In 2010, Bharti Airtel entered into African telecom market by acquiring Zain's Africa operations for an Enterprise value of US$10.7 bn. The company is currently present in 15 African markets. It is optimistic about long-term growth in Africa given low teledensity, favorable demographics, and wide spectrum.
Following are the key takeaways from the meeting:
• Bharti has strengthened its distribution and increased network in order to grow in the African market. It also offered bundled plans to subscribers leading to increase in ARPU and curtailed costs (subscriber acquisition costs, energy cost, etc). Consequently, ARPU has recovered and data traffic is growing at 80-90% yoy (currently 700MB per subscriber per month).
• As per the company, at least 40% EBITDA margin is the benchmark for delivering a positive bottom-line in most markets. However, the number of markets with more than 40% EBITDA margin has increased to 5 in Q2FY18 (none in 2016). Also, the markets with less than 20% EBITDA margin have reduced from 8 in 2016 to 4 in Q2FY18. Bharti is still struggling in Tanzania and Kenya where EBITDA is <20%. In order to grow in Kenya and
Tanzania, Bharti has rolled out 4G and 3G (in 900MHz frequency band) respectively in these areas. The Rwanda market is loss-making at the operating level.
• In Uganda market – revenue market share (RMS) gap between Bharti and the leader- MTN has narrowed down from 48.7% in 2010 to just 9% currently.
Both the companies together control ~94% of RMS of the Uganda market.
• In Nigeria, players including Bharti and GIo are in the race to acquire Etisalat’s operations, which may lead to consolidation and reduced competition.
• The company plans a capex of ~US$700m for Africa in FY18. It is also considering tower sale in some of its markets where it still owns towers.
Bharti Airtel Ltd is currently trading at Rs527.2, up by Rs2.0 or 0.39% from its previous closing of Rs525.2 on the BSE.
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