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Key Highlights
The GSM operators added 8.78 mn new subscribers in February 2012, taking the total GSM
user base to 656.86 mn in the country, according to the COAI data. During the previous month
the subscriber addition was 8.44 mn.
Subscriber addition primarily came from the smaller operators during the month despite their
2G licenses getting cancelled following the Supreme Court verdict cancelling 122 2G licence
that were issued in 2008.
Steeper improvement in subscriber addition by the new operators seems to suggest that the
reducing competitive intensity story bandied about, post the license cancellation by the Supreme
Court has not come in.
Uninor added the most 2.34 mn subscribers in February 2012 taking its total subscriber base to
41.14 mn; on the other hand Idea Cellular added 2.58 mn new subscribers during the month to
take its total subscriber base to 110.71 mn.
Bharti added 1.82 mn subscribers, taking its total subscriber base to 178.78 mn users. The GSM
subscriber market share of the company dropped marginally to 27.22% in February 2012
compared to 27.30% in January 2012.
Vodafone Essar added 8.4 lakh users in February 2011 against 8.6 lakh addition in January
2012 to take the company's total subscriber base to 149.44 mn. The market share of the company
dropped to 22.75% in February 2012 from 22.93% in the previous month.
Aircel added 7.9 lakh new customers during February 2012 compared to 8.2 lakh in January
2012 while Videocon added 3.5 lakh customers taking its subscriber base to 6.2 mn.
However other operators like Etisalat and Stel did not add any new subscribers during the
month and they are already in the process of winding up their operations in India.
The subscribers from the 'B' and 'C' category circles constituted 54% of the total GSM subscriber
base in India. Both these category circles put together witnessed 4.59 mn subscriber additions
during the month of February 2012 as compared to the previous month.
The 'Metro' and 'A' circles added 4.19 mn subscribers during the month constituting 48% of
the total subscriber net addition.
Smaller operators like Idea Cellular, Uninor and Videocon gained subscriber market share by
17 bps, 28 bps and 4 bps respectively during February 2012 to take their respective GSM
subscriber market share to 16.85%, 6.26% and 0.94% respectively.
The regulatory uncertainty continues to be a major issue for the incumbent operators going
forward. We expect the final NTP to be ready by June and perhaps could revive the industry
fortunes.
We remain bullish on mobile operators under our coverage (Bharti Airtel and Idea Cellular)
despite such extreme regulatory uncertainty and flip-flop. We maintain our 'Buy' rating on
both Bharti Airtel and Idea Cellular with a target price of Rs 495 and Rs 133 respectively.
The GSM operators continued to witness healthy growth in subscriber numbers during the month of
February 2012 as compared to the previous month as the incumbent operators as well as the new
operators added users across the country. Surprisingly the addition in subscribers was led by the
newer operators who were impacted in varying degree from the recent Supreme Court order
cancelling 122 2G licenses that were issued in 2008. Steeper improvement in subscriber addition by
the new operators seems to suggest that the reducing competitive intensity story bandied about,
post the license cancellation by the Supreme Court has not come in. Perhaps the decision by Telenor
to float a separate company and to continue to stay put in India has helped to witness subscriber
addition by the company. The total GSM subscriber base at the end of February 2012 increased
1.35% (adding 8.78 mn subscribers) to 656.86 mn subscribers. The M-o-M subscriber net addition
growth during the month although was lower at 4%. Uninor, a joint venture between Unitech and
Norway-based Telenor added 2.34 mn subscribers (6.04% M-o-M growth) to take its total subscriber
base to 41.14 mn. Uninor has witnessed the highest growth in subscriber growth during the month
followed by Videocon, which added 0.34 mn subscribers (5.97% M-o-M growth) to take its subscriber
base to 6.19 mn. Idea Cellular added the maximum 2.58 mn subscribers during the month. However
other operators like Etisalat and Stel did not add any new subscribers during the month and they are
already in the process of winding up their operations in India.
The industry expected some policy road map on the New Telecom Policy (NTP) and the spectrum
pricing during the budget though nothing came by. However one shocker came in the form of proposed
amendment of the Income-Tax Act (and that too retrospectively from April 1962) to bring the Vodafone-
Hutch type deals into the tax net. This is a major negative for any cross border mergers and acquisition
that has taken place in the last few years. The regulatory uncertainty continues to be a major issue
for the incumbent operators going forward. We expect the final NTP to be ready by June and could
revive the industry fortunes.
