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Jun-11 quarter preview: Stable quarter, but watch out for outlook on tariffs/3G
● Indian telcos would report Jun-11 results from end of July.
● We expect mobile revenue growth to remain strong at 3-6% QoQ.
While MoU could remain flat, RPM could see ~1% decline (vs 2-
3% in the previous quarter).
● We expect Bharti to show ~50 bp margin increase in India mobile
business, with most of the margin depressants behind us and the
gross additions showing a dip during the quarter. Africa should
continue to show strong margin improvement (100 bp+ QoQ).
● QoQ comparison for both RCOM and Idea would be coloured by
one-offs in the previous quarter (IRU accounting change for
RCOM, one-off cost savings for Idea). Adjusted for these, we
expect minor margin improvement for Idea.
● Net profits for Bharti and Idea would also be coloured by full
quarter impact of 3G amortisation and interest cost.
● Beyond results, we would focus on commentary around 3G uptake
and tariff environment. We remain positive on both these issues.
However, it is unlikely that either of these would materially impact
1Q numbers. We remain positive on Bharti and Idea.
Things to look out for
Bharti: (1) We expect the cost management initiatives in Africa to
continue to deliver margin improvements. We expect 130 bp QoQ
expansion. (2) The African currencies have remained largely stable vs
the rupee during the quarter, and hence the forex impact on reported
profits could be negligible. (3) We expect the initial numbers on 3G to
be sustained, on both subscriber uptake and incremental ARPU.
RCOM: (1) We expect RPM to continue to fall for another quarter. (2)
There has been some excitement around potential stake sale in
Infratel. We would look for comments around this.
Idea: (1) We expect management to retain its bullish tone around 3G
similar to the last quarter. (2) We would look for the trend of losses in
new circles – these have stabilised over the last few quarters.
TCOM: We expect continued growth in non-voice business leading to
continued increase in margins. We would look for updates on margins
in Neotel.
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