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 Rama Krishna Vadlamudi November 2 
nd 
, 2009 
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 30 
th 
, 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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Photograph: By the author Airtel logo: Company’s website 
 
Rama Krishna Vadlamudi, BKC, Bombay. November 2 
nd 
, 2009 Please read the Author’s Disclaimer at the end 
Page 2 of 17
PROMOTER SHAREHOLDING:
SHAREHOLDING PATTERNSep-09 %
Promoters-Foreign 22.40Promoters-Indian 45.30FIIs 18.40DIIs 8.10Others 5.80
Holding more than 1% stake
LIC of India 4.60ICICI Prudential Life Ins Co 1.35The promoters are Bharti EnterprisesLtd led by Sunil Bharti Mittal and hisfamily members. The total promotingshareholding stands at 68 per cent.Interestingly, their stake hasconsistently gone up in the last threefrom 61 per cent to the present 68 percent.
MUTUAL FUND HOLDINGS:
The following equity mutual fund schemes hold large chunk of shares in BhartiAirtel Limited as of September 30, 2009: ICICI Infrastructure Fund, Franklin IndiaFlexi Cap, DSP BR TIGER Fund, Franklin India Bluechip Fund, Reliance VisionFund, SBI Magnum Contra Fund, SBI Infrastructure Fund, SBI Magnum TaxGain Scheme, HDFC Top 200, Reliance Growth Fund and more than 200 othermutual fund schemes. (The picture as of October 31, 2009 will be more useful asits share price has fallen sharply between September 30
th
and October 31
st
. ThisMF holdings data as on October 31
st
will be available in the next few days). Mostof 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 overdifferent 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 Rs1,898 crore (face value – Rs 5 per share).
MANAGEMENT TEAM:
The company’s chairman is Sunil Bharti Mittal and the Chief Executive Office isManoj Kohli. Sunil Bharti Mittal is the promoter and the main architect for thephenomenal 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 theface of tough competition from several GSM and CDMA players.
 
Rama Krishna Vadlamudi, BKC, Bombay. November 2 
nd 
, 2009 Please read the Author’s Disclaimer at the end 
Page 3 of 17
PAST TRACK RECORD:
 
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
 
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
 
Its earnings per share had gone up from Rs 3.27 in 2004-05 to Rs 20.23 pershare to 208-09 (face value Rs 5), a CAGR of 58 per cent
 
It net worth has gone up steeply from Rs 4,500 crore in March 2005 to Rs27,500 crore in March 2009, a CAGR of 57 per cent
 
The maiden dividend of the company since its inception was paid in 2008-09 ata rate of Rs 2 per Rs 10 face value (before the share split). As the companywas ploughing back its profits into business, it’d never considered any dividendtill last year.
 
The stock was listed in February 2002
 
The net sales of the trailing four quarters have been a little subdued due to ageneral slowdown in the economy and competition from new players
 
The net profit of the trailing four quarters has been muted
GROWTH DRIVERS:
The impending rollout of 3G will bring more business to the company, though it may takeanother year for Bharti to start 3G services
3G services auction is scheduled to start by GOI on November 16
th
 
Likely consolidation in the sector may benefit Bharti Airtel, the biggest player
Competition is likely to increase the market pie
The usage of data services as of now is very low; any increase in them will bring morerevenue, especially, market leader and large player, like, Bharti
The contribution form non-voice segments is growing at a faster clip
Bharti Airtel has been actively considering various options to make a foray into foreignshores, like, Africa, despite its recent setback over MTN merger
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 badto worse in the last ten years
RISKS ASSOCIATED WITH THE COMPANY:
Telecom sector is heavily regulated and as such the company may be vulnerableto adverse policy changes
New players may nibble away at the market share of the company affecting itsprofitability, capital efficiency and revenues
Its foreign exchange outflow is Rs 5,400 crore and inflow is Rs 1,800 crore during2008-09. This makes the company vulnerable to the any adverse movements inthe rupee exchange rate in relation to major currencies, like, US, JPY, EUP andGBP. Any hedges taken to protect revenues due to any sudden appreciation ordepreciation in the value of rupee.
Of late, its pricing power in the market has come down and it may impact not onlyits revenues, but also its profitability and capital efficiency
Any slowdown in business especially in new business segments is likely to affectthe company’s growth plans in future
Changes in available technology could increase competition and our capitalcosts, though the company is in the best position to overcome such hurdles dueto its superior technology, innovation and business vision
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