India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Subscriber addition slowing down…
Early signs of subscriber addition slowing down…
Subscriber addition in the telecom industry fell for the third straight
month to record an 18 month low in May 2011. The industry added 9.5
million GSM subscribers in May 2011 as against 11.1 million in April 2011.
Subscriber addition in Q4FY11 was also 6 million lower than that in
Q3FY11, indicating early signs of subscriber addition peaking out.
Airtel and Vodafone – Better performers
The two largest GSM operators were the better performers in May 2011
with both increasing their net subscriber additions in May 2011 as
compared to April 2011. Airtel and Vodafone added 2.5 million and 2.4
million subscribers in May 2011 as against 2.4 million each in April 2011,
respectively. The share in net adds was also the highest for both at 25.7%,
rising from 21.7% in April 2011.
Idea and BSNL – Lower net adds
Idea Cellular added 1.8 million subscribers in May 2011, 26.5% lower than
the 2.5 million subscribers added in April 2011. The share in net adds also
decreased from 22.1% in April 2011 to 18.9% in May 2011.
BSNL continued its poor form by adding a mere 0.5 million subscribers in
May 2011, 31.6% lower than 0.7 million additions in April 2011. That
recorded a decline in net adds for BSNL for the fifth straight month. The
share in net adds also reduced to 4.9% from 6.2% in April 2011.
Others
Aircel’s net adds stood at 1.1 million, which is at the same level as April
2011. However, it increased its share in net adds from 10.0% to 11.7%.
Uninor is on a continuous decline with 1.1 million subscriber addition as
compared to 1.5 million in April 2011. Other companies in the industry
performed very poorly with net additions of mere 0.1 million as compared
to 0.6 million in April 2011.
Industry Outlook
The declining net adds of new operators’ exhibits softening competitive
intensity and dying dual SIM phenomena. This would also curb MoU
cannibalisation for incumbent players. Steady MoU, moderate rate of
subscriber addition and a marginal fall in ARPM would lead to revenue
growth, going forward. The new telecom policy is expected to be a
balanced one. It would help the incumbents in the long run. With
imminent consolidation in the industry, we expect larger players to
further consolidate their dominance in the industry.
Among our coverage stocks, both Bharti Airtel and Idea Cellular have so
far remained clear of any allegation, which is also reflected in their price
performance vis-à-vis broader market and its peers. Both Airtel and Idea
have appreciated ~47% in 12 months while RCom and TTML have
declined 52.5% and 22.5%, respectively, and the benchmark index is
more or less flat over the same period. With the expected turnaround in
African operations and strongest key metrics among Indian telcos, Bharti
Airtel remains our top pick in the sector.
Recent events
Wireless broadband subsidy may touch | 8000 crore
The department of telecom has pegged the total subsidy for financing
countrywide rural wireless broadband rollout at roughly | 6,000-8,000
crore. The subsidy will be available to telecom service providers, which
finally win the rights to roll out the wireless broadband network in all 22
circles. The actual subsidy layout will be linked to the lowest bid per
circle on conclusion of the tendering process.
RCom may have received offers for tower business
Reliance Communication has communicated that it has received a
number of preliminary offers for a controlling stake in its tower business
from a combination of strategic and private equity investors. Viom
Networks, a telecom tower JV between Tata Teleservices and Quippo, a
SREI Group enterprise, has confirmed its interest in Reliance Infratel's
towers.
Other potential bidders for a controlling stake in Reliance Infratel
include American Tower Corporation and UAE's largest
telecommunications provider, Etisalat. UBS is also said to have
approached buyout funds Carlyle and Apax Partners on behalf of
Reliance Communications.
Bharti looking at tie-up with several giants in Africa
India's largest mobile phone company Bharti Airtel, which expanded
operations to 16 African countries last year, is in talks with five leading
operators - Etisalat, MTN, France Telecom (Orange), Millicom and
Vodafone - for sharing telecom infrastructure such as towers and fibre
in that continent.
Vodafone buys out Essar’s stake
The Vodafone Group has paid its Indian partner Essar $1.9 billion, the
first tranche of its $5 billion deal, to buy out the Ruias' entire 33% stake
in Vodafone Essar. It will pay the next instalment of $1.9 billion in
November 2011. In March 2011, Vodafone and Essar had agreed on an
amicable divorce after a four-year marriage marred by bitter fighting
with the British group offering its Indian partner a previously agreed
pre-nuptial settlement of $5 billion (| 22,200 crore).
No comments:
Post a Comment