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India Telecoms
MNP goes pan-India - recent developments
Mobile Number Portability (MNP) goes operational across India today
after being launched in the Haryana circle in November. We expect the
near-term impact on the telcos to be negative driven by: [1] pressure on
post-paid tariffs, and [2] higher marketing expenses. We reiterate our view
that this is not a volume game – we don’t expect any meaningful market
share movements.
• Pricing pressure expected: We believe competitive pricing has so far
been concentrated in the pre-paid segment while the high-value postpaid
segment has been protected with flattish ARPMs and declining
churn rates. Post-paid ARPMs are at a 44% premium to pre-paid.
• Personal experience and on-the-ground developments: Based on
recent developments, we believe that MNP is prompting telcos to
highlight quality and value to subscribers. Our experience leads us to
believe that not all ground sales reps are equipped to respond
immediately but nevertheless, the initial sound-bites suggest near-term
competition.
o We believe there had been marketing calls from some telco
companies offering discounts and other benefits to post-paid
subscribers vs. their current plans.
o Vodafone has been calling their post-paid subscribers gathering
feedback on the quality of service.
o Loop Mobile (Mumbai) has launched a "Network Challenge"
offering its post-paid and pre-paid customers money back of INR
0.50/min for dropped calls.
o Idea has been the first and most pro-active in our view on
educating customers about MNP while Vodafone has also
launched MNP marketing. Others like RCOM, Bharti and Tata
are less visible.
• Potential impact: Bharti generates 15-20% of its wireless revenue and
20-25% of its EBITDA from post-paid subs, in our view. We estimate
that a 20-30% decline in post-paid pricing can have a 7-10% impact on
Bharti’s EPS. We believe the exposure for Idea is larger – its lossgenerating
“new circles” account for ~10% of standalone revenue. Loop
Mobile in Mumbai has ~9% subscriber share and an ARPU of ~INR 200.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
India Telecoms
MNP goes pan-India - recent developments
Mobile Number Portability (MNP) goes operational across India today
after being launched in the Haryana circle in November. We expect the
near-term impact on the telcos to be negative driven by: [1] pressure on
post-paid tariffs, and [2] higher marketing expenses. We reiterate our view
that this is not a volume game – we don’t expect any meaningful market
share movements.
• Pricing pressure expected: We believe competitive pricing has so far
been concentrated in the pre-paid segment while the high-value postpaid
segment has been protected with flattish ARPMs and declining
churn rates. Post-paid ARPMs are at a 44% premium to pre-paid.
• Personal experience and on-the-ground developments: Based on
recent developments, we believe that MNP is prompting telcos to
highlight quality and value to subscribers. Our experience leads us to
believe that not all ground sales reps are equipped to respond
immediately but nevertheless, the initial sound-bites suggest near-term
competition.
o We believe there had been marketing calls from some telco
companies offering discounts and other benefits to post-paid
subscribers vs. their current plans.
o Vodafone has been calling their post-paid subscribers gathering
feedback on the quality of service.
o Loop Mobile (Mumbai) has launched a "Network Challenge"
offering its post-paid and pre-paid customers money back of INR
0.50/min for dropped calls.
o Idea has been the first and most pro-active in our view on
educating customers about MNP while Vodafone has also
launched MNP marketing. Others like RCOM, Bharti and Tata
are less visible.
• Potential impact: Bharti generates 15-20% of its wireless revenue and
20-25% of its EBITDA from post-paid subs, in our view. We estimate
that a 20-30% decline in post-paid pricing can have a 7-10% impact on
Bharti’s EPS. We believe the exposure for Idea is larger – its lossgenerating
“new circles” account for ~10% of standalone revenue. Loop
Mobile in Mumbai has ~9% subscriber share and an ARPU of ~INR 200.
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