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Key Highlights
The GSM operators added 8.44 mn new subscribers in January 2012, taking the total GSM user
base to 648.08 mn in the country, according to the COAI data. During the previous month the
subscriber addition was 7.55 mn.
Uninor added the most 2.49 mn subscribers in January 2012 taking its total subscriber base to
38.80 mn; on the other hand Idea Cellular added 1.75 mn new subscribers during the month to
take its total subscriber base to 108.13 mn.
Bharti added 1.3 mn subscribers, taking its total subscriber base to 176.95 mn users. The GSM
subscriber market share of the company dropped marginally to 27.30% in January 2012
compared to 27.46% in December 2011.
Vodafone Essar added 8.6 lakh users in January 2011 against 9.1 lakh addition in December
2011 to take the company's total subscriber base to 148.60 mn. The market share of the company
dropped to 22.93% in January 2012 from 23.10% in the previous month.
Aircel added 8.2 lakh new customers during January 2012 compared to 6.9 lakh in December
2011 while Videocon added 4.1 lakh customers taking its subscriber base to 5.85 mn.
The subscribers from the 'B' and 'C' circle constituted 54% of the total GSM subscriber base in
India. Both these category circles put together witnessed 4.69 mn subscriber additions during
the month of January 2012 as compared to the previous month.
The 'Metro' and 'A' circles added 3.76 mn subscribers during the month constituting 44% of
the total subscriber net addition.
Idea Cellular, Uninor and Videocon gained subscriber market share by 5 bps, 31 bps and 5 bps
respectively during January 2012 to take their respective GSM subscriber market share to
16.68%, 5.99% and 0.9% respectively.
The industry is set to witness significant change in the months ahead following the recent
license cancellation order by the Supreme Court. The Supreme Court recently cancelled 122
2G licenses of many operators granted during 2008 by the former telecom minister A Raja.
Incumbents continue to face huge regulatory uncertainty pertaining to the one time excess
spectrum charges that the incumbents have to pay for spectrum they hold in excess of 6.2 MHz
in each circles, legal validity of the 3G roaming agreement that the incumbents have entered
among themselves for offering 3G services in circles where they do not have the required
license and spectrum (issue is pending with TDSAT for final hearing) and various other issue.
Despite such extreme regulatory uncertainty and flip-flop we are positive on the operational
performance of the mobile operators under our coverage (Bharti Airtel and Idea Cellular).
Maintain our 'Buy' rating on both Bharti Airtel and Idea Cellular with the target price of Rs 495
and Rs 133 respectively.
The GSM subscriber additions improved during the month of January 2012 as compared to the previous
month as the incumbent operators as well as the new operators added users in the 'B' and 'C' circles.
Rather the subscriber growth in January 2012 was the highest since June 2011. The total GSM subscriber
base at the end of January 2011 increased 1.32% (adding 8.44 mn subscribers) to 648.08 mn subscribers.
The M-o-M subscriber net addition growth during the month was also impressive at 11.8%. But the
industry structure is set to witness significant change in the months ahead following the recent license
cancellation order by the Supreme Court.
The Supreme Court recently cancelled 122 2G licenses granted during the period by the former
telecom minister A Raja. The affected companies whose licenses are cancelled include Uninor (joint
venture between Unitech and Telenor of Norway), Sistema-Shyam (joint venture between Shyam
Telecomand Sistema of Russia), Videocon, Loop Telecom, Idea Cellular, Etisalat DB (joint venture
between DB Realty and Etisalat of UAE) among others.
Now many of these operators may choose to shut down their operation completely in the next few
months, thus bringing down the number of operators in each circle. The existing operators may
witness significant subscriber port-ins in the months ahead. Even subscribers with the operators who
choose to contend the Supreme Court order will choose to port out. We see this as a major bonanza
for operators like Idea Cellular, Reliance Communication and Aircel who has been aggressively adding
subscribers since the introduction of mobile number portability (MNP); for the incumbents however
we believe its not going to have any major impact. The government would gain though from the
auction of these cancelled license and freed spectrum.