The GSM operators have been adding impressive subscriber growth during the past several months
especially from the tier II cities and rural markets where the mobile penetration is still low. Bucking
the trend in February, the metro and 'A' circle witnessed healthy growth as compared to 'B' and 'C'
category circles. The subscribers from the 'B' and 'C' circle constituted 54% of the total GSM subscriber
base in India. Both these circle categories put together witnessed 4.59 mn subscriber additions during
the month of February 2012 as compared to the previous month. The 'Metro' and 'A' circles added
4.19 mn subscribers during the month constituting 48% of the total net subscriber addition. Going
ahead we see the growth in subscribers for the incumbents to come from the porting customers of the
new operators and the 'B' and 'C circles. Around 15 mn subscribers from the existing operators
whose licenses got cancelled may port to the incumbents network in the months ahead, thus
consolidating the industry structure in favor of the incumbents who would witness improvement in
subscriber market shares. During February 2012 Bharti Airtel, Vodafone, Aircel 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
17 bps, 28 bps and 4 bps respectively during February 2012 to take their respective GSM subscriber
market share to 16.85%, 6.26% and 0.94% respectively. On the other hand the incumbent operators
like Bharti Airtel and Vodafone lost GSM subscriber market share by 9 bps and 18 bps to 27.22% and
22.75% respectively. We see the price remaining stable for the incumbents, rather could improve
marginally unless Telecom Regulatory Authority of India (TRAI) decides to regulate the pricing. We
expect the Broadband Wireless Access (BWA) launch by various operators by the end of the current
calendar year and that perhaps would improve the blended average revenue per minute (ARPM) of
leading operators going ahead. Nevertheless the subscriber acquisition cost and network operation &
expansion cost is expected to be on the higher side. We remain bullish on mobile operators under
our coverage (Bharti Airtel and Idea Cellular) despite such extreme regulatory uncertainty and flipflop.
We 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 January 2012 rose by 9.59 mn subscribers to 936.12 mn as
compared to December 2011. TRAI is yet to release the February 2012 data. The total wireless subscriber
base (GSM + CDMA) in the metros and 'A' circle as at the end of January 2012 stood at 422.34 mn as
compared to 418.03 during December 2011, while the total subscriber base in the 'B' and 'C' category
circles stood at 365.15 mn and 116.24 mn respectively, up 4.03 mn M-o-M and 1.54 mn M-o-M
respectively.
As per the TRAI's data, India's total tele-density increased to 77.57% at the end of January 2012. as
against 76.86% as at the end of December 2011, while the wireless tele density in the country as at
the end of January 2012 rose to 74.89%, as against 74.15% at the end of December 2011. The urban
wireless tele-density increased to 162.06%, while the rural wireless tele-density at the end of January
2012 increased to 37.13%.
As per the TRAI's report, the number of actual active subscribers, based on the Visitor Location
Register (VLR) at the end of January 2012, was 659.97 mn, as against the total wireless subscriber
base as on that date of 903.73 mn.
Broadband subscriber base increased marginally from 13.30 mn in December 2011 to 13.42 mn in
January 2012.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Highlights
The GSM operators added 8.78 mn new subscribers in February 2012, taking the total GSM
user base to 656.86 mn in the country, according to the COAI data. During the previous month
the subscriber addition was 8.44 mn.
Subscriber addition primarily came from the smaller operators during the month despite their
2G licenses getting cancelled following the Supreme Court verdict cancelling 122 2G licence
that were issued in 2008.
Steeper improvement in subscriber addition by the new operators seems to suggest that the
reducing competitive intensity story bandied about, post the license cancellation by the Supreme
Court has not come in.
Uninor added the most 2.34 mn subscribers in February 2012 taking its total subscriber base to
41.14 mn; on the other hand Idea Cellular added 2.58 mn new subscribers during the month to
take its total subscriber base to 110.71 mn.
Bharti added 1.82 mn subscribers, taking its total subscriber base to 178.78 mn users. The GSM
subscriber market share of the company dropped marginally to 27.22% in February 2012
compared to 27.30% in January 2012.
Vodafone Essar added 8.4 lakh users in February 2011 against 8.6 lakh addition in January
2012 to take the company's total subscriber base to 149.44 mn. The market share of the company
dropped to 22.75% in February 2012 from 22.93% in the previous month.
Aircel added 7.9 lakh new customers during February 2012 compared to 8.2 lakh in January
2012 while Videocon added 3.5 lakh customers taking its subscriber base to 6.2 mn.
However other operators like Etisalat and Stel did not add any new subscribers during the
month and they are already in the process of winding up their operations in India.
The subscribers from the 'B' and 'C' category circles constituted 54% of the total GSM subscriber
base in India. Both these category circles put together witnessed 4.59 mn subscriber additions
during the month of February 2012 as compared to the previous month.
The 'Metro' and 'A' circles added 4.19 mn subscribers during the month constituting 48% of
the total subscriber net addition.
Smaller operators like Idea Cellular, Uninor and Videocon gained subscriber market share by
17 bps, 28 bps and 4 bps respectively during February 2012 to take their respective GSM
subscriber market share to 16.85%, 6.26% and 0.94% respectively.
The regulatory uncertainty continues to be a major issue for the incumbent operators going
forward. We expect the final NTP to be ready by June and perhaps could revive the industry
fortunes.
We remain bullish on mobile operators under our coverage (Bharti Airtel and Idea Cellular)
despite such extreme regulatory uncertainty and flip-flop. We maintain our 'Buy' rating on
both Bharti Airtel and Idea Cellular with a target price of Rs 495 and Rs 133 respectively.
