UBS:: India Mobile - Revenue growth remains robust

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UBS Investment Research
India Mobile Sector
R evenue growth remains robust
􀂄 Gross revenue growth accelerated to 4.8% in 1QFY12 vs. 4.1% in 4QFY11
Based on TRAI's quarterly revenue report, industry gross revenue grew 4.8% in
1QFY12 vs. 4.1% in 4QFY12. Among the operators, Airtel gained the highest
(+66bps rev share), followed by Uninor (+35bps), Vodafone (+29bps) and Idea
(+27bps) while BSNL (-100bps), RCOM (-69bps) lost share. The rev share of all
other operators remained stable in 1QFY12. Over the last few quarters, Idea has
been consistently gaining share reflecting company’s strong brand and execution.
􀂄 BSNL and RCom lost rev share across service areas; Uninor & Idea gain
Bharti continues to lead the market with revenue share of 30.8%. Its revenue share
increased in all service areas except in service area ‘C’ (-26bps) where it lost share.
Uninor gained revenue share in all service areas while Idea’s revenue share
increased by 84bps/26bps in service areas ‘B’/‘C’ while in other areas its share
remained stable. Vodafone saw increase in revenue share in service areas ‘B’/‘C’
while it lost share in metros. BSNL and RCom lost rev share across service areas.
􀂄 Reiterate positive view on the sector; Idea is our top-pick
We believe revenue market share, revenue growth and EBITDA margins are the
key metrics in the sector and incumbent operators have faired well on these
parameters. We expect incumbents to further consolidate their revenue share over
the next few quarter given the recent tariff hikes. We remain positive on the
outlook of the sector given improving pricing environment and regulatory outlook.
Idea is our top-pick as it offers pure play exposure to the Indian mobile sector. We
like Bharti given its dominant position in the Indian mobile sector and expect it
benefit from potential consolidation.