual growth rate) of 44 per cent in four years
ü
Net profit went up from Rs 1,200 crore in 2004-05 to Rs 7,700 crore
in 2008-09, a CAGR (compounded annual growth rate) of 59 per cent
ü
Its earnings per share had gone up from Rs 3.27 in 2004-05 to Rs
20.23 per share to 208-09 (face value Rs 5),
a CAGR of 58 per cent
ü
It net worth has gone up steeply from Rs 4,500 crore in March 2005
to Rs 27,500 crore in March 2009, a CAGR of 57 per cent
ü
The maiden dividend of the company since its inception was paid in
2008-09 at a rate of Rs 2 per Rs 10 face value (before the share split). As the
company was ploughing back its profits into business, it’d never considered any
dividend till last year.
ü
The stock was listed in February 2002
ü
The net sales of the trailing four quarters have been a little
subdued due to a general slowdown in the economy and competition from new
players
ü
The net profit of the trailing four quarters has been muted
GROWTH DRIVERS:
ü
The impending rollout of 3G will bring more business to the
company, though it may take another year for Bharti to start 3G services
ü
3G services auction is scheduled to start by GOI on November 16th
ü
Likely consolidation in the sector may benefit Bharti Airtel, the
biggest player
ü
Competition is likely to increase the market pie
ü
The usage of data services as of now is very low; any increase in
them will bring more revenue, especially, market leader and large player, like,
Bharti
ü
The contribution form non-voice segments is growing at a faster
clip
ü
Bharti Airtel has been actively considering various options to make
a foray into foreign shores, like, Africa ,
despite its recent setback over MTN merger
ü
Of course, investors have to be extremely cautious with regard to
any kind of mergers, acquisitions or diversifications as the overall experience
of Indian investors has been bad to worse in the last ten years
RISKS ASSOCIATED WITH THE
COMPANY:
v Telecom sector is heavily
regulated and as such the company may be vulnerable to adverse policy changes
v New players may nibble
away at the market share of the company affecting its profitability, capital
efficiency and revenues
v Its foreign exchange
outflow is Rs 5,400 crore and inflow is Rs 1,800 crore during 2008-09. This
makes the company vulnerable to the any adverse movements in the rupee exchange
rate in relation to major currencies, like, US, JPY, EUP and GBP. Any hedges
taken to protect revenues due to any sudden appreciation or depreciation in the
value of rupee.
v Of late, its pricing
power in the market has come down and it may impact not only its revenues, but
also its profitability and capital efficiency
v Any slowdown in business
especially in new business segments is likely to affect the company’s growth
plans in future
v Changes in available
technology could increase competition and our
capital costs, though the company is in the best position to overcome
such hurdles due to its superior technology, innovation and business vision
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BUSINESS MODEL
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The
Indian telecommunication industry is now the second
largest wireless market in
the world after China India India
The rural segment is witnessing a growth of 8-10%
every month – giving a substantial boost
to the telecom sector. With rural
teledensity still below 15%, the opportunities are immense and Airtel
is leveraging its fast mover
advantage to reach the hinterlands. Currently, more than 60% of our
new customers come from rural India
STRONG STRATEGIC PARTNERSHIPS:
The company has a strategic alliance with
SingTel, which has enabled them to further enhance and expand their telecommunications
network in India Singapore
MOBILE SERVICES DIVISION:
The company offers mobile services using GSM
(Global System of Mobile communications) technology as opposed to CDMA
technology employed by rivals, Reliance Communications and Tata Teleservices. It
operates in all 22 licensed jurisdictions (also known as
Telecom Circles) in India
Bharti Airtel Limited, a group company of Bharti Enterprises, is
among Asia’s leading integrated telecom services providers with operations in India and Sri Lanka
The growth in revenues has happened despite
reductions in tariffs and intense competition. With mobile tariffs in India
being among the lowest in the world, the
Company's prime focus is on ensuring customer
satisfaction through
network quality, superior
customer service and
continuous innovation in value
added services that would
help expand its
mobile subscriber base and drive up volumes.
