Bharti Airtel investment

I invested in Bharti Airtel about two weeks ago at Rs. 265/-
Rationale:
1. Valuation - at 12 times current earnings the risk reward ratio is favourable.

Risks:
1. Have they paid too much for spectrum?
Difficult to say. People thought the same about mobile licences when they were announced first.
I would imagine people will lap up broadband.
2. Airtel will borrow a lot of money.
Yes, a concern. I hate companies taking debt!!!
Airtel should get debt at a good interest rate though given how awed our banks and institutions are by big names.

Returns
1. Can it grow profits at 15% per annum.
Some things that need to be in place
a) Average revenue per user needs to stabilize - it will once the industry consolidates.
b) Investments made in broadband need to yield return - means consumers have to adopt broadband. This is not a demand issue but a pricing issue. Existing players who cover the fixed line, mobile and DTH space will crack this market. The technology is there, products are good.
Airtel is very smart with packaging so I expect they will be among the first to make money in this space.
c) its ventures overseas need to make money - remains to be seen. They have never done a merger before.