3QFY2012 Result Update | Telecom

February 8, 2012

Bharti Airtel
Performance highlights
(` cr) Net sales EBITDA EBITDA margin (%) PAT 3QFY12 18,477 5,958 32.2 1,011 2QFY12 17,276 5,815 33.7 1,027 % chg (qoq) 6.9 2.5 (141)bp (1.5) 3QFY11 15,756 4,982 31.6 1,304 % chg (yoy) 17.3 19.6 63bp (22.4)

NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Telecom 134,435 0.6 445/309 480,795 5 17,707 5,368 BRTI.BO BHARTI.IN

`354 -

Source: Company, Angel Research

Bharti Airtel (Bharti) reported a mixed performance for 3QFY2012, with revenue coming in-line with our as well as street expectations. The company, however, disappointed on the operating and profitability fronts due to higher depreciation and amortization expenses. Also, minutes of usage (MOU) of mobile – India as well as Africa business declined by 1.0% and 2.5% qoq to 419min and 125min, respectively. We maintain our Neutral view on the stock. Result highlights: For 3QFY2012, Bharti’s consolidated revenue stood at `18,477cr, up 6.9% qoq. Revenue from mobile services for India came in at `10,176cr, up 4.0% qoq on the back of a 3.2% qoq increase in average revenue per minute (ARPM) to `0.45/min. However, MOU declined by 1.0% qoq due to slow traffic growth. Zain Africa’s contribution to revenue stood at `5,358cr, up by whopping 16.7% qoq, aided by INR depreciation and 2.5mn net subscriber additions. EBITDA margin of mobile India as well as Africa business increased by 0.18bp and 0.47bp qoq to 33.8% and 26.7%, respectively. However, EBITDA margin of all the other business segments declined sharply, which led to a 141bp qoq decline in Bharti’s consolidated EBITDA margin to 32.2%. PAT came in at `1,011cr, down 1.5% qoq, negatively impacted by higher depreciation costs of `3,585cr in 3QFY2012 vs. `3,184cr in 2QFY2012 and higher tax rates. Outlook and valuation: Bharti is on its way to turnaround its Africa business by bringing down its network operating expenditure by outsourcing various network-related developments. Thus, we expect the combination of stable KPIs and cost efficiencies to drive the EBITDA margin for the Africa business to 26.6% and 27.0% by FY2012 and FY2013, respectively. We expect Bharti’s Indian and African mobile subscriber base to post a CAGR of 8.2% and 17.4% over FY2011–13E to 189.9mn and 60.9mn subscribers, respectively. However, key downside risks such as 1) uncertainty in regulatory outcome; 2) pricing scenario in Africa operations; and 3) delay in return on investments made in 3G launches, still loom. We maintain our Neutral rating on the stock. Key financials (Consolidated, IFRS)
Y/E March (` cr) Net sales % chg Net profit % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 68.5 8.2 17.5 5.8

Abs. (%) Sensex Bharti Airtel

3m 0.8 (10.9)

1yr (0.4) 6.2

3yr 90.4 9.4

FY2009 36,962 36.8 8,615 27.3 41.4 22.7 15.6 4.4 28.3 23.3 3.8 9.2

FY2010 41,847 13.2 9,108 5.7 40.3 24.0 14.7 3.2 21.6 17.6 3.3 8.1

FY2011 59,467 42.1 6,035 (33.7) 33.7 15.9 22.3 2.8 12.4 8.2 3.3 9.7

FY2012E 71,601 20.4 4,705 (22.0) 32.8 12.4 28.6 2.5 8.9 8.3 2.8 8.5

FY2013E 80,983 13.1 6,927 47.2 33.3 18.2 19.4 2.3 11.6 10.9 2.3 7.0

Ankita Somani
022-39357800 Ext: 6819 ankita.somani@angelbroking.com

Please refer to important disclosures at the end of this report

1

Bharti Airtel | 3QFY2012 Result Update

Exhibit 1: 3QFY2012 – Financial performance (Consolidated, IFRS)
(` cr) Net revenue Operating expenditure EBITDA Depreciation & amortization EBIT Interest charges Non operating expenditure Other income PBT Income tax PAT Share in earnings of associate Minority Interest Adj. PAT EPS (`) EBITDA margin (%) EBIT margin (%) PAT margin (%)
Source: Company, Angel Research

