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Telecom
Potential Result Outperformer: Bharti
Potential Result Underperformer: Reliance Com
Result Expectations – Key Highlights
No major upside drivers this quarter: Prima facie, 3Q FY11 is likely to be a
strong quarter for the industry due to a combination of stronger net adds and
modest attrition in revenue per minute. For the majors (Bharti, RCom and Idea)
collectively, we forecast 3Q FY11E wireless revenues for India to grow ~5-6%
QoQ vs 0% QoQ growth witnessed in 2Q FY11.
Subs momentum returns but traffic growth likely modest: Data for Oct-Nov
’10 shows that the majors (Bharti, RCom and Idea) garnered 37% of industry net
adds vs 35% share in 2Q FY11; this may be owing to a strong push in festival
(Diwali) promotions. However, minutes of use per sub (MoU/sub) are unlikely to
revert to 1Q FY11 levels, in our view. We expect traffic growth to recover
seasonally to ~7% QoQ but remain lower than the 8% growth witnessed in 1Q
FY11.
Modest attrition in revenue per minute: We expect revenue per minute (rpm) to
post a modest 2% QoQ attrition similar to the trend witnessed in 2Q FY11. This
reflects a relatively stable competitive environment in the industry.
Cost push to keep margins in check: Our industry feedback suggests that
inflationary pressure on costs will make it difficult for the industry to deliver any
margin upside even though tariffs have been mostly stable. Broadly, we expect
wireless margins of the majors to slip ~30bps QoQ.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Telecom
Potential Result Outperformer: Bharti
Potential Result Underperformer: Reliance Com
Result Expectations – Key Highlights
No major upside drivers this quarter: Prima facie, 3Q FY11 is likely to be a
strong quarter for the industry due to a combination of stronger net adds and
modest attrition in revenue per minute. For the majors (Bharti, RCom and Idea)
collectively, we forecast 3Q FY11E wireless revenues for India to grow ~5-6%
QoQ vs 0% QoQ growth witnessed in 2Q FY11.
Subs momentum returns but traffic growth likely modest: Data for Oct-Nov
’10 shows that the majors (Bharti, RCom and Idea) garnered 37% of industry net
adds vs 35% share in 2Q FY11; this may be owing to a strong push in festival
(Diwali) promotions. However, minutes of use per sub (MoU/sub) are unlikely to
revert to 1Q FY11 levels, in our view. We expect traffic growth to recover
seasonally to ~7% QoQ but remain lower than the 8% growth witnessed in 1Q
FY11.
Modest attrition in revenue per minute: We expect revenue per minute (rpm) to
post a modest 2% QoQ attrition similar to the trend witnessed in 2Q FY11. This
reflects a relatively stable competitive environment in the industry.
Cost push to keep margins in check: Our industry feedback suggests that
inflationary pressure on costs will make it difficult for the industry to deliver any
margin upside even though tariffs have been mostly stable. Broadly, we expect
wireless margins of the majors to slip ~30bps QoQ.
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