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UBS Investment Research
India Mobile Sector
The truth about subscriber numbers
„ TRAI active subscriber stats reveal interesting insights
TRAI has recently published active subscriber data as of Sep 30, 2010. The active
wireless subs base in India (477m) is 70% of the actual reported subs base (682m).
The percentage of active subs is highest for Bharti (89%) followed by Idea (incl.
Spice, 88%), Vodafone (75%), RCom (67%), BSNL (59%), & Aircel (59%). For
new operators, the active subs percentage is much lower than the national average
of 70%. Sistema’s active sub percentage is 46% while the same for Etisalat,
Videocon, Unitech and S–Tel are 44%, 39%, 31% and 24% respectively. Tata
Tele’s active sub percentage is 45%. The company has clarified that its active subs
data is not comparable. (TTSL uses 7 days of data vs. 30 days by its rivals)
„ Key conclusion – New operators are really struggling
1. Reported mobile subscriber data is irrelevant if we don’t know what percentage
of subscribers are active. 2. India’s real mobile penetration is 40% (vs. reported
58%). 3. New operators are struggling, as evidenced by very few active subs. 4.
Bharti & Idea managements are conservative in accounting for their subscribers.
„ Regulatory progress likely in 6-9 months; Bharti is our top pick
We expect that the change in telecom minister is likely to result in speedy
resolution of outstanding regulatory issues such as 2G spectrum pricing, M&A
guidelines, and future of new entrants who have got spectrum but have not rolled
out services. Regulatory changes should be positive for incumbents. We reiterate
our Buy ratings on Bharti and RCom, and our Sell rating on Idea. Bharti is our top
pick as we expect: 1) Bharti to benefit the most from potential sector consolidation
and emergence of pricing power; 2) Zain Africa to be positive in medium term.
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