TELECOM
Strong momentum in subscriber net additions coupled with network minutes
growth is expected to augur well for the telecom companies.
We expect drop in ARPU to be subdued in our coverage universe owing to
MoU growth and lower drop in tariffs.
The industry has not witnessed any major drop in tariffs post per second billing
in October 2009.
The government allotted 3G spectrums to telcos in September 2010, which
would help them launch services by 4QFY11. 3G services are expected to open
up new revenue streams for operators in the long term.
The industry participants are optimistic about 3G penetration in the country
owing to: (1) proven technology; (2) availability of low cost equipment and
handsets; (3) availability of various data services; (4) information about user
consumption patterns; (5) 3G data and services pricing trends in the global
markets etc. Bharti Airtel remains our top pick in the sector.
We expect Bharti to report ARPU of Rs210, QoQ drop of 2.3%, and MoU
growth of 1.8% QoQ. On the back of strong estimated MoU growth of 3.2%
QoQ, we expect Idea Cellular to report ARPU drop of 2%. For RCom we expect
the slide in ARPU to continue and expect ARPUs and MoUs to drop 4% and
3.1% QoQ respectively
Our top pick is Bharti Airtel
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