The GSM operators continued to witness healthy growth in subscriber numbers during the month of
February 2012 as compared to the previous month as the incumbent operators as well as the new
operators added users across the country. Surprisingly the addition in subscribers was led by the
newer operators who were impacted in varying degree from the recent Supreme Court order
cancelling 122 2G licenses that were issued in 2008. Steeper improvement in subscriber addition by
the new operators seems to suggest that the reducing competitive intensity story bandied about,
post the license cancellation by the Supreme Court has not come in. Perhaps the decision by Telenor
to float a separate company and to continue to stay put in India has helped to witness subscriber
addition by the company. The total GSM subscriber base at the end of February 2012 increased
1.35% (adding 8.78 mn subscribers) to 656.86 mn subscribers. The M-o-M subscriber net addition
growth during the month although was lower at 4%. Uninor, a joint venture between Unitech and
Norway-based Telenor added 2.34 mn subscribers (6.04% M-o-M growth) to take its total subscriber
base to 41.14 mn. Uninor has witnessed the highest growth in subscriber growth during the month
followed by Videocon, which added 0.34 mn subscribers (5.97% M-o-M growth) to take its subscriber
base to 6.19 mn. Idea Cellular added the maximum 2.58 mn subscribers during the month. However
other operators like Etisalat and Stel did not add any new subscribers during the month and they are
already in the process of winding up their operations in India.
The industry expected some policy road map on the New Telecom Policy (NTP) and the spectrum
pricing during the budget though nothing came by. However one shocker came in the form of proposed
amendment of the Income-Tax Act (and that too retrospectively from April 1962) to bring the Vodafone-
Hutch type deals into the tax net. This is a major negative for any cross border mergers and acquisition
that has taken place in the last few years. The regulatory uncertainty continues to be a major issue
for the incumbent operators going forward. We expect the final NTP to be ready by June and could
revive the industry fortunes.
The GSM operators have been adding impressive subscriber growth during the past several months
especially from the tier II cities and rural markets where the mobile penetration is still low. Bucking
the trend in February, the metro and 'A' circle witnessed healthy growth as compared to 'B' and 'C'
category circles. The subscribers from the 'B' and 'C' circle constituted 54% of the total GSM subscriber
base in India. Both these circle categories put together witnessed 4.59 mn subscriber additions during
the month of February 2012 as compared to the previous month. The 'Metro' and 'A' circles added
4.19 mn subscribers during the month constituting 48% of the total net subscriber addition. Going
ahead we see the growth in subscribers for the incumbents to come from the porting customers of the
new operators and the 'B' and 'C circles. Around 15 mn subscribers from the existing operators
whose licenses got cancelled may port to the incumbents network in the months ahead, thus
consolidating the industry structure in favor of the incumbents who would witness improvement in
subscriber market shares. During February 2012 Bharti Airtel, Vodafone, Aircel 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
17 bps, 28 bps and 4 bps respectively during February 2012 to take their respective GSM subscriber
market share to 16.85%, 6.26% and 0.94% respectively. On the other hand the incumbent operators
like Bharti Airtel and Vodafone lost GSM subscriber market share by 9 bps and 18 bps to 27.22% and
22.75% respectively. We see the price remaining stable for the incumbents, rather could improve
marginally unless Telecom Regulatory Authority of India (TRAI) decides to regulate the pricing. We
expect the Broadband Wireless Access (BWA) launch by various operators by the end of the current
calendar year and that perhaps would improve the blended average revenue per minute (ARPM) of
leading operators going ahead. Nevertheless the subscriber acquisition cost and network operation &
expansion cost is expected to be on the higher side. We remain bullish on mobile operators under
our coverage (Bharti Airtel and Idea Cellular) despite such extreme regulatory uncertainty and flipflop.
We 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 January 2012 rose by 9.59 mn subscribers to 936.12 mn as
compared to December 2011. TRAI is yet to release the February 2012 data. The total wireless subscriber
base (GSM + CDMA) in the metros and 'A' circle as at the end of January 2012 stood at 422.34 mn as
compared to 418.03 during December 2011, while the total subscriber base in the 'B' and 'C' category
circles stood at 365.15 mn and 116.24 mn respectively, up 4.03 mn M-o-M and 1.54 mn M-o-M
respectively.
As per the TRAI's data, India's total tele-density increased to 77.57% at the end of January 2012. as
against 76.86% as at the end of December 2011, while the wireless tele density in the country as at
the end of January 2012 rose to 74.89%, as against 74.15% at the end of December 2011. The urban
wireless tele-density increased to 162.06%, while the rural wireless tele-density at the end of January
2012 increased to 37.13%.
As per the TRAI's report, the number of actual active subscribers, based on the Visitor Location
Register (VLR) at the end of January 2012, was 659.97 mn, as against the total wireless subscriber
base as on that date of 903.73 mn.
Broadband subscriber base increased marginally from 13.30 mn in December 2011 to 13.42 mn in
January 2012.
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