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UBS Investment Research
India Mobile Sector
TRAI recommendations finally…
๔ Spectrum up to 6.2MHz at 53% of 3G price; Beyond 6.2MHz-136% of 3G
TRAI today submitted its recommendations on pricing of 2G spectrum. TRAI has
suggested service area wise two different levels of pricing for 1800MHz spectrum
– upto 6.2MHz and beyond 6.2MHz. For spectrum up to 6.2MHz, TRAI price is
53% of the pan-India 3G spectrum price while for spectrum beyond 6.2MHz TRAI
price is 136% of pan-India 3G spectrum price. TRAI has also recommended that
operators be charged prorated for the remaining license period beginning 1 Apr’10.
Further TRAI has suggested to use auction based 2G prices once there is sufficient
spectrum available for conducting auction.
๔ UBS View: No impact on our PT
1) Based on TRAI numbers, Bharti will need to pay a one time charge of Rs37bn
(Rs10/share) for spectrum beyond 2x6.2 MHz, while Idea will need to pay Rs15bn
(Rs4.5/share). 2) Our PT for Bharti and Idea already incorporate impact of Rs11
and Rs4 respectively due to one time excess 2G spectrum payment. 3) Further
using inflation adjusted TRAI 2G prices for determining amount payable during
renewal, we estimate that our price targets for Bharti and Idea could see downside
of 5% & 18% respectively. However, we must emphasize that at present there is no
clarity on policy related to 2G license renewal (please see table 3 & 4 for details).
We have not done analysis for RCom as most of its GSM licenses have been issued
recently.
๔ Maintain our Buy rating on Bharti, Idea and RCom
Given the improving pricing environment and regulatory outlook, we strongly
believe that Indian mobile sector can outperform in 2011. Idea is our top-pick as it
offers pure play exposure to Indian mobile sector.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Mobile Sector
TRAI recommendations finally…
๔ Spectrum up to 6.2MHz at 53% of 3G price; Beyond 6.2MHz-136% of 3G
TRAI today submitted its recommendations on pricing of 2G spectrum. TRAI has
suggested service area wise two different levels of pricing for 1800MHz spectrum
– upto 6.2MHz and beyond 6.2MHz. For spectrum up to 6.2MHz, TRAI price is
53% of the pan-India 3G spectrum price while for spectrum beyond 6.2MHz TRAI
price is 136% of pan-India 3G spectrum price. TRAI has also recommended that
operators be charged prorated for the remaining license period beginning 1 Apr’10.
Further TRAI has suggested to use auction based 2G prices once there is sufficient
spectrum available for conducting auction.
๔ UBS View: No impact on our PT
1) Based on TRAI numbers, Bharti will need to pay a one time charge of Rs37bn
(Rs10/share) for spectrum beyond 2x6.2 MHz, while Idea will need to pay Rs15bn
(Rs4.5/share). 2) Our PT for Bharti and Idea already incorporate impact of Rs11
and Rs4 respectively due to one time excess 2G spectrum payment. 3) Further
using inflation adjusted TRAI 2G prices for determining amount payable during
renewal, we estimate that our price targets for Bharti and Idea could see downside
of 5% & 18% respectively. However, we must emphasize that at present there is no
clarity on policy related to 2G license renewal (please see table 3 & 4 for details).
We have not done analysis for RCom as most of its GSM licenses have been issued
recently.
๔ Maintain our Buy rating on Bharti, Idea and RCom
Given the improving pricing environment and regulatory outlook, we strongly
believe that Indian mobile sector can outperform in 2011. Idea is our top-pick as it
offers pure play exposure to Indian mobile sector.
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