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India Telecom
TeleScan – Vol 1/11
Key topics: 3QFY11 results; MNP data
3QFY11 results. Telcos that have reported 3Q results (Bharti,
Vodafone, Idea, TTML) have seen almost flat revenue per minute
qoq vs. our estimate of ~2% dip. But, traffic growth rates saw
significant disparity. Idea saw the highest traffic growth (10% qoq),
possibly driven by: i) strong subs growth (10% vs. 6.4-7.5% for
Bharti/Vodafone; ii) higher share of rural subs in total base (50%
vs. ~40% for Bharti/Vodafone), as rural traffic exhibits stronger
seasonal recovery in 3Q. Idea registered 8% qoq revenue growth.
Vodafone saw ~5.8% wireless revenue growth owing to 5.5%
growth in traffic. Bharti’s India wireless revenue rose 3.6% due to
subdued traffic growth vs. peers. Capex picked up in 3Q, post
delays in previous quarters due to security import issues.
Incumbents benefit from number portability. Leading telcos
(Vodafone, Idea, Bharti and Aircel) have emerged as beneficiaries of
MNP, based on data (reported in media) as of 31 January; notably,
MNP was launched on 20 Jan ’11. Vodafone/Idea recorded
maximum net subscriber gain of ~51,000/32,000, followed by Aircel
(22,000) and Bharti (16,000). Note that Idea and Vodafone had
aggressively promoted launch of MNP. RCom is the largest net loser
(57,000 subs, including both GSM and CDMA), followed by BSNL
and TTSL’s CDMA network. TTSL’s GSM network was a net
gainer, of 16,000 subs. Importantly, total subscriber porting stood at
~350,000, which is less than 1% of estimated monthly churn of
subscribers. We believe that while MNP may lead to some tariff
pressures (especially in the post-paid segment), leading telcos are
unlikely to see significant loss of subscriber/traffic share or.
Investment view. Tulip is our top sector pick; despite healthy
revenue/profit growth, it continues to trade at significant discount to
large telcos. The domestic wireless market would remain stable, driven
by stable ARPM drop and steady volume. We especially like Idea for
its India focus and operating leverage potential. We expect Bharti to
remain range bound in the near term. We maintain Sell on RCom and
TTML due to weak operating trends and high balance sheet leverage.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Telecom
TeleScan – Vol 1/11
Key topics: 3QFY11 results; MNP data
3QFY11 results. Telcos that have reported 3Q results (Bharti,
Vodafone, Idea, TTML) have seen almost flat revenue per minute
qoq vs. our estimate of ~2% dip. But, traffic growth rates saw
significant disparity. Idea saw the highest traffic growth (10% qoq),
possibly driven by: i) strong subs growth (10% vs. 6.4-7.5% for
Bharti/Vodafone; ii) higher share of rural subs in total base (50%
vs. ~40% for Bharti/Vodafone), as rural traffic exhibits stronger
seasonal recovery in 3Q. Idea registered 8% qoq revenue growth.
Vodafone saw ~5.8% wireless revenue growth owing to 5.5%
growth in traffic. Bharti’s India wireless revenue rose 3.6% due to
subdued traffic growth vs. peers. Capex picked up in 3Q, post
delays in previous quarters due to security import issues.
Incumbents benefit from number portability. Leading telcos
(Vodafone, Idea, Bharti and Aircel) have emerged as beneficiaries of
MNP, based on data (reported in media) as of 31 January; notably,
MNP was launched on 20 Jan ’11. Vodafone/Idea recorded
maximum net subscriber gain of ~51,000/32,000, followed by Aircel
(22,000) and Bharti (16,000). Note that Idea and Vodafone had
aggressively promoted launch of MNP. RCom is the largest net loser
(57,000 subs, including both GSM and CDMA), followed by BSNL
and TTSL’s CDMA network. TTSL’s GSM network was a net
gainer, of 16,000 subs. Importantly, total subscriber porting stood at
~350,000, which is less than 1% of estimated monthly churn of
subscribers. We believe that while MNP may lead to some tariff
pressures (especially in the post-paid segment), leading telcos are
unlikely to see significant loss of subscriber/traffic share or.
Investment view. Tulip is our top sector pick; despite healthy
revenue/profit growth, it continues to trade at significant discount to
large telcos. The domestic wireless market would remain stable, driven
by stable ARPM drop and steady volume. We especially like Idea for
its India focus and operating leverage potential. We expect Bharti to
remain range bound in the near term. We maintain Sell on RCom and
TTML due to weak operating trends and high balance sheet leverage.
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