Can Bharti Airtel’s Free Cash Flow Surprise Positively? ICICI Securities' Analysis

ICICI Securities Report

The biggest disappointment for Bharti Airtel Ltd. we have heard from investors is lack of free cash flow generation in the past, which has capped shareholder value creation.

In this note, we highlight the reasons for Bharti Airtel’s lack of FCF generation, which includes competitive intensity, costs of building spectrum portfolio, leapfrogging in technology adoption, regulatory payouts and Africa acquisition.

The heavy-lifting on most investments is behind except for 5G network rollout. Thus, we have come a long way, and are close to crossing the line from where Bharti Airtel can possibly generate cashflow equivalent to 10% of its current market capitalisation, and this, we believe, is just two years away.

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