3QFY12 18,477 12,518 5,958 3,585 2,374 788 1,586 559 1,028 (6) 11 1,011 2.7 32.2 12.8 5.5

2QFY12 17,276 11,461 5,815 3,184 2,631 1,119 1,513 490 1,023 (4) 1,027 2.7 33.7 15.2 5.9

% chg (qoq) 6.9 9.2 2.5 12.6 (9.8) (29.6) 4.9 14.0 0.5 (345.5) (1.5) (1.6) (141)bp (238)bp (47)bp

3QFY11 15,756 10,774 4,982 2,711 2,271 747 0 26 1,550 337 1,213 (90) 1,304 3.4 31.6 14.4 8.3

% chg (yoy) 17.3 16.2 19.6 32.2 4.5 5.5 2.3 65.9 (15.3) (111.9) (22.4) (22.4) 63bp (157)bp (279)bp

9MFY12 52,736 35,256 17,479 9,900 7,580 2,761 4,818 1,563 3,256 (6) (3) 3,253 5.4 33.1 14.4 6.2

9MFY11 43,202 28,685 14,517 7,236 7,281 1,498 (23) 98 5,902 1,279 4,623 (7) (77) 4,707 12.4 33.6 16.9 10.9

% chg (yoy) 22.1 22.9 20.4 36.8 4.1 84.3 (18.4) 22.1 (29.6) (95.6) (30.9) (56.7) (46)bp (248)bp (470)bp

Exhibit 2: Actual vs. Angel estimates
(` cr) Net sales EBITDA margin (%) PAT
Source: Company, Angel Research

Actual 18,477 32.2 1,011

Estimate 18,133 34.1 1,445

% Var. 1.9 (181)bp (30.0)

In-line revenue growth
For 3QFY2012, Bharti reported modest revenue growth of 6.9% qoq, with consolidated revenue coming in at `18,477.

Exhibit 3: Revenue break-up (Business segment wise)
Business segment (` cr) Mobile services – India & South Asia Mobile services – Africa Telemedia services Enterprise services Passive infrastructure services Others Eliminations Net revenue
Source: Company, Angel Research

3QFY12 2QFY12 % chg (qoq) 3QFY11 % chg (yoy) 10,176 5,358 913 1,188 2,439 399 1,997 18,477 9,783 4,591 953 1,104 2,377 406 1,937 17,276 4.0 16.7 (4.2) 7.6 2.6 (1.7) 3.1 6.9 9,146 4,044 907 1,050 2,197 195 1,783 15,756 11.3 32.5 0.7 13.1 11.0 104.9 12.0 17.3

February 8, 2012

2

Bharti Airtel | 3QFY2012 Result Update

Mobile business – India and South Asia: Revenue of the mobile business – India and South Asia – grew by 4.0% qoq to `10,176cr on the back of 3.2% qoq growth in ARPM to `0.45/month. However, MOU reported a 1.0% qoq dip to 419mn due to lower growth in traffic. Revenue of mobile – India and South Asia – business was also impacted because of the slight decline in value-added services (VAS) share (even when 3G services are launched in all the circles and this was seasonally a strong quarter for telecom companies), which decreased to 14.3% in 3QFY2012 from 14.5% in 2QFY2012. All this led to 2.2% qoq growth in ARPU to `187/month. In 3QFY2012, the company added 2.87mn subscribers in this segment, taking its total subscriber base to 175.6mn.

Exhibit 4: Trend in MOU (qoq)
500 480 460 4.9 2.7 (0.1) (0.9) (1.1) (4.9) (0.8) 6 4 2

Exhibit 5: Trend in VAS share (qoq)
16 15 14 15.0 13.8 12.7 11.8 11.0 11.6 14.6 14.5 14.3

(mins)

(%)

440 420 400 380

(%)

(1.0) 0 (2) (4) (6) (8)

13 12 11 10 9

(5.5)

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

MoU

qoq growth

VAS share

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 6: Trend in ARPM (qoq)
0.6 (0.9) (0.6) (0.8) 3.2 0.9 4 0

Exhibit 7: Trend in ARPU (qoq)
250 (1.6)
(`/month)

4 2.2 (2.5) (1.8) (3.8)
(%)

0 (4)

(2.0) 200 (4.6) (6.3)

(`/min)

(7.8) (9.1) 0.2 (8) (12)

(%)

0.4

(4.6)

(2.4)

(4)

(8.6) 150
3QFY10 4QFY10 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

(8) (12)

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

ARPM

qoq growth

ARPU

qoq growth

Source: Company, Angel Research

Source: Company, Angel Research

Mobile – Africa business: For 3QFY2012, Zain Africa’s revenue stood at `5,358cr, up 16.7% qoq, aided by addition of 2.5mn subscribers, taking its total subscriber base to 50.9mn and a 0.1% qoq increase in ARPM to US¢5.7/min. However, MOU declined by 2.5% qoq to 125min, which led to a 2.3% qoq fall in ARPU to US$7.1/month.