Incumbents continue to face huge regulatory uncertainty pertaining to the one time excess spectrum
charges that the incumbents have to pay for spectrum they hold in excess of 6.2 MHz in each circles,
legal validity of the 3G roaming agreement that the incumbents have entered among themselves for
offering 3G services in circles where they do not have the required license and spectrum (issue is
pending with TDSAT for final hearing) and various other issue. On the excess spectrum payment
front, there is further uncertainty on the pricing front as the Department of Telecom (DoT) mulls
Telecom regulatory authority of India (TRAI) recommended price or the new price that would be
discovered in the forthcoming auction of the 2G spectrum. On the 3G roaming legality front, the DoT
and the TDSAT continues to bicker on the latter's jurisdiction to hear the case.
The GSM operators continued to witness subscriber growth especially from the tier II cities and rural
markets where the mobile penetration is still low. The subscribers from the 'B' and 'C' circle constituted
54% of the total GSM subscriber base in India. Both these category circles put together witnessed
4.69 mn subscriber additions during the month of January 2012 as compared to the previous month.
The 'Metro' and 'A' circles added 3.76 mn subscribers during the month constituting 44% of the total
subscriber net addition. Although the industry continues to witness subscriber addition month after
month, the growth in the metro and 'A' circles have fallen considerably. This is primarily due to the
saturation level in several circles where the mobile penetration has exceeded 100% mark. We see the
industry consolidating going ahead and the number of operators per circle falling as a result we see
improvement in subscriber market shares of incumbents. During January 2012 Bharti Airtel, Vodafone
and BSNL continued to witness fall in subscriber market share, while smaller operators like Idea
Cellular, Uninor and Videocon increased market share.
For e.g. smaller operators like Idea Cellular, Uninor and Videocon gained subscriber market share by
5 bps, 31 bps and 5 bps respectively during January 2012 to take their respective GSM subscriber
market share to 16.68%, 5.99% and 0.9% respectively. On the other hand the incumbent operators
like Bharti Airtel and Vodafone lost GSM subscriber market share by 16 bps and 17 bps to take their
respective market share to 27.30% and 22.93% respectively. Now that the competitive intensity is
low, subsequent price increase (tariff hikes) is expected to be absorbed comfortably. We see healthy
improvement in price going ahead, while pick-up in the data and 3G business for incumbent operators
is expected to improve the blended average revenue per minute (ARPM) of leading operators going
ahead. The subscriber acquisition cost and network operation & expansion cost is expected to be on
the higher side. Despite such extreme regulatory uncertainty and flip-flop we are positive on the
operational performance of the mobile operators under our coverage (Bharti Airtel and Idea Cellular).
Maintain our 'Buy' rating on both Bharti Airtel and Idea Cellular with the target price of Rs 495 and
Rs 133 respectively.
Sector Overview
As per Telecom Regulatory Authority of India (TRAI) data, the total telecom subscribers in India (GSM
+ CDMA + Wire-line) at the end of December 2011 rose by 9.20 mn subscribers to 926.53 mn as
compared to November 2011. TRAI is yet to release the data for January 2012. The total wireless
subscriber base (GSM + CDMA) in the metros and 'A' circle as at the end of December 2011 stood at
418.03 mn as compared to 413.45 mn during November 2011, while the total subscriber base in the
'B' and 'C' circles stood at 361.12 mn and 114.70 mn respectively, up 3.33 mn M-o-M and 1.57 mn
M-o-M respectively.
As per the TRAI's data, India's total tele-density increased to 76.86% as at the end of December 2011,
as against 76.18% as at the end of November 2011, while the wireless tele density in the country as
at the end of December 2011 rose to 74.15%, as against 73.44% at the end of November 2011. The
urban wireless tele-density increased to 161.01%, while the rural wireless tele-density at the end of
December 2011 increased to 36.56%.
As per the TRAI's report, the number of actual active subscribers, based on the Visitor Location
Register (VLR) as at the end of December 2011, was 646.77 mn, as against the total wireless subscriber
base as on that date of 893.84 mn.
