India Telecoms- July net adds down ~40% M/M; CDMA sees net loss :JPMorgan

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 July net adds decline over 40% M/M: Subscriber data from TRAI for
both GSM and CDMA segments show that net adds in July declined
42% M/M to 6.7m. This is down over 70% from the peak net adds of
~23m/month seen at end-2010. India’s total sub base now stands at
858.4m with 2/3rd of the subs in urban areas (157% penetration) and the
remainder is rural areas (35% penetration).
 CDMA sees net loss: We note that GSM net adds for July (excluding
data for Tata and Reliance) were 7.6m, down 11% M/M. See our note
“India Telecoms: GSM adds continued to decline in July” from August
26 for more details. This implies that CDMA witnessed a net loss of
967K subs in the month. This is the first month of negative net adds for
CDMA since Mar-07 when the subscriber base was cleaned at RCOM.
We note that Tata Teleservices lost 2.7m subs in the month driving the
poor performance, while RCOM’s net adds declined 28% M/M to 1.5m.
We note that Tata’s net adds have been weak in the prior two months too
averaging ~300K/month vs. ~1.5m/month average since January 2011.
 VLR update for July: VLR or active sub data for July shows that Idea,
Bharti, Vodafone have the highest ratios at 93.3%, 89.9% and 81.5%
respectively. The average for the industry is 70.7% implying active
wireless penetration of 51% vs. the reported 72%. RCOM has 62.5%
active subs, Aircel at 54.5% and some new operators like S Tel and
Etisalat at 43.4% and 34.4%.
 MNP remains small: In July, 15.5m subs made porting requests as per
Mobile Number Portability (MNP) data from TRAI. This represents
1.8% of the reported sub base or 2.6% of the active sub base.