Buy Bharti Airtel; target of Rs 1100: Sharekhan
Sharekhan is bullish on Bharti Airtel and has recommended buy rating on the stock in its December 10, 2007 report. “Bharti Airtel (through its subsidiary Bharti Infratel), Idea Cellular (Idea) and Vodafone Essar (Vodafone) have agreed to form an independent tower company, Indus Towers. The formation of Indus Towers would involve merger of existing passive infrastructure assets of the three GSM operators in 16 telecom circles and is likely to result in cost savings and value unlocking for the operators. Formation of an independent tower company would considerably improve the sharing of passive infrastructure and consequently reduce operational expenditure. Moreover, it would also bring in additional revenues from external tenants on the towers. We believe that the combined entity supported by leading GSM operators and having an impressive scale (around 70,000 towers) would attract much better valuations and thereby result in value unlocking for the listed entities. Thus, the formation of Indus Towers is a positive development for Bharti Airtel and could result in re-rating of the stock in future. Consequently, in spite of regulatory uncertainties, we continue to maintain Buy recommendation on the stock with a price target of Rs 1100,” says Sharekhan research report.
