Bharti Airtel with over 24% market share is a leader in the Indian telecom space and currently has a subscriber base of approximately 64 million. On an average, the company is adding around 2 million subscribers every month.
The embedded value in the company’s tower business offers considerable downside support to the stock price. Bharti Infratel (with 22,000 towers in circles other than the 16 covered by Indus Towers) has raised $1 billion through placement to the leading foreign institutions. It has been valued in the range of $10-12.5 billion depending on the actual performance in FY2009.
This apart, Bharti Infratel would hold 40% stake in Indus Towers (formed along with Vodafone and Idea Cellular).
Bharti Airtel is likely to be a key beneficiary of the removal of the Access Deficit Charge (ADC) to the tune of Rs180-200 crore. It may pass on the benefits accruing from the ADC removal to the end consumers by way of reduced tariffs or similar benefits.
At the current market price the stock trades at 18.8x FY2009 and 14.6x FY2010 estimated earnings.