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India Equity Research Reports, IPO and Stock News
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● We expect muted QoQ growth for Indian telcos in the Sep-11
quarter due to seasonal weakness in the mobile business. Mobile
top-line growth could be 0-2% QoQ.
● ARPU could fall 3-4% primarily driven by weak minutes, while
RPM could remain flat (stemming the usual trend of falling RPMs).
Based on our recent conversations with unlisted operators, we
believe there could be upside surprise on RPM.
● We expect ~40-50 bp margin expansion in the mobile business,
driven by lower subscriber acquisitions costs. However, for Idea
this could be offset by salary hikes leading to flattish margins.
● Currency related non-cash losses could dent Bharti’s earnings,
leading to a ~27% decline in profit QoQ. RCOM and Idea should
deliver 7% and 13% growth in profits QoQ, respectively.
● Sep-quarter results could fail to cheer investors due to seasonal
weakness and Bharti’s forex losses. However, we believe that the
underlying strength in fundamentals continues, and should reflect
in strong Dec-11 quarter numbers. Retain OUTPERFORM on
Bharti and Idea
Bharti currency impact
The sharp currency movements (the INR depreciated 9% versus the
USD, 13% versus the JPY, African currencies depreciated ~6%
versus the USD) in the Sep-11 quarter will have an impact on Bharti’s
reported numbers. While the translation impact on the Zain acquisition
debt will not impact P&L (adjusted to reserves), the impact from other
foreign currency net liabilities will hit the P&L. We are building
~US$200 mn of non-cash, one-time losses in the Sep-quarter for
Bharti from currency fluctuations. Note that these losses are NOT in
our full-year FY3/12 estimates.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● We expect muted QoQ growth for Indian telcos in the Sep-11
quarter due to seasonal weakness in the mobile business. Mobile
top-line growth could be 0-2% QoQ.
● ARPU could fall 3-4% primarily driven by weak minutes, while
RPM could remain flat (stemming the usual trend of falling RPMs).
Based on our recent conversations with unlisted operators, we
believe there could be upside surprise on RPM.
● We expect ~40-50 bp margin expansion in the mobile business,
driven by lower subscriber acquisitions costs. However, for Idea
this could be offset by salary hikes leading to flattish margins.
● Currency related non-cash losses could dent Bharti’s earnings,
leading to a ~27% decline in profit QoQ. RCOM and Idea should
deliver 7% and 13% growth in profits QoQ, respectively.
● Sep-quarter results could fail to cheer investors due to seasonal
weakness and Bharti’s forex losses. However, we believe that the
underlying strength in fundamentals continues, and should reflect
in strong Dec-11 quarter numbers. Retain OUTPERFORM on
Bharti and Idea
Bharti currency impact
The sharp currency movements (the INR depreciated 9% versus the
USD, 13% versus the JPY, African currencies depreciated ~6%
versus the USD) in the Sep-11 quarter will have an impact on Bharti’s
reported numbers. While the translation impact on the Zain acquisition
debt will not impact P&L (adjusted to reserves), the impact from other
foreign currency net liabilities will hit the P&L. We are building
~US$200 mn of non-cash, one-time losses in the Sep-quarter for
Bharti from currency fluctuations. Note that these losses are NOT in
our full-year FY3/12 estimates.
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