X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Bharti vs. Singtel: How the two stack up? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Mar 8, 2013

    Bharti vs. Singtel: How the two stack up?

    One is the largest telecom company in India. The other is the incumbent in Singapore. One is now the fourth largest company in the world in terms of subscribers. The other is the hand that rocks its cradle. We are talking about Bharti Airtel and its co-promoter Singtel. Unlike most corporate relationships, this is one that is perhaps one of the least talked about in the markets. Singtel is the second largest shareholder of Bharti after its promoters. And therefore, the two share an important relationship. Therefore we thought it would be a good idea to see how the two stack up against each other.

    In the next few articles, we will compare Bharti Airtel and Singtel on different parameters. Our intention is to provide information to the reader so that he can understand how the same business has different results because of operating in two different countries. It would also provide information on whether or not Bharti Airtel has superseded its Singapore counterpart in terms of performance. The latter is important because it will help identify the reasons as to why the better performance was possible. Was it because of something that Bharti did right or was it because of operating in another country? In either case, it would help an investor get a better understanding of the company we believe.

    In this article we will compare the key points of distinction between Bharti Airtel and Singtel.

    Geographic Focus

    Both the companies have extensive business interests outside the shores of their home countries. Singtel has business interests in Australia, Thailand, India, Philippines, Indonesia, Bangladesh and Pakistan. Bharti too has spread its wings into Bangladesh, Sri Lanka and the African continent.

    Market structure

    The two companies cater to very different types of markets. For comparison sake, we have taken the home markets for both the companies. Bharti's home market in India still holds a huge potential in the untapped rural markets, home to two-thirds of country's one billion-plus population. The rising rural tele-density is clearly indicative of the much-larger drama unfolding in the Indian telecom market. Though growth in subscribers has eased off in recent times, nevertheless the underpenetrated rural markets continue to present a huge opportunity for telecom companies like Bharti Airtel. On the other hand, Singtel faces a near mature market in Singapore.

    Source: Company data, TRAI

    As indicated in the graph above, India clearly has a huge potential to grow. But another thing that comes out from this is that Singapore is a more mature market. Therefore the potential of other telecom services like data, internet, etc would play an important role. And these are typically higher ARPU (Average revenue per user) services. This is visible in the different revenue sources for the companies.

    Operating Revenues

    While mobile operations are the biggest contributor to revenues, both companies have other sources of revenues too. The following set of graphs give a clear picture of the contribution that each business interest has in the top line of the two companies:

    Source: Company data


    Source: Company data

    Note: The data is taken for the trailing 12 months for both the companies

    Clearly, mobile is the largest contributor of revenues for both companies. However, Bharti is more exposed to mobile services as compared to Singtel. The reason for this is the maturity of the two markets. Singapore (and Australia as results include that of Optus), is a more mature market for telecom services. As such, contribution of data and other such services tends to be high.

    Subscriber base

    The two companies also face different types of customers.

    Source: Company data

    As seen in the graph above, Bharti's subscriber base predominantly consists of prepaid subscribers. This leads to higher churn and thereby higher subscriber acquisition costs for the company. Naturally acquisition costs depend on other things as well like level of competition, regulatory requirements, etc.; nevertheless, Bharti has to offer incentives to acquire and retain customers.

    Regulatory Risk

    The markets catered to by Bharti are quite different from those catered to by Singtel. As such Bharti is exposed to a higher regulatory risk. The telecom sector in India is one of the highest regulated sectors in the country. The regulator and the government have been regulating the costs through spectrum charges, spectrum fees, license fees, access charges, etc. In recent times the dillydallying on regulatory issues has just gone up.

    A clear example of the exposure to regulatory risk can be seen in the proportion of regulatory costs for the two companies.

    Source: Company data

    Regulatory flip flops also affect Bharti on the margin front. While the government does not regulate the prices directly, it regulates the costs, thereby influencing the pricing indirectly. As a result, any increase in regulated costs can add pressure to the margins of the telecom companies.

    So far, we have just talked about what these companies are, from where they earn their revenues and the differences in the markets they operate in. In the subsequent articles, we would see how these differences affect their financial performance and valuations.

     

     

    Equitymaster requests your view! Post a comment on "Bharti vs. Singtel: How the two stack up?". Click here!

    1 Responses to "Bharti vs. Singtel: How the two stack up?"

    Neeraj

    Mar 23, 2013

    Even though there might be reasons to compare the 2, they seem tenuous and stretched.. Why not compare with Verizon or AT&T too ?

    Comparison should be for reasons of competitive anlaysis and understanding differences in strategy FOR investment purpose - right ? or am I missing something here ?

    Like (1)
      
    Equitymaster requests your view! Post a comment on "Bharti vs. Singtel: How the two stack up?". Click here!
     

    More Views on News

    Bharti Airtel: A Good Quarterly Performance (Quarterly Results Update - Detailed)

    May 6, 2016

    Bharti Airtel has reported a8.4% YoY growth in the topline and an increase of 2.8% YoY in the bottomline for the quarter ended March 2016.

    Bharti Airtel: Revenues Rise Profits Fall (Quarterly Results Update - Detailed)

    Feb 4, 2016

    Bharti Airtel has reported a 3.8% YoY growth in the topline and a decrease of 22.2% YoY in the bottomline for the quarter ended December 2015.

    Bharti Airtel: A stable performance (Quarterly Results Update - Detailed)

    Nov 23, 2015

    Bharti Airtel has reported a 4.3% YoY growth in the topline and an increase of 10.1% YoY in the bottomline for the quarter ended September 2015.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    BHARTI AIRTEL SHARE PRICE


    Aug 24, 2017 09:26 AM

    TRACK BHARTI AIRTEL

    • Track your investment in BHARTI AIRTEL with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    BHARTI AIRTEL 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE BHARTI AIRTEL WITH

    MARKET STATS