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S t r e a k b r o k e n ; s u b s c r i b e r a d d i t i o n r i s e s …
Subscriber addition falls again …
After falling for six straight months, subscriber addition in the telecom
industry rose marginally in September. The industry added 6.5 million
GSM subscribers in September 2011 as against 5.3 million in August
2011. The total GSM subscribers for the industry stood at 618.3 million.
The subscriber addition is still considerably below the CY10 number,
which was 13.6 million.
Uninor – the dark horse
Uninor was the dark horse in September with a net subscriber addition of
1.9 million against just 0.3 million in August. The share of net adds for
Uninor was 29.4% - highest for any operator in September.
Top guns fail to fire!
All the top 3 companies saw their subscriber addition fall in September
2011. Bharti Airtel, Vodafone and Idea added 0.9 million, 0.8 million and
1.7 million as against 1.2 million, 1.1 million and 2.3 million, respectively,
in August 2011. However, Idea had the second highest share in net adds
at 26.6%, which was considerably lower than 43.6% in August 2011. Airtel
and Vodafone saw a share in net adds of 14.3% and 13.0%, down from
21.5% and 21.2%, respectively.
Others
The subscriber addition for Aircel stayed flat at 0.6 million subscribers as
against August 2011. Other operators in the industry, however, improved
with negligible net adds in September 2011 as against a decline in the
total subscribers by 0.6 million in August 2011.
Industry outlook
The net adds have shown a slight improvement. However, they continue
to be on the lower side. The recent price hike by telcos would aid ARPM
expansion, going ahead. We expect 2-3 paisa improvement in ARPM by
FY13 across players on the back of the recent price hike. ARPM expansion
would aid the margins. However, rising fuel cost, 3G rollout and rising
interest cost would exert downward pressure on profitability.
The telecom ministry announced the draft of the New Telecom Policy
2011. The draft on the new policy did seem to be consumer and industry
friendly and took cognizance of the need of enhanced broadband
penetration in the country and need for additional spectrum. Though the
draft talked about the Spectrum Management Act and that the future
spectrum would be given only through auction and conducting regular
spectrum audit, it did not mention one-time spectrum fees or spectrum
re-framing explicitly. Hence, the uncertainty regarding spectrum pricing
and fees continues. Both Bharti Airtel and Idea Cellular (under our
coverage universe) would be impacted the most by one-time spectrum
fees and spectrum re-farming. However, till further clarity emerges, we
maintain our BUY rating on Bharti Airtel and Idea Cellular with a target
price of | 450 and | 104, respectively. Though Reliance Communications
would be least impacted by spectrum pricing in the near term, we remain
cautious due to large debt and poor operating performance. We have
assigned a HOLD rating to the stock with a target price of | 84.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S t r e a k b r o k e n ; s u b s c r i b e r a d d i t i o n r i s e s …
Subscriber addition falls again …
After falling for six straight months, subscriber addition in the telecom
industry rose marginally in September. The industry added 6.5 million
GSM subscribers in September 2011 as against 5.3 million in August
2011. The total GSM subscribers for the industry stood at 618.3 million.
The subscriber addition is still considerably below the CY10 number,
which was 13.6 million.
Uninor – the dark horse
Uninor was the dark horse in September with a net subscriber addition of
1.9 million against just 0.3 million in August. The share of net adds for
Uninor was 29.4% - highest for any operator in September.
Top guns fail to fire!
All the top 3 companies saw their subscriber addition fall in September
2011. Bharti Airtel, Vodafone and Idea added 0.9 million, 0.8 million and
1.7 million as against 1.2 million, 1.1 million and 2.3 million, respectively,
in August 2011. However, Idea had the second highest share in net adds
at 26.6%, which was considerably lower than 43.6% in August 2011. Airtel
and Vodafone saw a share in net adds of 14.3% and 13.0%, down from
21.5% and 21.2%, respectively.
Others
The subscriber addition for Aircel stayed flat at 0.6 million subscribers as
against August 2011. Other operators in the industry, however, improved
with negligible net adds in September 2011 as against a decline in the
total subscribers by 0.6 million in August 2011.
Industry outlook
The net adds have shown a slight improvement. However, they continue
to be on the lower side. The recent price hike by telcos would aid ARPM
expansion, going ahead. We expect 2-3 paisa improvement in ARPM by
FY13 across players on the back of the recent price hike. ARPM expansion
would aid the margins. However, rising fuel cost, 3G rollout and rising
interest cost would exert downward pressure on profitability.
The telecom ministry announced the draft of the New Telecom Policy
2011. The draft on the new policy did seem to be consumer and industry
friendly and took cognizance of the need of enhanced broadband
penetration in the country and need for additional spectrum. Though the
draft talked about the Spectrum Management Act and that the future
spectrum would be given only through auction and conducting regular
spectrum audit, it did not mention one-time spectrum fees or spectrum
re-framing explicitly. Hence, the uncertainty regarding spectrum pricing
and fees continues. Both Bharti Airtel and Idea Cellular (under our
coverage universe) would be impacted the most by one-time spectrum
fees and spectrum re-farming. However, till further clarity emerges, we
maintain our BUY rating on Bharti Airtel and Idea Cellular with a target
price of | 450 and | 104, respectively. Though Reliance Communications
would be least impacted by spectrum pricing in the near term, we remain
cautious due to large debt and poor operating performance. We have
assigned a HOLD rating to the stock with a target price of | 84.
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