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India Telecom Sector ------------------------------------------------------------------------------------------
March 2011 quarter preview: Expect strong growth with stable margin
● Indian telcos will report March 2011 results from the end of April.
● We believe that the underlying growth in the sector remains
strong, with competitive intensity stable.
● However, the nationwide launch of MNP in Jan 2011 could have a
short-term impact on RPM, as operators tried to retain high-value
customers. We build in 2-3% QoQ RPM decline for companies, after
the RPM decline had fallen to less than 1% in the previous quarter.
● On the other hand, strong subscriber growth and stable MoU
could help sustain flat margins.
● For Bharti, we expect margins in India to remain flat on a like-for-like
basis, while Africa could see a 100 bp margin increase. These
comparisons exclude one-time branding cost in the Dec 2010 quarter.
● While initial comments from managements indicate good response
to 3G launch, we would look for detailed comments on ARPU uplift
and subscriber uptake.
● We remain positive on the India telecom sector with
OUTPERFORM ratings on Bharti and Idea.
Things to look out for
Bharti: (1) Africa margins started improving in the Dec 2010 quarter.
We expect this trend to continue. (2) African currencies have remained
largely stable versus the INR during the quarter; hence, the forex impact
on reported profits could be negligible. (3) Bharti launched 3G services
in about 40 cities during the quarter. We would look for comments on
subscriber uptake and ARPU uplift in these circles.
RCOM: (1) We would look for updates on the rationalisation of PCO
business that the company has been undergoing over the past few
quarters. (2) We would look for comments on ways to manage the
upcoming FCCB redemptions.
Idea: (1) We expect capex intensity to continue to rise as the company
invests into new circles. (2) We would look for the trend of losses in new
circles – these have stabilised over the past few quarters.
TCOM: We expect continued growth in the non-voice business
leading to continued increase in margins. We would look for updates
on margins in Neotel.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Telecom Sector ------------------------------------------------------------------------------------------
March 2011 quarter preview: Expect strong growth with stable margin
● Indian telcos will report March 2011 results from the end of April.
● We believe that the underlying growth in the sector remains
strong, with competitive intensity stable.
● However, the nationwide launch of MNP in Jan 2011 could have a
short-term impact on RPM, as operators tried to retain high-value
customers. We build in 2-3% QoQ RPM decline for companies, after
the RPM decline had fallen to less than 1% in the previous quarter.
● On the other hand, strong subscriber growth and stable MoU
could help sustain flat margins.
● For Bharti, we expect margins in India to remain flat on a like-for-like
basis, while Africa could see a 100 bp margin increase. These
comparisons exclude one-time branding cost in the Dec 2010 quarter.
● While initial comments from managements indicate good response
to 3G launch, we would look for detailed comments on ARPU uplift
and subscriber uptake.
● We remain positive on the India telecom sector with
OUTPERFORM ratings on Bharti and Idea.
Things to look out for
Bharti: (1) Africa margins started improving in the Dec 2010 quarter.
We expect this trend to continue. (2) African currencies have remained
largely stable versus the INR during the quarter; hence, the forex impact
on reported profits could be negligible. (3) Bharti launched 3G services
in about 40 cities during the quarter. We would look for comments on
subscriber uptake and ARPU uplift in these circles.
RCOM: (1) We would look for updates on the rationalisation of PCO
business that the company has been undergoing over the past few
quarters. (2) We would look for comments on ways to manage the
upcoming FCCB redemptions.
Idea: (1) We expect capex intensity to continue to rise as the company
invests into new circles. (2) We would look for the trend of losses in new
circles – these have stabilised over the past few quarters.
TCOM: We expect continued growth in the non-voice business
leading to continued increase in margins. We would look for updates
on margins in Neotel.
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