TELEMEDIA SERVICES DIVISION:
Under this division, the Company provides
broadband (DSL) and telephone services (fixed line) in 15 circles
spanning over 95 cities with growing focus on new
media and entertainment solutions
such as DTH and IPTV. The total customers under this segment as on
September 30, 2009 are 29.28 lakh of which 40 per cent is from
broadband/internet services.
The Enterprise India
The
national long distance (NLD) infrastructure comprises
of 1.13 lakh route kilometers (Rkms) of optical fibre, providing a pan-India reach
covering all major cities in India Singapore
and SEA-MEWE-4 to Europe . The company specializes
in providing customized solutions to address unique requirements of different
industry verticals; BFSI, IT, ITeS, Manufacturing and Distribution, Media,
Education, Telecom, Government, PSUs and Retail among others.
DIGITAL TV SERVICES DIVISION:
The Digital TV business provides Direct-to-Home TV services across India
PASSIVE INFRASTRUCTURE
SERVICES DIVISION:
The company also deploys, owns and manages passive infrastructure
pertaining to telecom operations under its subsidiary Bharti Infratel
Limited. Bharti Infratel and Indus Towers
are the two top providers of passive infrastructure services in India India India Indus Towers Indus Towers Indus with effect from January 1, 2009. Indus Towers
TOTAL CUMULATIVE
INVESTMENTS IN VARIOUS BUSINESS SEGMENTS:
Data: As on September 30, 2009
As can be seen from the above two tables, revenue contribution from
Mobile Services is at 67 per cent of total revenues, the EBITDA contribution of
this segment is only 56 per cent of the total EBITDA. In the case of Enterprise
Services segment, the revenue contribution is at 18 per cent but the EBITDA contribution
is much higher at 23 per cent – indicating the profitability of Enterprise
Services segment is superior to that of Mobile Services.
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SWOT ANALYSIS of
BUSINESS
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STRENGTHS
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WEAKNESSES
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Being a big player and biggest brand, it
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Due to stiff competition, its market share
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can face
competition skillfully
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may be under
pressures
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With a market share of 25 per cent,
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The pace of growth has tapered off
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Bharti is a leading
& dominant player
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Being a market leader, it takes time
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Other players can’t match its network
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to respond to the market
threats
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It has got a good management team
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As in the case of HindustanUnilever, over
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This management team will translate
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over a period of
eight to nine years,
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into better customer
segmentation
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small competitors
may nibble away
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New players cannot match its network
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at Bharti’ market
share. However,
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It has huge cash Rs 6,500 crore (30.9.09)
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the company has
shown good
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Tariff wars are not new to the biggest
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Management skills
to face up to the
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player in
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increasing
competition. As of now,
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Its debt-equity ratio is only 0.12
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Bharti Airtel is in a
strong position.
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THREATS
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OPPORTUNITIES
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Growth rate is likely to be under pressure
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Consolidation in the sector to benefit
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if not growth per
se
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large players
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Reliance Com to give tough competition
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Subscribers are in general buying new
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Tata Docomo’s audacious offer of
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SIM cards in
addition to existing ones
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‘one paise per second’ has taken away
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A few days back, Bharti itself launched
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Bharti’s market
share
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its own ‘one paise per second’ plan
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Being heavily regulated, the business
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The contribution from non-voice segments
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is susceptible to
regulatory actions
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is growing at a
faster clip
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Global economic slowdown is likely to
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The usage of data services is low, which
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affect telecom
business
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may create more
opportunities
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ARPUs are falling rapidly
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Bharti Airtel is actively pursuing markets in
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SOME IMPORTANT DATA & INFO:
Ø
Face
Value: Rs 5 per share (In July 2009 reduced from Rs 10 to Rs 5)
Ø
Its
market capitalization: Rs 1.11 lakh crore (30.10.2009)
Ø
Till
2006, the company was known as Bharti Televentures Limited
Ø
Total
employees: At the
end of March
31, 2009, Bharti Airtel had a
total of 24,538 employees; 10,357 were on
the rolls of Bharti Airtel Limited, 14,181
were on the rolls of Bharti Airtel Services Limited.
