ICICI Securities research report on Bharti Airtel
The biggest disappointment for Bharti we have heard from investors is lack of FCF generation in the past, which has capped shareholder value creation. In this note, we highlight the reasons for Bharti’s lack of FCF generation, which includes competitive intensity, costs of building spectrum portfolio, leapfrogging in technology adoption, regulatory payouts and Africa acquisition. The heavy-lifting on most investments is behind except for 5G network rollout. Thus, we have come a long way, and are close to crossing the line from where Bharti can possibly generate cashflow equivalent to 10% of its current market capitalisation, and this, we believe, is just two years away.
Outlook
We maintain our BUY rating on Bharti with an unchanged SoTP-based target price of Rs960.
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