Bharti provides additional update on Zain Africa: In a conference call, Bharti mgmt informed that it has taken over the management of ZA. Bharti plans to undertake re-branding in all the 15 countries of ZA during October 2010. The company has given a capex guidance of $800 mn for FY11. After visiting individual countries that ZA operates in, Bharti mgmt has found the local governments and regulators to be fairly supportive of its entry.
Valuations: Bharti is our top pick among Indian telcos. Despite a run-up in its share price recently (+11% since our mid-June upgrade, vs. +1.5% move in the Sensex), Bharti may provide another 15-20% upside within the 9-12 months, based on our TP. Key catalysts include: evidence of wireless EBITDA growth driven by ARPM/margin stability, turnaround in Zain operations. Idea shares have also rallied sharply since our upgrade (+19%) and currently offer limited absolute upside in the short-to-medium term. We maintain our Sell rating on RCOM, and Hold on Tulip Telecom.
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