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http://www.icicidirect.com/mailimages/ICICIdirect_ConsolidatedResultPreview_Q4FY12E.pdf
Telecom
ƒ Subscriber addition rises
After falling for quite some time, subscriber additions have risen in the
first two months of Q4FY12 at 17.9 million as compared to 11.4 million
in Q2FY12. However, it remains well below the number of Q4FY12 at
39.9 million. We expect the industry to add 25.4 million subscribers in
Q4FY12 as compared to 20.4 million in Q3FY12 and 59.9 million in
Q4FY11. The rise in net adds was on the back of reintroduction of
attractive offers by operators after the SC order of cancellation of 122
licenses. We expect 2.7% QoQ revenue growth for telecom service
providers on the back of 2.4% subscriber growth.
ƒ Traffic growth to remain stable; ARPMs may not expand
Total traffic growth across our telecom coverage universe is expected to
remain stable in Q4FY12. We expect 2.1% QoQ domestic volume
growth for our telecom universe coverage in Q4FY12 to 451 billion
minutes as against 2.2% growth in Q3FY12. ARPM across players is
expected to remain more or less stable in Q4FY12 as the upward
pressure on ARPM on the back of the recent price hike taken by telecom
operators and higher 3G uptake would be offset by the downward
pressure owing to reintroduction of lucrative offers by the operators. We
expect ARPMs to stay in the range of 44-46 paisa.
ƒ EBITDA margin to expand
EBITDA margins are expected to expand across operators, except
RCom, in Q4FY12 QoQ. This was due to lower marketing costs than
Q3FY11, which was a festive season with a few one-time sporting
events wherein operators were aggressive with ads. However, higher
subscriber acquisition costs due to higher subscriber added will limit the
margin expansion.
ƒ 122 licenses cancelled - creates further uncertainty
The recent SC ruling of cancelling 122 licenses, which were awarded on
or after January 2008, has brought further uncertainty to the fate of
these operators. While STel and DB Etisalat have already declared their
intention of quitting the business, other operators have been going
aggressive to counter churn and acquire subscribers. However, the SC
has heard petitions of operators whose licenses stand cancelled, along
with the government and results are awaited.
Company specific view
Company Remarks
Bharti Airtel We expect Airtel to add 4.3 million subscribers in India and 2.5 million in Africa.
India ARPU would grow 1% QoQ to | 189 while that of Africa would improve by
0.2% to US$7.1. We expect MoU to decline ~0.5% QoQ in the domestic market
while ARPM will continue to witness a slight up-tick. The African business is
expected to post a stable EBITDA margin at ~26.9%. Telemedia, enterprise and
passive infrastructure are expected to grow about 1-2% each while Digital TV would
grow at 5.0%
Idea Cellular We expect Idea to add second highest subscribers in the industry at 5.0 million
subscribers with 1.5% QoQ improvement in ARPU to | 161. MoU is expected to
decline 0.5% to 367. ARPM is expected to remain stable at 44 paisa
OnMobile OnMobile is expected to continue to see a drop in its domestic revenues. However,
international revenues are expected to grow by leaps and bounds. Also, declining
discretionary spend by subscribers owing to the economic slowdown and tighter
sharing norms from telcos would be a dampener
Reliance Comm. We expect RCom to add 2.7 million subscribers. We expect ARPU to continue on a
downward slope with 2.0% QoQ fall to | 98 while MoU would decline 1.5% to 221
and ARPM is expected to remain stable at 45 paisa. Broadband and global revenues
are expected to stay more or less flat
TTML TTML would witness a second straight quarter of decline in both the gross and
active subscriber base. Gross subscribers are expected to fall to 13.3 million from
14.7 million in Q3FY12. The ARPU is expected to increase 2.3% to | 197 (for active
subscribers) due to the churn of non-revenue generating subs. MoU would also
improve ~2% to 431. Key metrics would fare better due to increasing usage of data
card services
Tulip Telecom After witnessing de-growth in the last quarter, revenues are expected to remain
stable in Q4FY12. However, margins would contract due to additional operation
expenses of the data centre. We expect the data centre to contribute significantly
to revenues from Q1FY13 onwards
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.icicidirect.com/mailimages/ICICIdirect_ConsolidatedResultPreview_Q4FY12E.pdf
Telecom
ƒ Subscriber addition rises
After falling for quite some time, subscriber additions have risen in the
first two months of Q4FY12 at 17.9 million as compared to 11.4 million
in Q2FY12. However, it remains well below the number of Q4FY12 at
39.9 million. We expect the industry to add 25.4 million subscribers in
Q4FY12 as compared to 20.4 million in Q3FY12 and 59.9 million in
Q4FY11. The rise in net adds was on the back of reintroduction of
attractive offers by operators after the SC order of cancellation of 122
licenses. We expect 2.7% QoQ revenue growth for telecom service
providers on the back of 2.4% subscriber growth.
