Bharti Airtel: Assign 10x EV/EBITDA to India biz

By: |
March 25, 2021 4:15 AM

This deal should also incorporate lease agreements and the sites in these regions. This transaction is expected to be completed by end-FY22.

We value Bharti on an SOTP basis. We assign 10x EV/ebitda to the India business and 6x to the Africa business in FY23E to reach Rs 720/share.We value Bharti on an SOTP basis. We assign 10x EV/ebitda to the India business and 6x to the Africa business in FY23E to reach Rs 720/share.

Bharti’s subsidiary Airtel Africa announced the sale of 1,424 towers in Madagascar and Malawi to Helios Towers for $119. Airtel Africa’s tower portfolio in these two regions consists of 1,229 towers – it is entering into two separate agreements for the different jurisdictions. Total proceeds from the sale of these towers would be $108million. The transaction is expected to be completed in 4QCY21.

Airtel Africa would continue to develop, maintain, and operate its equipment on the towers under lease with Helios. Furthermore, it has agreed to build 195 sites with Helios for $11milllion across these regions over three years. Additionally, it has entered into an exclusive MoU with Helios for the potential sale of its tower assets (~1000) in Chad and Gabon. This deal should also incorporate lease agreements and the sites in these regions. This transaction is expected to be completed by end-FY22.

This is the second asset monetisation decision by the company in less than a week. Previously, on 18th Mar’21, it sold a 7% stake in its Mobile Money business to The Rise Fund for a sum of $200million. Additionally, the management is in talks with potential investors for an additional stake sale up to 25% in its Mobile Money business. Both of these decisions are in line with the management’s intention to achieve strategic asset monetisation. Proceeds from these transactions would be utilised for debt reduction and as investments in network and sales infrastructure.

We value Bharti on an SOTP basis. We assign 10x EV/ebitda to the India business and 6x to the Africa business in FY23E to reach Rs 720/share.

Our higher multiple captures the opportunity for an EBITDA increase from a potential price hike or market share gains.

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