GSM Subscriber Update- October: Anand Rathi

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GSM Subscriber Update - Incumbents lead recovery in monthly net-adds in October

n       Monthly net adds post strong recover in October. Total SIM card additions of GSM telcos (ex RCom and Tata Tele) jumped to 14.7m in October vs. 12.4m in September. Combined net-adds of  GSM incumbents (Bharti, Vodafone, Idea) increased to 7.3m from 5.3m in September and accounted for almost the total increase in  GSM industry net adds in October. Monthly net-adds of GSM incumbents had sharply declined in 2QFY11, partly due to lower gross adds (stricter subscriber verification) and deactivations (related to subscriber re-verification exercise) undertaken to address government concerns about national security.

n       Bharti’s net-adds revisit 3m levels. Bharti’s average net-adds were 3m through Jan-Jun ’10; although they dipped in 2QFY11 (reaching 2m in Sep), they have rebounded in Oct. In 2Q, besides the subscriber verification/re-verification-related issues, Bharti’s net-adds were also impacted by withdrawal of some ‘free-minutes’ tariff plans, resulting in loss of a few ‘deal seeking’ subs. At current net-adds rate, Bharti is on track to meet our FY11 sub base forecast of 160m.

n       Idea, Vodafone’s net-adds also recover. Idea’s net-adds rose to 1.8m (vs. 1.5m in Sep) and, at this rate, are likely to cross our FY11e subs base by ~4%. Vodafone net-adds rose to 2.5m (1.8m in Sep). Net-adds of both are ~15% lower than their recent peaks. 

n       Other telcos. Uninor’s net-adds further increased to 2.5m (+14% mom). The company has been enjoying good subscriber/traffic growth (reflected in 3QCY10 results) on the back of its ‘dynamic discount’ tariff plan and aggressive promotions. Net adds of other new entrants (Videocon, S Tel, Loop) also recorded a sharp mom jump. Aircel’s net adds fell sharply, to 1m (-38% mom).