February 8, 2012

3QFY12

3

Bharti Airtel | 3QFY2012 Result Update

Exhibit 8: Operating metrics for Zain Africa
3QFY12 ARPM (US¢/min) MOU (min) ARPU (US$/month) Subscriber base (mn)
Source: Company, Angel Research

2QFY12 5.7 128 7.3 48.4

% chg qoq 0.1 (2.5) (2.3) 5.2

3QFY11 6.1 120 7.3 42.1

% chg yoy (6.4) 3.5 (3.0) 20.9

5.7 125 7.1 50.9

Telemedia services: Revenue of the telemedia business declined by 4.2% qoq to `913cr due to a 4.1% qoq decline in its ARPU to `916 in 3QFY2012 from `955 in 2QFY2012, as this is seasonally a weak quarter for the telemedia business. Also, the total subscriber base of Bharti in this business declined by 11 to 3,317. Currently, the company derives ~54% of the revenue of telemedia services from data services (non voice-based services).

Exhibit 9: Telemedia – Subscriber base and ARPU trend
3,500 3,000
(in 000's)

964 937

961 954

934 934

952 955

1000 916

2,500 2,000 1,500
3QFY10 4QFY10 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

800

600

Telemedia subscribers (in 000's )
Source: Company, Angel Research

ARPU

Enterprise services: Revenue of the enterprise services segment grew by 7.6% qoq to `1,188cr in 3QFY2012. Passive infrastructure services: Revenue growth in the passive infrastructure services segment stood at 2.6% qoq to `2,439cr. Tenancy ratio improved to 1.91 in 3QFY2012 from 1.89 in 2QFY2012.

February 8, 2012

(`)

4

Bharti Airtel | 3QFY2012 Result Update

Exhibit 10: Trend in passive infrastructure business (qoq)
1,200 1.75 900 600 300 0 1.65 1.65 1.68 1.73 1.78 1.80 1.83 1.87 1.89 1.91 2.0 1.8 1.6 1.4 1.2 1.0

No. of towers (in 00's)

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

Bharti Infratel (BTIL)
Source: Company, Angel Research

Indus

BTIL tenancy

Indus tenancy

Margins decline
During the quarter, at the operational front, EBITDA margin of mobile – India and South Asia – business and mobile – Africa business grew by 0.18bp and 0.47bp qoq to 33.8% and 26.7%, respectively. However, EBITDA margin of all the other business segments declined sharply, with margin of telemedia services, enterprise services and passive infrastructure business decreasing by 541bp (steep due to migration in billing system), 457bp (due to disruptions occurred on account of fire at one of its data centers) and 11bp qoq to 38.8%, 16.9% and 37.3%, respectively. All this led to a 141bp qoq decline in Bharti’s consolidated EBITDA margin to 32.2%. This decline is attributed to high SG&A expenses and access charges.

Exhibit 11: Segment-wise EBITDA margin trend (qoq)
55 46.1 45 37.1
(%)

44.6 38.6 34.9

45.2 37.0 25.7 33.3

45.5 37.7 34.2

44.2 37.5 38.8 37.3 33.8

35 25

35.2

33.7 21.5

24.7 15 2QFY11

3QFY12

21.5 3QFY11 4QFY11

22.1 1QFY12 2QFY12

16.9 3QFY12

Mobile services-India & South Asia Enterprise services
Source: Company, Angel Research

Telemedia services Passive infrastructure services

February 8, 2012

Tenancy (x)

