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• Solid revenue growth, some margin pressure: We forecast 2-5% Q/Q
revenue growth for Bharti/Idea/RCOM driven by strong volumes (2-8%)
but off-set by some ARPM pressures. We expect ~1pp Q/Q margin
declines related to network opex and SG&A expenses. For Bharti Africa
we forecast a 60bp Q/Q increase to 25.7%. JPMe for Bharti
Consolidated / Idea/ RCOM: 33%/23%/33%. We expect 3G related
costs to impact P&L in varying degrees with RCOM having a full
quarter impact, a partial impact for Bharti and a negligible if any impact
for Idea.
• Looking for strong volumes at the incumbents: Strong net adds offset
by some MOU pressures drive our estimate for 6%8%/2% sequential
growth in total wireless minutes at Bharti/Idea/RCOM. We expect MOU
pressure at RCOM as we believe it may have lost some high-usage
subscribers.
• Expect MNP-driven ARPM pressure: We forecast 3% Q/Q declines in
voice ARPMs for both Bharti and Idea, off-set somewhat by non-voice
revenue driving blended ARPMs to INR 0.44/0.41 representing flat/1%
decline. For RCOM we forecast a 1% Q/Q decline in ARPM.
• Key issues to watch [1] MNP impact on post-paid pricing [2] Overall
pricing environment [3] 3G take-up and impact [4] Capex guidance for
FY12 [5] Commentary around regulations and [6] For Bharti Africa,
pricing competition, capex outlook, elasticity, cost reduction efforts.
• We see two positives for the sector in FY12 – easing of competitive
intensity and regulatory clarity. We prefer Bharti as it is best positioned
to absorb any negative regulatory impact in addition to benefiting from
the expected pricing stability in H2 FY12 and strong earnings growth.
We also like Tulip Telecom and expect continued strength in core
business as increased fibre contribution drives both top-line growth and
margin expansion. We remain cautious on Idea Cellular on volume
dilution concerns and a potential increase in leverage if excess spectrum
payments materialize.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• Solid revenue growth, some margin pressure: We forecast 2-5% Q/Q
revenue growth for Bharti/Idea/RCOM driven by strong volumes (2-8%)
but off-set by some ARPM pressures. We expect ~1pp Q/Q margin
declines related to network opex and SG&A expenses. For Bharti Africa
we forecast a 60bp Q/Q increase to 25.7%. JPMe for Bharti
Consolidated / Idea/ RCOM: 33%/23%/33%. We expect 3G related
costs to impact P&L in varying degrees with RCOM having a full
quarter impact, a partial impact for Bharti and a negligible if any impact
for Idea.
• Looking for strong volumes at the incumbents: Strong net adds offset
by some MOU pressures drive our estimate for 6%8%/2% sequential
growth in total wireless minutes at Bharti/Idea/RCOM. We expect MOU
pressure at RCOM as we believe it may have lost some high-usage
subscribers.
• Expect MNP-driven ARPM pressure: We forecast 3% Q/Q declines in
voice ARPMs for both Bharti and Idea, off-set somewhat by non-voice
revenue driving blended ARPMs to INR 0.44/0.41 representing flat/1%
decline. For RCOM we forecast a 1% Q/Q decline in ARPM.
• Key issues to watch [1] MNP impact on post-paid pricing [2] Overall
pricing environment [3] 3G take-up and impact [4] Capex guidance for
FY12 [5] Commentary around regulations and [6] For Bharti Africa,
pricing competition, capex outlook, elasticity, cost reduction efforts.
• We see two positives for the sector in FY12 – easing of competitive
intensity and regulatory clarity. We prefer Bharti as it is best positioned
to absorb any negative regulatory impact in addition to benefiting from
the expected pricing stability in H2 FY12 and strong earnings growth.
We also like Tulip Telecom and expect continued strength in core
business as increased fibre contribution drives both top-line growth and
margin expansion. We remain cautious on Idea Cellular on volume
dilution concerns and a potential increase in leverage if excess spectrum
payments materialize.
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