Broadband subscriber base increased marginally from 13.13 mn in November 2011 to 13.30 mn in
December 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Highlights
The GSM operators added 8.44 mn new subscribers in January 2012, taking the total GSM user
base to 648.08 mn in the country, according to the COAI data. During the previous month the
subscriber addition was 7.55 mn.
Uninor added the most 2.49 mn subscribers in January 2012 taking its total subscriber base to
38.80 mn; on the other hand Idea Cellular added 1.75 mn new subscribers during the month to
take its total subscriber base to 108.13 mn.
Bharti added 1.3 mn subscribers, taking its total subscriber base to 176.95 mn users. The GSM
subscriber market share of the company dropped marginally to 27.30% in January 2012
compared to 27.46% in December 2011.
Vodafone Essar added 8.6 lakh users in January 2011 against 9.1 lakh addition in December
2011 to take the company's total subscriber base to 148.60 mn. The market share of the company
dropped to 22.93% in January 2012 from 23.10% in the previous month.
Aircel added 8.2 lakh new customers during January 2012 compared to 6.9 lakh in December
2011 while Videocon added 4.1 lakh customers taking its subscriber base to 5.85 mn.
The subscribers from the 'B' and 'C' circle constituted 54% of the total GSM subscriber base in
India. Both these category circles put together witnessed 4.69 mn subscriber additions during
the month of January 2012 as compared to the previous month.
The 'Metro' and 'A' circles added 3.76 mn subscribers during the month constituting 44% of
the total subscriber net addition.
Idea Cellular, Uninor and Videocon gained subscriber market share by 5 bps, 31 bps and 5 bps
respectively during January 2012 to take their respective GSM subscriber market share to
16.68%, 5.99% and 0.9% respectively.
The industry is set to witness significant change in the months ahead following the recent
license cancellation order by the Supreme Court. The Supreme Court recently cancelled 122
2G licenses of many operators granted during 2008 by the former telecom minister A Raja.
Incumbents continue to face huge regulatory uncertainty pertaining to the one time excess
spectrum charges that the incumbents have to pay for spectrum they hold in excess of 6.2 MHz
in each circles, legal validity of the 3G roaming agreement that the incumbents have entered
among themselves for offering 3G services in circles where they do not have the required
license and spectrum (issue is pending with TDSAT for final hearing) and various other issue.
Despite such extreme regulatory uncertainty and flip-flop we are positive on the operational
performance of the mobile operators under our coverage (Bharti Airtel and Idea Cellular).
Maintain our 'Buy' rating on both Bharti Airtel and Idea Cellular with the target price of Rs 495
and Rs 133 respectively.
The GSM subscriber additions improved during the month of January 2012 as compared to the previous
month as the incumbent operators as well as the new operators added users in the 'B' and 'C' circles.
Rather the subscriber growth in January 2012 was the highest since June 2011. The total GSM subscriber
base at the end of January 2011 increased 1.32% (adding 8.44 mn subscribers) to 648.08 mn subscribers.
The M-o-M subscriber net addition growth during the month was also impressive at 11.8%. But the
industry structure is set to witness significant change in the months ahead following the recent license
cancellation order by the Supreme Court.
The Supreme Court recently cancelled 122 2G licenses granted during the period by the former
telecom minister A Raja. The affected companies whose licenses are cancelled include Uninor (joint
venture between Unitech and Telenor of Norway), Sistema-Shyam (joint venture between Shyam
Telecomand Sistema of Russia), Videocon, Loop Telecom, Idea Cellular, Etisalat DB (joint venture
between DB Realty and Etisalat of UAE) among others.
Now many of these operators may choose to shut down their operation completely in the next few
months, thus bringing down the number of operators in each circle. The existing operators may
witness significant subscriber port-ins in the months ahead. Even subscribers with the operators who
choose to contend the Supreme Court order will choose to port out. We see this as a major bonanza
for operators like Idea Cellular, Reliance Communication and Aircel who has been aggressively adding
subscribers since the introduction of mobile number portability (MNP); for the incumbents however
we believe its not going to have any major impact. The government would gain though from the
auction of these cancelled license and freed spectrum.