Ø
Paid-up
capital: Rs 1,900 crore. This has remained stagnant in the last five years
which means there’s been no equity dilution which is an investor-friendly
feature. Though, investors need to look for any equity dilution in future as
part of the company’s ambitious plan to widen its footprint across the globe.
As I was writing this, a flash news indicated that the company is selling an
additional 7.30 lakh shares to Singtel
Ø
Total
Debt: Total debt of RS 7,700 crore for a company with a net worth of Rs 27,500
crore is manageable (March 2009). In fact, its debt-equity ratio (March 2009)
of 0.30 is quite low compared to its debt-ridden peers. And debt-servicing is
not a problem at all for a company with huge cash flows. The debt has since
come down to Rs 4,210 crore with debt-equity ratio at 0.12 with total reserves
at Rs 30,800 crore as on 30.09.09.
Ø
Its
captal expenditure during September 2009 quarter was Rs 2,280 crore
Ø
52-week
high: Rs 518 (19.05.09) and 52-week low: Rs 290 (30.10.2009)
LATEST QUARTERLY RESULTS: (as per US
Highlights for the Second Quarter ended September 30, 2009:
- Overall customer base at 11.34 crore
- Net addition of 82.44 lakh customers in a single quarter
- Market leader with a customer market share of all
- Total Revenues of Rs. 9,846 crore (up 9% Y-o-Y)
- EBITDA of Rs. 4,142 crore (up 12% Y-o-Y)
- EBITDA margin at 42.1% (prior year: 41.0%)
- Cash Profit of Rs. 4,099 crore (up 31% Y-o-Y)
- Net profit of Rs. 2,321 crore (up 13% Y-o-Y).
- Net profit margin is 23.6 per cent, which has
improved
- Operating profit margin (EBIDTA) is 42.1 per
cent, which has gone up
- Return on net worth is 30.3 per cent, which is
slipping
- Return on capital employed is 26.0 per cent –
this is also coming down
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Sep.09
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Jun.09
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Sep.08
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ARPU Rs
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252
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278
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331
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ARPM Rs
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0.56
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0.58
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0.63
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These figures are for MOBILE SERVICES
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As can be seen from above, the ARPUs are on a steep decline. They have
come down by around 24 per cent, compared to September 2008 quarter which is
quite huge and disturbing for investors. Compared to June 2009 quarter, ARPUs
have declined by around nine per cent which has alarmed the investors and it’s
no surprise the stock has witnessed intense selling with huge supported by
large volumes on the bourses last week. Even ARPMs have declined by 11 per cent
year on year and decreased by nine per cent quarter on quarter indicating the
increased competition from new and smaller players in the market. These steep
declines in these important parameters have disappointed the market
participants and investors immensely causing the stock to fall heavily on
bourses.
