Bharti Infratel: Second-Largest Wireless Tower Company in India

George Kurian of RARE Infrastructure presented his in-depth investment thesis on Bharti Infratel (India: BHIN) at Asian Investing Summit 2018.

Thesis summary:

Bharti Infratel is the second-largest wireless tower company in India. The investment case is a classic example of time horizon arbitrage. While the market seems focused on the ongoing carrier consolidation, it ignores the normalized earnings power of the company.

Over the next couple of years, Infratel could become the second-fastest growing tower company in the world on an EBITDA basis, yet the it was recently priced at the lowest EV/EBITDA tower multiple in the peer group.

Moreover, with many companies safely levered in the mid-single digit net debt-to-EBITDA multiple range, Infratel has a net cash balance sheet. It also owns 42% of the largest tower company in India, Indus, and has a right of first refusal to buy the remainder of Indus. The board of Infratel has asked management to evaluate the Indus acquisition, which, if done at reasonable terms, could improve the growth prospects of Infratel, provide synergies, and lower the weighted-average cost of capital.

Infratel could be the classic “double play” for long-term investors due to a potential uplift in earnings and valuation multiples.

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About the instructor:

George Kurian, CFA, is a Portfolio Manager at RARE Infrastructure in Sydney, Australia, and has over 18 years of Investment and Finance experience. The fund he works for, RARE Emerging Markets Fund, has been ranked by the London based Citywire as the second best performing Global Emerging Markets fund in the world over a four year period between London and Rio Olympics. George has published several articles including ‘Darwin’s Power and Porter’s missing Force’, where he showed how a multi-disciplinary framework could extend the traditional Value investing philosophy. Prior to joining RARE in 2010, George was an Investment Analyst with Tradition Capital Management in NJ, US. He has also worked with Citigroup Investment Research in New York City, Aviva plc in the UK, and has also worked in several states in India. He is also fluent in three languages. George holds an MBA in Finance and Investment management from Duke University’s Fuqua school of Business, NC, US. While at Duke, one of his investment ideas was voted by an NYC hedge fund as top five from all Universities in United States. He is also a CFA charterholder.