Incumbents continue to face huge regulatory uncertainty pertaining to the one time excess spectrum
charges that the incumbents have to pay for spectrum they hold in excess of 6.2 MHz in each circles,
legal validity of the 3G roaming agreement that the incumbents have entered among themselves for
offering 3G services in circles where they do not have the required license and spectrum (issue is
pending with TDSAT for final hearing) and various other issue. On the excess spectrum payment
front, there is further uncertainty on the pricing front as the Department of Telecom (DoT) mulls
Telecom regulatory authority of India (TRAI) recommended price or the new price that would be
discovered in the forthcoming auction of the 2G spectrum. On the 3G roaming legality front, the DoT
and the TDSAT continues to bicker on the latter's jurisdiction to hear the case.
The GSM operators continued to witness subscriber growth especially from the tier II cities and rural
markets where the mobile penetration is still low. The subscribers from the 'B' and 'C' circle constituted
54% of the total GSM subscriber base in India. Both these category circles put together witnessed
4.69 mn subscriber additions during the month of January 2012 as compared to the previous month.
The 'Metro' and 'A' circles added 3.76 mn subscribers during the month constituting 44% of the total
subscriber net addition. Although the industry continues to witness subscriber addition month after
month, the growth in the metro and 'A' circles have fallen considerably. This is primarily due to the
saturation level in several circles where the mobile penetration has exceeded 100% mark. We see the
industry consolidating going ahead and the number of operators per circle falling as a result we see
improvement in subscriber market shares of incumbents. During January 2012 Bharti Airtel, Vodafone
and BSNL continued to witness fall in subscriber market share, while smaller operators like Idea
Cellular, Uninor and Videocon increased market share.
For e.g. smaller operators like Idea Cellular, Uninor and Videocon gained subscriber market share by
5 bps, 31 bps and 5 bps respectively during January 2012 to take their respective GSM subscriber
market share to 16.68%, 5.99% and 0.9% respectively. On the other hand the incumbent operators
like Bharti Airtel and Vodafone lost GSM subscriber market share by 16 bps and 17 bps to take their
respective market share to 27.30% and 22.93% respectively. Now that the competitive intensity is
low, subsequent price increase (tariff hikes) is expected to be absorbed comfortably. We see healthy
improvement in price going ahead, while pick-up in the data and 3G business for incumbent operators
is expected to improve the blended average revenue per minute (ARPM) of leading operators going
ahead. The subscriber acquisition cost and network operation & expansion cost is expected to be on
the higher side. Despite such extreme regulatory uncertainty and flip-flop we are positive on the
operational performance of the mobile operators under our coverage (Bharti Airtel and Idea Cellular).
Maintain our 'Buy' rating on both Bharti Airtel and Idea Cellular with the target price of Rs 495 and
Rs 133 respectively.
Sector Overview
As per Telecom Regulatory Authority of India (TRAI) data, the total telecom subscribers in India (GSM
+ CDMA + Wire-line) at the end of December 2011 rose by 9.20 mn subscribers to 926.53 mn as
compared to November 2011. TRAI is yet to release the data for January 2012. The total wireless
subscriber base (GSM + CDMA) in the metros and 'A' circle as at the end of December 2011 stood at
418.03 mn as compared to 413.45 mn during November 2011, while the total subscriber base in the
'B' and 'C' circles stood at 361.12 mn and 114.70 mn respectively, up 3.33 mn M-o-M and 1.57 mn
M-o-M respectively.
As per the TRAI's data, India's total tele-density increased to 76.86% as at the end of December 2011,
as against 76.18% as at the end of November 2011, while the wireless tele density in the country as
at the end of December 2011 rose to 74.15%, as against 73.44% at the end of November 2011. The
urban wireless tele-density increased to 161.01%, while the rural wireless tele-density at the end of
December 2011 increased to 36.56%.
As per the TRAI's report, the number of actual active subscribers, based on the Visitor Location
Register (VLR) as at the end of December 2011, was 646.77 mn, as against the total wireless subscriber
base as on that date of 893.84 mn.
Broadband subscriber base increased marginally from 13.13 mn in November 2011 to 13.30 mn in
December 2011.
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