CAPITAL
EFFICIENCY:
However, the company has been maintaining
its robust margins at around 42 per cent which is the highest in the industry,
though the capital efficiency reflected in the RONW and ROCE ratios has been on
a downward curve in the last few years or so as can be seen in the following
table:
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Period
ending
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No. of customers
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OPM
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NPM
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RONW
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ROCE
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DER
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In crore
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%
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%
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%
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%
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%
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March.2006
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2.09
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37.30
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19.40
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29.50
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21.30
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0.45
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March.2007
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3.90
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40.20
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23.00
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37.40
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28.20
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0.31
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March.2008
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6.43
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42.10
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24.80
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38.00
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31.70
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0.19
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March.2009
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9.66
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41.00
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22.90
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32.50
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30.40
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0.23
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Sep.20009
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11.34
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42.10
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23.60
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30.30
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26.00
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0.12
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o
The
biggest strength of the company is the phenomenal growth the company enjoyed in
the 42 months, during which period the customer base has surged by almost 5.5
times
o
The
company has been able to maintain, remarkably, its operating profit margins at
around 42 per cent in the last 18 months
o
The
net profit margin is slightly down from 24.80 per cent in March 2008 to 23.60
per cent in September 2009
o
Its
return on net worth has shown an alarming deceleration from 38 per cent in
March 2009 to 30.3 per cent in September 2009
o
Its
return on capital employed too has shown a sudden fall from 31.7 per cent in
March 2008 to 26 per cent in September 2009
o
Basically,
the steep decine in RONW and ROCE indicates that the company’s profitability
has been under tremendous pressure due to surge in capital expenditure and
stiff competition
o
However,
the company has been financial savvy to reduce its debt-equity ratio from 0.19
in March 2008 to 0.12 in September 2009
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INVESTMENT RATIONALE
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ü
Bharti
Airtel has a DNA that ensures continuation of its success
ü
It
has got a rich human resource talent pool, management depth and entrepreneurial
vision
ü
The
company is focusing on building a strong brand, and enhancing customer experience
ü
It
has got a strong brand, ‘Airtel’, known across all its business segments
ü
The
company has been able to generate positive free cash flows
ü
The
company is focusing on new services and businesses (managed services,
m-commerce, m-entertainment, media)
ü
It is
expanding its network in to rural markets
ü
It
has the ability to leverage on the strengths of its business partners
ü
It is
an innovative company and our products and services are based on deep customer deep
customer understanding
ü
Going
forward, its profit margins are likely to improve in tower business, ie,
passive infrastructure business compensating for any losses in mobile services that
it may suffer due to increased competition
ü
The
small players may not be able to match the pricing strategies and management
depth of Bharti Airtel which will force smaller and less nimble players to
suffer
ü
The company
is expected to emerge stronger from competition
ü
We’ve
only scratched the surface as far as the potential for Telecom Sector for
future is concerned. As inveterate investors, it’s our duty to track the sector
diligently whether the company is doing all the right things to stay
competitive in the business and exploiting the available opportunities and turn
them into profit
ü
High
volumes on the bourses; hence there’s no risk of liquidity
ü
CASH
COW: Cash flow for 2008-09 from operating activities is Rs 11,900 crore
approximately.
ü
CASH
AT HAND: Rs 4,590 crore as on 31.03.2009 including marketable securities of Rs
2,340 crore. The total cash & cash equivalents have since gone up to Rs
6,470 crore including marketable securities of Rs 5,850 crore as on September
30, 2009.
ü
It
has got good management team and entrepreneurial spirit
ü
The
company’s strength lies in its strong customer base
ü
The Indian telecom sector has seen a phenomenal
growth and currently has close
to 430 mn telecom customers. The market surpassed the USA to
become the second largest market
in the world after China
The future is always hazy! Nobody had a clue what was going on in
the first week of March 2009 except Mark Mobius who was the first expert to
tell us that we’re in an upside. Really a wise man whom we can look forward to
in our approach towards equity investments!
When ICICI Bank came down to
RS 250 investors panicked unnecessarily in March 2009; but, it has bounced back
from that abysmal and given a return of 200 to 250 per cent for investors who
had the temerity to buy the stock when the pessimism was highest in the stock
at that time. The beauty is the bank has withstood all the liquidity and NPA
pressures; cut down its balance sheet ruthlessly; found its feet again and now
it’s up and about though it still has the legacy of higher NPAs hanging around
its neck like an albatross! The point good companies learn from their mistakes
and make course corrections.
