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UBS Investment Research
India Mobile Sector
Tata DoCoMo’s 3G plans seem rational
Tata DoCoMo launches 3G plans in nine service areas from November 10
According to various media reports, Tata DoCoMo’s 3G plan for prepaid
subscribers is priced at Rs350 per month and offers 500 minutes of local and/or
NLD usage and 150MB data download free. Post-paid plans for mobile phones
(3G life tariff plan) range from Rs500-2,000/month and offer 750-5,000 minutes of
local and/or NLD usage and 250MB-2GB data download free. The high-speed data
plans (worry free unlimited plans) on post-paid range from Rs1,000 to Rs2,000 and
offer 5GB-15GB of data download at speeds of 3.6-21.1 Mbps.
UBS view: Tata DoCoMo 3G pricing plans are not disruptive
We believe Tata DoCoMo’s 3G plans are rational and are not disruptive. This
reinforces our view that pricing environment is likely to remain stable. As
highlighted in our note Competitive intensity unlikely to worsen, published 9 April
2010, we believe revenue per minute is unlikely to decline significantly as cost/min
for a new operator is Rs0.74/minute and the prevailing rev/minute is Rs0.40.
RCOM is our top pick—looks well positioned to ride wireless data boom
With the imminent launch of 3G services, wireless data is likely to be a growth
area. We believe that Reliance Communication (RCOM), with its CDMA and 3G
spectrum coupled with optic fibre network, is well positioned to ride any boom on
wireless data. RCOM is likely to launch dongle-based broadband in 500 cities and
offer wireless internet browsing on handsets in the next 12 months. We maintain
our Buy ratings on RCOM and Bharti Airtel (Bharti), and our Sell rating on Idea
Cellular (Idea). Our sum-of-the-parts-based price targets for RCOM, Bharti, and
Idea are Rs270, Rs415, and Rs75, respectively.
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