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S u b s c r i b e r a d d i t i o n c o n t i n u e s t o r i s e …
Subscriber addition rises again…
After falling for six straight months till August 2011, subscriber addition
has risen for two straight months, though not significantly. Industry added
7.1 million GSM subscribers in October 2011 as against 6.5 million in
September 2011. The total GSM subscribers for the industry stood at
625.4 million. The subscriber addition is still considerably below the
October 2010 number, which was 14.7 million.
Uninor – continues to surprise brilliantly
After being the highest net adder in September 2011, Uninor continued
the trend by adding 2.7 million subscribers against 1.9 million in
September 2011. The share of net adds for Uninor was 37.4% - highest
for any operator in October just like in September.
Top 3 fail to impress!
While Bharti Airtel and Vodafone reported a marginal rise in their
subscriber addition, Idea reported a decline. Bharti Airtel, Vodafone and
Idea added 0.9 million, 0.9 million and 1.6 million as against 0.9 million,
0.8 million and 1.6 million, respectively, in September 2011. Idea had the
second highest share in net adds at 23.0%, which was lower than 26.6%
in September 2011. While the share in net adds declined for Airtel from
14.3% to 13.3%, it remained flat for Vodafone at 13.0%.
Others
The subscriber addition for Aircel fell from 0.6 million in September to 0.5
million in October 2011. Other operators in the industry reported a decline
in their subscriber base by 0.1 million in October 2011 as against a
negligible subscriber addition in September 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 has already
started showing in the ARPM but its full effect is yet to be seen. We
expect ~2 paisa improvement in ARPM by FY13 across players on the
back of the recent price hike. ARPM expansion would aid the margins.
However, rising amortisation cost, 3G rollout costs and rising interest cost
would exert downward pressure on profitability.
Trai has recently suggested reducing call termination charges from 20
paisa to 10 paisa a minute from January 2012 and doing away with it by
January 2014. Such a move could bring down the mobile tariffs further
and hurt Bharti and Vodafone as they are currently a net earner of
termination charges. Idea would see no such impact as they are currently
more or less neutral on call termination charges.
The telecom ministry announced the draft of the New Telecom Policy
2011. The draft did take cognizance of the need for enhanced broadband
penetration in the country and need for additional spectrum. However, it
lacked clarity when it came to one-time spectrum fees and pricing along
with spectrum re-farming. 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 HOLD on Idea Cellular and R
Com with a target price of | 450, | 99 and | 84, respectively.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S u b s c r i b e r a d d i t i o n c o n t i n u e s t o r i s e …
Subscriber addition rises again…
After falling for six straight months till August 2011, subscriber addition
has risen for two straight months, though not significantly. Industry added
7.1 million GSM subscribers in October 2011 as against 6.5 million in
September 2011. The total GSM subscribers for the industry stood at
625.4 million. The subscriber addition is still considerably below the
October 2010 number, which was 14.7 million.
Uninor – continues to surprise brilliantly
After being the highest net adder in September 2011, Uninor continued
the trend by adding 2.7 million subscribers against 1.9 million in
September 2011. The share of net adds for Uninor was 37.4% - highest
for any operator in October just like in September.
Top 3 fail to impress!
While Bharti Airtel and Vodafone reported a marginal rise in their
subscriber addition, Idea reported a decline. Bharti Airtel, Vodafone and
Idea added 0.9 million, 0.9 million and 1.6 million as against 0.9 million,
0.8 million and 1.6 million, respectively, in September 2011. Idea had the
second highest share in net adds at 23.0%, which was lower than 26.6%
in September 2011. While the share in net adds declined for Airtel from
14.3% to 13.3%, it remained flat for Vodafone at 13.0%.
Others
The subscriber addition for Aircel fell from 0.6 million in September to 0.5
million in October 2011. Other operators in the industry reported a decline
in their subscriber base by 0.1 million in October 2011 as against a
negligible subscriber addition in September 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 has already
started showing in the ARPM but its full effect is yet to be seen. We
expect ~2 paisa improvement in ARPM by FY13 across players on the
back of the recent price hike. ARPM expansion would aid the margins.
However, rising amortisation cost, 3G rollout costs and rising interest cost
would exert downward pressure on profitability.
Trai has recently suggested reducing call termination charges from 20
paisa to 10 paisa a minute from January 2012 and doing away with it by
January 2014. Such a move could bring down the mobile tariffs further
and hurt Bharti and Vodafone as they are currently a net earner of
termination charges. Idea would see no such impact as they are currently
more or less neutral on call termination charges.
The telecom ministry announced the draft of the New Telecom Policy
2011. The draft did take cognizance of the need for enhanced broadband
penetration in the country and need for additional spectrum. However, it
lacked clarity when it came to one-time spectrum fees and pricing along
with spectrum re-farming. 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 HOLD on Idea Cellular and R
Com with a target price of | 450, | 99 and | 84, respectively.
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