India Telecoms GSM adds weak in June :JPMorgan

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India Telecoms
GSM adds weak in June


 India’s GSM net adds weakened further in June to 8.6m down 10%
M/M, according to data from COAI. Q1FY12’s monthly net add rate is 32%
lower vs. Q4 and worse than the 16% Q/Q decline seen last year in Q1.
 Idea’s net adds see another sharp decline: After the 27% decline in net
adds seen in May, Idea’s June adds declined another 25%. Idea’s Q1
monthly net add rate at 1.87m is therefore 28% lower than Q4. This is 16%
lower than our current forecast for Q1 and we estimate a 2-3% negative
impact on our Q1 revenue forecast.
 Bharti and Vodafone’s net adds weaker too: Bharti and Vodafone say
14% and 15% M/M declines in net adds respectively to 2.1m each. Their
effective monthly net-add rates in the quarter have therefore declined 28%
and 33% respectively. For Bharti’s the net add rate is 5% below our current
forecast however this has a negligible financial impact.
 Smaller telcos hold steady: Grouping Uninor, Videocon, S Tel and Etisalat
as the “new” players, we note that their cumulative net adds is up 1% M/M.
They accounted for 14% of GSM net adds (13% in May, 18% in April),
contributing 6.4% of India’s GSM sub base vs. 6.3% in April. However it is
important that the highest VLR ratio (active data) among these telcos is only
55% (Uninor). Uninor’s net adds declined ~17.5% M/M.
 VLR data for May showed Idea, Bharti Vod stack up better with 92%,
89% and 81% of their reported base showing up as VLR (as of May 2011)
while RCOM has 63%, Aircel at 54% and some new operators like S Tel
and Etisalat at 38% and 42%. Overall for the market, 70% of India’s base is
active implying penetration of 49% vs. 70% reported.