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Bharti Infratel Ltd.

BSE: 534816 Sector: Infrastructure
NSE: INFRATEL ISIN Code: INE121J01017
BSE 00:00 | 16 Nov 259.40 3.65
(1.43%)
OPEN

255.75

HIGH

262.20

LOW

255.75

NSE 00:00 | 16 Nov 259.60 4.20
(1.64%)
OPEN

257.80

HIGH

262.25

LOW

256.00

OPEN 255.75
PREVIOUS CLOSE 255.75
VOLUME 28691
52-Week high 392.75
52-Week low 241.80
P/E 18.53
Mkt Cap.(Rs cr) 47,979
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 255.75
CLOSE 255.75
VOLUME 28691
52-Week high 392.75
52-Week low 241.80
P/E 18.53
Mkt Cap.(Rs cr) 47,979
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bharti Infratel Ltd. (INFRATEL) - Chairman Speech

Company chairman speech

Dear Shareholders

FY 2017-18 represents a landmark year in the history of the Indian Telecom Industry dueto unprecedented consolidation in the wake of intense price war which has led to fiveoperators ceasing to exist either on account of mergers/acquisitions or outright shutdownof operations.

A positive outcome of the consolidation has been that the basic structure of Indiantelecom industry which was until now fragmented with 12-14 regional operators hasimproved to 3-4 large operators with an ability to invest in nationwide networks.

Post the closure of accounts for FY 2017-18 Bharti Infratel has also made a majorannouncement regarding an agreement to merge Indus with Bharti Infratel. With thisannouncement we seek to dissolve a dual structure where global investors can investdirectly in the largest towerco outside China with a pan-India presence. This is much moredesirable than the current structure where the only way to invest in Indus is through thelisted Bharti Infratel entity.

The combined company which will fully own the respective businesses of Bharti Infrateland Indus Towers will change its name to Indus Towers Limited and will continue to belisted on the Indian Stock Exchanges. The combined company will continue to offer highquality passive infrastructure services to all telecom operators on a non-discriminatorybasis thus helping to support the delivery of the Government of India's vision of‘Digital India'. The transaction is conditional on regulatory and other approvalsincluding from CCI SEBI NCLT DoT (FDI approval) Bharti Infratel shareholders and isexpected to close before the end of the financial year ending March 31 2019.

Coming back to the developments of the year due to the ongoing consolidation thetower companies saw significant exits of co-locations from exiting operators. At Infratelwhile we reported strong gross co-location addition of 17124 on a consolidated basisduring FY 2017-18 we also witnessed consolidated exits for the full year of 22134 due tothe ongoing consolidation. It is important to highlight that with the above bulk of theadverse impact from consolidation other than the impending impact of Vodafone-Ideamerger is now behind us. As on March 31 2018 the consolidated tower base stood at91451 with consolidated co-locations at 205596 declining 2.4% YoY with a co-locationfactor of 2.25 at closing.

On the consumer side the key metrics such as number of data subscribers smartphonepenetration data consumption per user data enabled affordable handsets continued to growrapidly.

With this ideal industry structure and the fact that the data demand is growing at avery rapid pace it is clear that remaining operators particularly the three privateoperators will have to invest heavily in rolling out 4G across the country to remaincompetitive. In addition in the longer term we all know that advent of 5G wouldsignificantly increase the demand for sites because of spectrum being in Rsigherfrequencies and the deployment of critical applications on Internet of Things (IoT) whichwould require ubiquitous coverage. As a result we remain excited about the potential oftower industry in India in times to come.

Despite the turbulence in the industry the Company's financial performance during theyear was strong with consolidated revenues for the year at Rs 144896 Mn growing by 8%over the last year. Consolidated EBITDA improved to Rs 64272 Mn up 8% Y-o-Y representingan operating margin of 44.4%. The Operating Free Cash Flow grew by 13% Y-o-Y to Rs 42021Mn for the year. The Consolidated profit after tax came at Rs 24937 Mn. The Board ofDirectors have proposed a final dividend of Rs 14 per share subject to shareholders'approval. Total cash outgo for the dividend for the full year inclusive of tax ondividend would amount to Rs 31217 Mn ~125% of the consolidated PAT.

Foreign ownership touched an all-time high of 43.09% as on March 31 2018 as comparedto 8.65% at the time of IPO in December 2012. This includes 10.3% stake held by globalprivate equity funds - KKR and CPPIB.

We continued to improve our Green footprint during the year and move towards morediesel free sites in the long-run. On a consolidated basis over 42000 towers or 46% ofour portfolio are Green as of March 31 2018.

On the new revenue streams both Companies are investing in Smart City projects in aselective manner as pilots in Bhopal by Infratel & Vadodara by Indus. Both these arein final stages of completion and commissioning.

To conclude we do expect some more short-term challenges in form of cancellation ofco-locations particularly due to Vodafone-Idea merger. However with an improving industrystructure of fewer operators the rising consumer demand and the need to densify networksthrough 4G in the short-term and potentially 5G in the longer-term we do expect theIndustry to come out of this phase stronger. We believe both Bharti Infratel and Indus arein best position - both operationally and financially to cater to the ever-increasingpassive infrastructure demand of the industry.

Akhil Gupta

Chairman