1.77

1.79

1.81

5

Bharti Airtel | 3QFY2012 Result Update

Exhibit 12: Opex break-up (qoq)
100 80 60 33.7 31.6 33.5 33.7 33.6 33.7

18.2
5.7

19.9
5.6

17.1
5.7

17.7
5.4

16.6
5.3

16.2 8.4 22.7 13.9 3QFY12 EBITDA margin
5.2

(%)
40 20 0

8.2 21.8 12.4 2QFY11

8.6 21.4 12.9 3QFY11

8.5 21.9 13.3 4QFY11 License fee

8.7 21.8 12.6 1QFY12 Employee cost

8.8 22.5 13.2 2QFY12 S,G&A cost

Access charges

Network costs

Source: Company, Angel Research

During the quarter, Bharti’s consolidated net profit stood at `1,011cr, down 1.5% qoq, negatively impacted by higher depreciation costs of `3,585cr in 3QFY2012 vs. `3,184cr in 2QFY2012 (on account of a one-off item) and higher tax rate of 35.2% vs. 32.4% in 2QFY2012.

Outlook and valuation
Bharti is on its way to turnaround its Africa business by bringing down its network operating expenditure by outsourcing various network-related developments. The company has been consistently adding above 2.0mn subscribers per quarter in its Africa business. In terms of KPIs, the company has managed to keep its ARPM constant at US¢5.7/min and is expecting prices to remain stable in the African market. However, MOU, after reporting a continuous increase since the past six quarters, posted a decline of 2.5% to 125min in this quarter. Thus, we expect the combination of stable KPIs and cost efficiencies to drive the EBITDA margin of the Africa business to 26.6% and 27.0% by FY2012 and FY2013, respectively, from 25.3% in FY2011. On the domestic business front, the company undertook price hikes of 20% for on-net prepaid calls for all its 22 circles. This has gradually pushed ARPM to `0.45/min in 3QFY2012 from `0.43/min in 2QFY2012. We expect Bharti’s Indian and African mobile subscriber base to post a CAGR of 8.2% and 17.4% over FY2011–13E to 189.9mn and 60.9mn subscribers, respectively. In addition, we expect VAS share to inch up due to surging demand for non-SMS data services to further comfort the company’s ARPM. Bharti’s MOU is expected to remain soft because of the various free minute packages offered by competition as well as some moderation in volumes due to increased rates. The strong cashflow generation on account of 1) the expected improvement in operating profitability due to price increases in the domestic market and cost-efficiency measures in Africa business and 2) lower capex needs of ~US$3bn annually in future are expected to help the company’s debt repayment abilities. However, key downside risks such as 1) uncertainty in regulatory outcome; 2) pricing scenario in Africa operations; and 3) delay in return on investments made in 3G launches, still loom. We remain Neutral on the stock.

February 8, 2012

6

Bharti Airtel | 3QFY2012 Result Update

Exhibit 13: One-year forward EV/EBITDA (x)
525,000 450,000 375,000

EV (`cr)

300,000 225,000 150,000 75,000 0

Dec-07

Dec-08

Dec-09

Dec-10

Aug-07

Aug-08

Aug-09

Aug-10

EV

17x

14x

11x

8x

Aug-11

5x

Source: Company, Angel Research

Risks and concerns
Bharti, as per its accounting policy, is accounting for forex loss occurred on interest being paid on forex debt in the profit and loss statement; however, forex loss on balance sheet items (revaluation losses) is included in the foreign currency translation reserve. Due to INR depreciation over the past five months (10-12%), even after reporting ~`3,250cr of profit in 9MFY2012, the net worth of the company is almost flat from FY2011 (`51,623cr) to 3QFY2012 (`51,950cr), as foreign currency translation reserve is taking a hit, moving from `1,402cr to negative `1,014cr. Currently, the effective interest cost of Bharti is 5.5%, which is much lower than the domestic interest cost. Bharti, due to huge forex debt in its books, is always exposed to the risk that the effective interest costs might turn out to be higher than reported costs in the long run, courtesy foreign currency movement, if interest rate parity kicks in. Keeping this scenario in mind, if we were to assume effective interest costs to be ~10.5% (nearer to domestic borrowing cost), the interest outgo of Bharti would increase manifold. This would increase Bharti’s interest cost by 100% and FY2013E EPS would be reduced to `12.5 from `18.2, thus implying that Bharti would be trading at very expensive valuations of ~25x PE.