When SBI introduced cheaper
Home Loans at 8 per cent, many experts felt it would create a huge dent on
HDFC’s housing business and the HDFC stock tanked, of course amidst plummeting
stock markets, and lost more than 10 to 15 per cent and touched a low of Rs
1,200 on 20.11.08. But in its business place, nothing has happened to HDFC as
had been feared by the experts. It’s no wonder the stock is quoting around Rs
2,650, giving a decent return of 120 per cent in less than a year.
Even during 2007, following the sub-prime market crisis in the US,
market experts like Ramesh Damani and Rakesh Jhunjhunwala had opined that large
IT companies, like, Infosys, TCS, Wipro and HCL Tech would face severe dent in
their businesses and face margin pressure. But on the contrary, these large IT
companies have successfully weathered the sub-prime crisis by doing some
internal adjustments, cost cuttings and other measures. Who ever has cosied up
to these frontline IT stocks during the highest pessimism have been rewarded
handsomely.
Successful companies have their own DNA and have the capacity to
bounce back from their lows and reward patient investors with decent returns.
Bharti Airtel has been rated as a successful because:
ü
It
predicted the preference for GSM instead of CDMA
ü
It
initiated the first round of consolidation in the telecom space
ü
It
with stood the travails of Indian Policy successfully
ü
It
invented outsourcing in telecom-SUCCESSFULLY outsourced its operations –
network management to Nokia and information technology to IBM
ü
Has
priced itself more competitively without being the lowest tariff player
ü
It
has put in strong team; process; distribution; branding and consumer insight
practices
ü
Has
the lowest debt-equity ratio of 0.12
Due to a variety of factors,
Bharti Airtel Limited has received investors’ wrath of late. The main reasons
are: the perception that Telecom Sector would witness a price war and affecting
the profits, the calling off its merger efforts with MTN of South Africa is
seen as a negative by many, competition from smaller players like Tata Docomo
which has come out with a ‘per-second billing’, delay in 3G rollout and some
regulatory issues pertaining to audit of Telecom Companies.
Due to competition, Airtel
has announced its own ‘one paise per second’ billing plan joining the bandwagon
in the process which may affect its pricing power and revenues in the next one
or two few quarters. But, the company is place in a best situation to deal with
competition head-on and likely to decimate smaller players in the process. It
has made a capital expenditure (net of depreciation and amortization as shown
in a table above) of more than Rs 47,000 crore since inception. No other player
can reach or afford such a capex plan.
The company is diversifying
itself into other verticals such as DTH, enterprise solutions, mobile banking
and others which may provide additional revenue stream in future.
Moreover, the company is an innovator in the market and has developed
extraordinary execution skills.
One interesting trend is that many existing subscribers belonging
to rival operators have taken an additional SIM card from Tata Docomo for its ‘one
paise per second scheme’ for SMSes and phone calls in addition to their
existing phones. Does that mean that there is additional biz for telecom
players? May be, new subscribers would go only for the one paise per second
schemes. What's the reach of the new players, their connectivity and service
quality needs to be evaluated in future. I think telecom sector is still in an
evolving stage and there're more surprises in store for investors and
competitors alike in future. Nobody is able to foresee the big opportunities it
may throw open in the next two to three years. Can we take contrarian call on
Bharti Airtel? Will it be able to withstand the competition from ohter players
and survive like, an Asian Paints, or a Coca-Cola for that matter? Or, will it
go the way HUL had suffered between 2000 and 2008 at the hands of much smaller
players? I think Telecom Sector is
different from FMCG. Anyway, as I said earlier it's too early to foresee clear
trends in Telecom Sector. In uncertain times, it’s the big player with deep pockets
that will call the shots ultimately. As such, stay with the ‘men’ not the
‘boys.’
