GSM net adds in Sep down 8% MoM says Anand Rathi

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INDIAN WIRELESS: GSM net adds in Sep down 8% MoM on tightened verification norms for existing subscribers; Bharti, Uninor steady at ~2m

-          GSM subscriber net adds (excluding RCOM and Tata DOCOMO) is 12.4m in Sep-10 vs 13.5m in Aug-10, MoM decline of 8% led by lower net additions by Idea and Vodafone.

-          Subscriber additions for GSM incumbents are being impacted by more stringent security requirement for verification of existing subscriber base. While this led to a 22% decline in net adds for Bharti in Aug-10, net additions for Idea / Vodafone are down by ~23-26% in Sep10.

-     GSM subscriber base as reported by COAI (excl RCOM in 14 circles and TATA DOCOMO) is up 3% MoM and 44% YoY to 478m.

-          Bharti’s net adds were flat MoM but down 19% YoY to 2.04m. Bharti's subscriber base is up 30% YoY and 1% MoM to 143.3m.

-          Vodafone Essar recorded net adds of 1.78m, down 23% MoM and 10% YoY. Vodafone's subscriber base is up 39% YoY and 2% MoM to 115.6m.

-          Idea's net adds declined to 1.48m, down 26% MoM but up 6% YoY; Idea’s subscriber base reached 74.2m; up 44% YoY and 2% MoM.

-          BSNL's net adds increased ~2% MoM and 79% YoY to 2.34m. BSNL's GSM subscriber base is up 36% YoY and 3% MoM to 72.7m

-          Aircel’s net adds were flat MoM but increased 23% YoY to 1.61m; Aircel’s subscriber base is up 81% YoY and 4% MoM to 46.5m;Aircel reported negative net adds in J&K likely due to continued disruptions related to ongoing security issues.

-     Uninor, which launched operations during Dec-09, recorded net adds of 2.17m in Sep-10 vs 2.22m in Aug-10.

-     S-Tel net adds increased ~27% on MoM basis.

-          Etisalat’s operations likely remain in the test launch phase with total reported subscriber base of ~57,000.

-          Videocon net adds declined 8% MoM to 0.82m taking its total subscriber base to 4.5m.

-          Greenfield operators like Videocon, Etisalat, and Loop have not launched commercially in several circles but have started reporting small subscriber base across circles possibly to meet roll-out obligations.

-          Our estimates for FY11 incorporate monthly net adds run-rate of 2.7m (vs 2.6m for 1HFY11) for Bharti (BHARTI IN, Mkt Cap US$28b, CMP Rs334, Buy) and 1.7m (vs 1.7m for 1HFY11) for Idea (IDEA IN, Mkt Cap US$5.3b, CMP Rs72, Buy). Sector valuations are attractive at 7-8x FY12 EV/proportionate EBITDA.