Exhibit 14: Change in estimates
FY2012 Parameter (` cr) Net revenue EBITDA PBT Tax PAT Earlier estimates 71,094 24,060 7,320 2,026 5,326 Revised estimates 71,601 23,509 6,742 2,043 4,705 Variation (%) 0.7 (2.3) (7.9) 0.9 (11.7) Earlier estimates 80,835 28,441 11,213 2,803 8,446 FY2013 Revised estimates 80,983 27,001 9,839 2,952 6,927 Variation (%) 0.2 (5.1) (12.3) 5.3 (18.0)

Source: Company, Angel Research

February 8, 2012

Dec-11

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

7

Bharti Airtel | 3QFY2012 Result Update

Exhibit 15: Recommendation summary
Company Bharti Airtel Idea Cellular RCom Reco. Neutral Neutral Neutral CMP (`) 354 92 93 Tgt. price (`) Upside (%) FY2013E P/BV (x) 2.3 2.2 0.5 FY2013E P/E (x) 19.4 29.8 16.2 FY2011-13E EPS CAGR (%) 7.0 6.7 (5.7) FY2013E RoCE (%) 10.9 10.0 3.3 FY2013E RoE (%) 11.6 7.3 2.8

Source: Company, Angel Research

February 8, 2012

8

Bharti Airtel | 3QFY2012 Result Update

Profit and Loss account (Consolidated, IFRS)
Y/E March (` cr) Net sales Roaming and access charges % of net sales Network operating exp. % of net sales License fee % of net sales Other expenses Total expenditure % of net sales EBITDA % of net sales Dep. and amortization Non operating expenses EBIT Interest charges Other income, net Profit before tax Provision for tax % of PBT PAT Share in earnings of associate Minority interest Adj. PAT EPS (`) FY2009 36,962 5,290 14.3 5,936 16.1 3,827 10.4 6,596 21,649 58.6 15,313 41.4 4,758 22 10,533 2,762 1,753 9,523 662 6.9 8,862 (71) 176 8,615 22.7 FY2010 41,847 4,481 10.7 8,912 21.3 4,088 9.8 7,513 24,993 59.7 16,854 40.3 6,284 (18) 10,589 18 70 10,640 1,345 12.6 9,295 187 9,108 24.0 FY2011 59,467 7,499 12.6 12,993 21.8 5,166 8.7 13,774 39,432 66.3 20,035 33.7 10,206 111 9,719 2,182 129 7,666 1,778 23.2 5,887 (148) 6,035 15.9 FY2012E 71,601 9,991 14.0 16,260 22.7 6,060 8.5 15,781 48,092 67.2 23,509 32.8 13,164 10,345 3,604 6,742 2,043 30.3 4,698 (6) (12) 4,705 12.4 FY2013E 80,983 11,717 14.5 18,137 22.4 6,590 8.1 17,539 53,982 66.7 27,001 33.3 13,759 13,243 3,404 9,839 2,952 30.0 6,887 (40) 6,927 18.2

February 8, 2012

9

Bharti Airtel | 3QFY2012 Result Update

Balance sheet (Consolidated, IFRS)
Y/E March (` cr) Liabilities Share capital Reserves and surplus Tot. shareholders’ funds Minority interest Secured loans Unsecured loans Total debt Other liabilities Total liabilities Assets Gross block Acc. depreciation Net block Goodwill Oth. non-current assets Investments Inventories Sundry debtors Cash and equivalents Other current asst Total current assets Less: - current liab. Less:- provisions Net current assets Net deferred tax Miscellaneous exp. Total assets 54,981 14,067 40,914 4,036 3,805 96 2,853 1,115 6,552 10,615 15,155 79 (4,619) 1,024 45,161 69,725 21,462 48,263 5,989 1,825 5,236 48 3,571 2,532 2,381 8,532 10,841 41 (2,350) 1,249 60,212 96,810 31,668 65,142 63,732 1,918 622 214 5,493 958 3,921 10,585 28,430 118 (17,962) 4,506 117,959 112,790 44,831 67,959 64,893 2,893 1,315 368 7,062 1,234 5,521 14,184 32,808 138 (18,762) 6,987 125,284 122,790 58,590 64,200 64,893 3,103 1,315 400 7,765 2,088 6,921 17,174 36,678 153 (19,657) 8,044 121,897 1,898 28,496 30,394 1,070 5,399 6,481 11,880 1,816 45,161 1,899 40,295 42,194 2,529 8,147 2,042 10,190 5,300 60,212 1,899 46,868 48,767 2,856 53,234 8,437 61,671 4,665 117,959 1,899 51,129 53,027 2,856 49,991 18,210 68,201 1,200 125,284 1,899 57,611 59,510 2,856 42,317 15,414 57,731 1,800 121,897 FY2009 FY2010 FY2011 FY2012E FY2013E

