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Cellular Operators Association of India (COAI) reported GSM subscriber data for
August 2011. GSM subscriber net addition data continued its declining trend
during this month as well and was reported to be weak on mom basis across all
telecom operators (except Idea). Net subscriber addition number stood at merely
5.3mn (almost at all-time low), down by whopping 30% mom, taking the total
GSM subscriber base to 611.8mn subscribers in August 2011.
Weakness across the board
Net addition run rate on mom basis for all operators (except Idea) dropped off
steeply (Refer Exhibit: 5 and 6) in August 2011. Among the incumbents, Bharti
and Vodafone reported a significant decline in their net subscriber addition
numbers, with net addition numbers dropping to merely 1.2mn and 1.1mn, down
23.8% and 24.0% mom, respectively. BSNL, which was bucking the declining
trend since the last two months, reported a significant decline in net subscriber
addition in August 2011 to only 0.4mn from 1.8mn in July 2011. Idea emerged
as the dark horse by reporting net subscriber addition of whopping 2.3mn as
against 1.0mn in July 2011, up 132% mom, which led to a 30bp mom increase
in its subscriber market share to 16.1%. Subscriber market share of Bharti and
Vodafone remained stable mom at 28.1% and 23.6%, respectively; however,
market share of BSNL declined by 10bp to 14.8%.
Among new operators, Videocon and S Tel reported a net decline of 0.65mn and
0.1mn subscribers in their subscriber base, respectively. Net subscriber addition
of Uninor declined by 67.0% mom, as it added merely 0.3mn subscribers.
Subscriber market share of all new operators remained flat on mom basis, expect
for Videocon, which reported a 20bp decline in its subscriber market share to
1.0% because of net reduction of 0.65mn subscribers in its subscriber base.
Circle-wise highlights
In August 2011, the net addition run rate of all the circles declined significantly,
the highest being for Metro circle, which reported addition of merely 0.4mn
subscribers, down 57.2% mom from 0.9mn in July 2011. This led to a decline in
net subscriber market share of Metro circle to 7.6% from 12.4%. In the Metro
circle, during the month, Idea reported the highest net addition of 0.27mn
subscribers, followed by Vodafone, Bharti and Aircel, which reported 0.23mn,
0.09mn and 0.05mn net subscriber additions, respectively. Subscriber addition
run rate of A circle remained comparatively stable at 2.3mn as against 2.6mn in
July 2011. Subscriber additions in B and C circles also fell to 2.0mn and 0.6mn
from 2.7mn and 1.3mn in July 2011, respectively.
Valuation
For Bharti, such a decline in net subscriber additions was along expected lines,
thus our estimates remain unchanged. However, Idea’s net addition numbers
came in as a positive surprise. The driving force for the overall sector is the
increase in tariff rates as well as increasing use of value-added services, which will
lead to higher ARPU for all players, thereby aiding profitability. Bharti continues to
be a better bet due to its low-cost integrated model (owned tower infrastructure),
potential opportunity to scale up in Africa, established leadership in revenue and
subscriber market share and relatively better KPIs. However, overall we remain
Neutral on the telecom sector.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cellular Operators Association of India (COAI) reported GSM subscriber data for
August 2011. GSM subscriber net addition data continued its declining trend
during this month as well and was reported to be weak on mom basis across all
telecom operators (except Idea). Net subscriber addition number stood at merely
5.3mn (almost at all-time low), down by whopping 30% mom, taking the total
GSM subscriber base to 611.8mn subscribers in August 2011.
Weakness across the board
Net addition run rate on mom basis for all operators (except Idea) dropped off
steeply (Refer Exhibit: 5 and 6) in August 2011. Among the incumbents, Bharti
and Vodafone reported a significant decline in their net subscriber addition
numbers, with net addition numbers dropping to merely 1.2mn and 1.1mn, down
23.8% and 24.0% mom, respectively. BSNL, which was bucking the declining
trend since the last two months, reported a significant decline in net subscriber
addition in August 2011 to only 0.4mn from 1.8mn in July 2011. Idea emerged
as the dark horse by reporting net subscriber addition of whopping 2.3mn as
against 1.0mn in July 2011, up 132% mom, which led to a 30bp mom increase
in its subscriber market share to 16.1%. Subscriber market share of Bharti and
Vodafone remained stable mom at 28.1% and 23.6%, respectively; however,
market share of BSNL declined by 10bp to 14.8%.
Among new operators, Videocon and S Tel reported a net decline of 0.65mn and
0.1mn subscribers in their subscriber base, respectively. Net subscriber addition
of Uninor declined by 67.0% mom, as it added merely 0.3mn subscribers.
Subscriber market share of all new operators remained flat on mom basis, expect
for Videocon, which reported a 20bp decline in its subscriber market share to
1.0% because of net reduction of 0.65mn subscribers in its subscriber base.
Circle-wise highlights
In August 2011, the net addition run rate of all the circles declined significantly,
the highest being for Metro circle, which reported addition of merely 0.4mn
subscribers, down 57.2% mom from 0.9mn in July 2011. This led to a decline in
net subscriber market share of Metro circle to 7.6% from 12.4%. In the Metro
circle, during the month, Idea reported the highest net addition of 0.27mn
subscribers, followed by Vodafone, Bharti and Aircel, which reported 0.23mn,
0.09mn and 0.05mn net subscriber additions, respectively. Subscriber addition
run rate of A circle remained comparatively stable at 2.3mn as against 2.6mn in
July 2011. Subscriber additions in B and C circles also fell to 2.0mn and 0.6mn
from 2.7mn and 1.3mn in July 2011, respectively.
Valuation
For Bharti, such a decline in net subscriber additions was along expected lines,
thus our estimates remain unchanged. However, Idea’s net addition numbers
came in as a positive surprise. The driving force for the overall sector is the
increase in tariff rates as well as increasing use of value-added services, which will
lead to higher ARPU for all players, thereby aiding profitability. Bharti continues to
be a better bet due to its low-cost integrated model (owned tower infrastructure),
potential opportunity to scale up in Africa, established leadership in revenue and
subscriber market share and relatively better KPIs. However, overall we remain
Neutral on the telecom sector.
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