THE OVERHANG OF BHARTI-MTN
MERGER:
If you believe, the diversification into other countries will not
benefit the company, you’d better stay out of its equity shares. In India
VALUATION
and PROSPECTS:
At the closing market price of Rs 293 on October 30th,
2009; Market capitalization of Bharti Airtel Limited works out to Rs 1.10 lakh crore as at the end
of October 2009. Based on free float, the market cap is around Rs 36,500 crore
and the company’s weight in Sensex is 3.27 per cent and Nifty50 is 2.75
respectively. The price-earning ratio is 12.25 based on trailing four quarter
earning per share (EPS) of Rs 23.90 on face value of Rs 5 per share (in July
2009, the share was split from Rs 10 face value to Rs 5). Its price-book value
is 3.19 with a book value of Rs 91.94 per share. The company consistently
maintains an operating profit margin of around 40 per cent in the past five
years despite severe competition in the market and entry of new players.
However, going forward, the company has to make a sacrifice in its OPM in order
to retail market share as well as decimate weak competitors (may be, strong
ones also depending on the competitors’ strategies also) in the process. Last
year, the company announced unprecedented tariff cuts in certain plans. The
company maintains an RONW and ROCE of around 33 per cent (2008-09) despite the
paid-up capital being Rs 1,900 crore. However, RONW has been on the decline in
the past two years due to increased capital expenditure by the company and
competition from numerous players. Overall, the company has got a strong
balance sheet with robust cash flows. The dividend yield is 0.34 per cent.
Low-beta stock: Its latest beta is around
0.83 indicating that its price volatility is lesser compared to the volatility
in benchmarks, like, Sensex and Nifty. Low-beta stocks are more suitable to
small and long-term investors. But, there’s no guarantee that it will remain
the same as India
|
MY TAKE ON BHARTI
AIRTEL STOCK
|
The company’s Price-Earnings Ratio is at
around 12.25 at the current market price of Rs 293 as on October 30th,
2009. It price-book value is around 3.19. Its operating profit margin is 42 per
cent, which is quite good in a business with stiff competition. The company has
a strong balance sheet and its CASH HOLDING is at Rs 6,470 crore as on 30.9.09.
It’s generating enormous free cash flows net of capital expenditure. It’s
in the best position to leverage its strengths and decimate smaller players in
the process. But, it’d take some time for it to regroup its energies and mount
an onslaught on its competitors and consolidation is evitable ultimately.
The company has got the best business
model, resources, management team and huge network to face any kind of
competition. Investors with a three-year outlook can consider investing in its
equity shares at the current market price of Rs 293. Small investors should not
try to time the market. But, they should be mentally prepared for a fall of
20/30 per cent from the current level. And they should not worry too much about
the price fluctuations if they want to make safe money in the long-term. By any
reckoning, the current market price offers a good entry point and small
investors should start nibbling away at the shares in instalments at different
price levels so that their acquisition cost will be low and reasonable. This
stock is suitable for investors with long-term horizon of at least three years.
It’s likely to give long-term decent returns to investors. If you’re looking
for spectacular return in one month or even one year, DON’T BUY THE STOCK.
DATA SOURCE: NSE, BSE,
CAPITAL MARKET, Company’s website, etc
References:
1. Valuable Inputs from
PN Rao, Ratna KPS, Ravi TM and Suryadeep B
STING ALL OF YOU!
|
FINALLY, HAPPY
INVESTING ALL OF YOU!
|
SOME ABBREVIATIONS:
ARPU (for Mobile
ARPM (Average Rate Per Minute): Average
Rate Per Minute is computed by: Dividing the total revenues by total minutes.
Book Value Per Equity Share: Total
stockholder’s equity as at the end of the relevant period divided by issued and
outstanding equity shares as at the end of the relevant period.
Cash Profit From Operations: It is not
a US GAAP measure and is defined as operating income adjusted for depreciation
and amortization, pre-operating costs, interest expense and interest income.
DTH Direct to Home
broadcast service
Earnings Per Basic Share: It is
computed by dividing net profit attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the period.