February 8, 2012

10

Bharti Airtel | 3QFY2012 Result Update

Cash flow statement (Consolidated, IFRS)
Y/E March (` cr) Pretax profit from operations Depreciation Expenses (deferred)/written off Pre tax cash from operations Other income/prior period ad Net cash from operations Tax Cash profits (Inc)/Dec in Current assets Current liabilities Net trade working capital Cash flow from oper. actv. (Inc)/Dec in fixed assets (Inc)/Dec in intangibles (Inc)/Dec in investments (Inc)/Dec in net dfr. tax asset (Inc)/Dec in minority interest (Inc)/Dec in oth. non-curr. ast. Cash flow from investing actv. Inc/(Dec) in debt Inc/(Dec) in equity/premium Others Dividends Cash flow from financing actv. Cash generated/(utilized) Cash at start of the year Cash at end of the year (3,609) 1,755 (1,854) 11,766 (14,331) (12) 1,014 215 (514) (13,628) 2,174 272 297 444 2,299 437 678 1,115 3,501 (4,352) (851) 14,733 (13,633) (1,953) (1,431) (1,249) 1,458 (801) (17,608) (1,690) 2,944 3,484 444 4,293 1,418 1,115 2,532 (3,628) 17,666 14,038 30,131 (27,085) (57,743) 4,614 (3,257) 328 (94) (83,237) 51,481 1,130 (635) 444 51,532 (1,575) 2,532 958 (3,323) 4,399 1,076 18,937 (15,980) (1,161) (692) (2,481) (967) (21,282) 6,530 (3,465) 444 2,621 276 958 1,234 (2,136) 3,885 1,749 22,395 (10,000) (1,057) (170) (11,227) (10,470) 600 444 (10,314) 854 1,234 2,088 FY2009 7,771 4,758 12,529 1,753 14,282 (662) 13,620 FY2010 10,571 6,284 16,854 70 16,924 (1,345) 15,584 FY2011 7,536 10,206 17,742 129 17,872 (1,778) 16,093 FY2012E 6,742 13,164 19,905 19,905 (2,043) 17,862 FY2013E 9,839 13,759 23,598 23,598 (2,952) 20,646

February 8, 2012

11

Bharti Airtel | 3QFY2012 Result Update

Key ratios
Y/E March Valuation ratio (x) P/E (on FDEPS) P/CEPS P/BVPS Dividend yield EV/Sales EV/EBITDA EV/Total assets Per share data (`) EPS Cash EPS Dividend Book value DuPont analysis Tax retention ratio (PAT/PBT) Cost of debt (PBT/EBIT) EBIT margin (EBIT/Sales) Asset turnover ratio (Sales/Assets) Leverage ratio (Assets/Equity) Operating ROE Return ratios (%) RoCE (pre-tax) Angel RoIC RoE Turnover ratios (x) Asset turnover (fixed assets) Receivables days Payable days 0.9 28 256 0.8 28 158 0.7 34 263 0.6 36 249 0.7 35 248 23.3 29.1 28.3 17.6 22.8 21.6 8.2 18.5 12.4 8.3 17.9 8.9 10.9 24.7 11.6 0.9 0.9 0.3 0.8 1.5 28.3 0.9 1.0 0.3 0.7 1.4 21.6 0.8 0.8 0.2 0.5 2.4 12.4 0.7 0.7 0.1 0.6 2.4 8.9 0.7 0.7 0.2 0.7 2.0 11.6 22.7 35.3 1.0 80.1 24.0 40.6 1.0 111.2 15.9 42.8 1.0 128.5 12.4 47.1 1.0 139.7 18.2 54.5 1.0 156.8 15.6 10.0 4.4 0.3 3.8 9.2 3.1 14.7 8.7 3.2 0.3 3.3 8.1 2.3 22.3 8.3 2.8 0.3 3.3 9.7 1.6 28.6 7.5 2.5 0.3 2.8 8.5 1.6 19.4 6.5 2.3 0.3 2.3 7.0 1.5 FY2009 FY2010 FY2011 FY2012E FY2013E

February 8, 2012

12

Bharti Airtel | 3QFY2012 Result Update

Research Team Tel: 022 - 3935 7800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Bharti Airtel No No No No

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 8, 2012

13