Bharti Infratel’s (BHN) Q4FY15 earnings report was broadly in line with our expectations with 8.8% y-o-y growth in service revenues and 14.6% y-o-y growth in adjusted Ebitda. Capex surge drove a 22% y-o-y decline in free cash flows in FY15 as the company commissioned a higher number of towers and spent higher on tower upgrade capex. We continue to find the asset attractive but valuations rich. We shall update our model and review our stance post the earnings call.
The company announced a final dividend of R6.5 per share taking the total F015 dividend to R11 per share, a dividend payout ratio of 104% pre-dividend distribution tax (DDT) and almost 123% including DDT on consolidated PAT. On standalone PAT, the payout ratio was 76.4%, in line with the company’s guided range of 60-80%.
FY15 was a robust year for Bharti Infratel on all counts except free cash flow (FCF) generation. The company delivered overall revenue growth of 7.8%, Ebitda growth of 13.7%, Ebit growth of 24% and recurring EPS growth of 34% yoy. However, FCF declined 22% yoy to R1,800 crore as capex surged 36% y-o-y. Reported maintenance capex and tower additions do not fully explain the increase in overall capex to R2,080 crore in FY15 from R1,530 crore in FY14.