EBITDA Earnings/ (loss) before
interest, taxation, depreciation and amortization. It is not a US GAAP measure and
is defined as operating income adjusted for depreciation and amortization and
pre-operating costs.
EBITDA Margin or EBITDA / Total
Revenues: It is computed by dividing EBITDA for the relevant period by total
revenues for the relevant period.
IPTV Internet Protocol TV: IPTV is the
method of delivering and viewing television programmes using an IP transmission
and service infrastructure, which can deliver digital television to the
customers. IPTV when offered using an IP network and high speed broadband
technology becomes interactive because of availability of return path and is
capable of providing Video on Demand (VOD), time shifted television and many
other exciting programmes.
Market Capitalization: Number of
issued and outstanding shares as at end of particular date multiplied by
closing market price as on that particular date
Debt-Equity Ratio: It is computed by
dividing net debt as at the end of the relevant period by stockholder’s equity
as at the end of the relevant period.
Return On Capital Employed (ROCE): For
the full year ended March 31, 2006, 2007, 2008 and 2009, ROCE is computed by
dividing the sum of net profit and finance cost (net) for the period by average
(of opening and closing) capital employed. For the quarterly computation, it is
computed by dividing the sum of net profit and finance cost (net) for the
preceding (last) 12 months from the end of the relevant period by average
capital employed. Average capital employed is calculated by considering average
of quarterly average for the preceding (last) four quarters from the end of the
relevant period.
Return On Net Worth (RONW): For the
full year ended March 31, 2006, 2007, 2008 and 2009, it is computed by dividing
net profit for the period by the average (of opening and closing) Stockholder’s
equity. For the quarterly computations, it is computed by dividing net profit
for the preceding (last) 12 months from the end of the relevant period by the
average Stockholder’s equity for the preceding (last) 12 months. Average
Stockholder’s equity is calculated by considering average of quarterly average
for the preceding (last) four quarters from the end of the relevant period.
OTHERS:
CDMA: Code Division Multiple Access
COAI Cellular Operators Association of
India
DoT Department of Telecommunications
DTH Direct To Home
IPTV Internet Protocol Television
ISP Internet Service Provider
IUC Interconnection Usage Charges
MNO: Mobile
Network Operator
MNP: Mobile
Number Portability
NLDO National Long Distance Operator
TDSAT Telecom Disputes Settlement
& Appellate Tribunal
TRAI Telecom Regulatory Authority of India
UASL Unified Access Service License
USOF Universal Service Obligation Fund
GSM Global System for Mobile Communications
IGAAP Generally Accepted Accounting
Principles in India
USGAAP United States
FLASH NEWS!
Singapore
Telecommunications (Singtel) is increasing its stake in Bharti Airtel Limited
by an additional 1.52 per cent stake or 7.30 lakh shares at a cost of Rs 3,000
crore (depending on the future market price) in three instalments over an
18-month period. Singtel holds an effective stake of 30.43 per cent in Bharti
Airtel taking its total share holding to 31.95 per cent. The usual caveat is
institutional investors have deep pocket and come with a very long-time
horizon. They can absorb substantial erosion in their capital in the short time
in order to make huge profits over longer time intervals. Their time horizon
may not be suitable to other small investors. This analysis has been initiated
much before this FLASH NEWS hit headlines yesterday. This is to inform the
readers that my analysis is no way influenced by this piece of important news
for the stock. THE analysis is aimed at small investors; not at HNIs and
institutional players —for they have
their own methods of looking at markets slightly differently.
AUTHOR’s DISCLAIMER: This should not be
construed as a recommendation by me. The author holds a small stake in the
company’s equity shares and as such it’s safe to assume that the author has a
vested interest in the stock price and general market going up. The views of
the author are personal. Readers or investors must consult their certified
financial advisor before taking any decision on their equity investments and
the investment should be in line with their risk profile & risk appetite
and their general market perception. Any equity investment should be within
their overall ASSET ALLOCATION, which is extremely vital.
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