ƒ Traffic growth to remain stable; ARPMs may not expand
Total traffic growth across our telecom coverage universe is expected to
remain stable in Q4FY12. We expect 2.1% QoQ domestic volume
growth for our telecom universe coverage in Q4FY12 to 451 billion
minutes as against 2.2% growth in Q3FY12. ARPM across players is
expected to remain more or less stable in Q4FY12 as the upward
pressure on ARPM on the back of the recent price hike taken by telecom
operators and higher 3G uptake would be offset by the downward
pressure owing to reintroduction of lucrative offers by the operators. We
expect ARPMs to stay in the range of 44-46 paisa.
ƒ EBITDA margin to expand
EBITDA margins are expected to expand across operators, except
RCom, in Q4FY12 QoQ. This was due to lower marketing costs than
Q3FY11, which was a festive season with a few one-time sporting
events wherein operators were aggressive with ads. However, higher
subscriber acquisition costs due to higher subscriber added will limit the
margin expansion.
ƒ 122 licenses cancelled - creates further uncertainty
The recent SC ruling of cancelling 122 licenses, which were awarded on
or after January 2008, has brought further uncertainty to the fate of
these operators. While STel and DB Etisalat have already declared their
intention of quitting the business, other operators have been going
aggressive to counter churn and acquire subscribers. However, the SC
has heard petitions of operators whose licenses stand cancelled, along
with the government and results are awaited.
Company specific view
Company Remarks
Bharti Airtel We expect Airtel to add 4.3 million subscribers in India and 2.5 million in Africa.
India ARPU would grow 1% QoQ to | 189 while that of Africa would improve by
0.2% to US$7.1. We expect MoU to decline ~0.5% QoQ in the domestic market
while ARPM will continue to witness a slight up-tick. The African business is
expected to post a stable EBITDA margin at ~26.9%. Telemedia, enterprise and
passive infrastructure are expected to grow about 1-2% each while Digital TV would
grow at 5.0%
Idea Cellular We expect Idea to add second highest subscribers in the industry at 5.0 million
subscribers with 1.5% QoQ improvement in ARPU to | 161. MoU is expected to
decline 0.5% to 367. ARPM is expected to remain stable at 44 paisa
OnMobile OnMobile is expected to continue to see a drop in its domestic revenues. However,
international revenues are expected to grow by leaps and bounds. Also, declining
discretionary spend by subscribers owing to the economic slowdown and tighter
sharing norms from telcos would be a dampener
Reliance Comm. We expect RCom to add 2.7 million subscribers. We expect ARPU to continue on a
downward slope with 2.0% QoQ fall to | 98 while MoU would decline 1.5% to 221
and ARPM is expected to remain stable at 45 paisa. Broadband and global revenues
are expected to stay more or less flat
TTML TTML would witness a second straight quarter of decline in both the gross and
active subscriber base. Gross subscribers are expected to fall to 13.3 million from
14.7 million in Q3FY12. The ARPU is expected to increase 2.3% to | 197 (for active
subscribers) due to the churn of non-revenue generating subs. MoU would also
improve ~2% to 431. Key metrics would fare better due to increasing usage of data
card services
Tulip Telecom After witnessing de-growth in the last quarter, revenues are expected to remain
stable in Q4FY12. However, margins would contract due to additional operation
expenses of the data centre. We expect the data centre to contribute significantly
to revenues from Q1FY13 onwards
Source: Company, ICICIdirect.com Research
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