Bharti better bet than Idea: Angel Broking

89317 Investors following Bharti Airtel. Share this News with them.

0

Like this story, share it with millions of investors on M3

Bharti better bet than Idea: Angel Broking

Angel Broking has come out with its report on Telecom Sector. The research firm is neutral on the sector.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy Simplex Infra; target of Rs 316: Firstcall Research Buy TCS; target of Rs 1320: ICICIdirect.com Accumulate TCS; target of Rs 1280: Unicon Investment

Angel Broking has come out with its report on Telecom Sector. The research firm is neutral on the sector.

"Cellular Operators Association of India (COAI) reported GSM subscriber data for June 2011, which continued its declining trend in this month as well. GSM subscriber net addition data was reported to be weak on mom basis across all the telecom operators (except BSNL). The net subscriber addition number stood at 9.6mn, down 10% mom, taking the total GSM subscriber base to 598.8mn in June 2011."

Weakness across the board: Net addition run rate on mom basis for all operators (except BSNL) dropped steeply (Refer Exhibit: 5 and 6) in June 2011. Among the incumbents, Idea, after adding 2.5mn plus net subscribers every month from November 2010-April 2011, reported a drop in net subscriber additions to merely 1.4mn, down 24.8% mom. Net subscriber addition numbers of Bharti, Vodafone and Aircel also fell by 13.5%, 14.5% and 17.3% mom to 2.1mn, 2.1mn and 0.9mn, respectively. However, BSNL, which was reporting mom decline in its subscriber additions since the last five months, again registered a 78.8% mom jump in June 2011, with net subscriber addition of 0.8mn. Subscriber market share of all the incumbents remained almost flat mom - Bharti at 28.3%, Vodafone at 23.6%, Idea at 15.9%, BSNL at 14.8% and Aircel at 9.7%.

All the new operators reported a sharp decline in subscriber net addition numbers for June 2011. Uninor, DB Etisalat and S Tel reported 17.4%, 37.1% and 7.8% mom decline in net subscriber additions, with addition numbers of 0.9mn, 0.1mn and 0.2mn, respectively. Loop Mobile emerged as the dark horse and reported a 30.8% mom increase in subscriber addition to 0.02mn. Subscriber market share of all the new players also remained almost stable on mom basis.

Circle-wise highlights: In June 2011, the net addition run rate of Metro circle declined to 0.7mn vs. 1.0mn in May 2011. In the Metro circle, in this month again Vodafone had the highest net additions at 0.21mn, followed by Bharti and Idea reporting 0.17mn net additions each. Subscriber addition run rate of A circle bounced back to 3.0mn from 2.4mn in May 2011. However, subscriber additions in B and C circles fell to 3.4mn and 1.5mn from 4.0mn and 2.1mn in May 2011, respectively. This led to a considerable decline in their net subscriber addition market share to 39.2% and 17.7% from 41.9% and 22.4% in May 2011, respectively.

Valuation: For Bharti and Idea, such a decline in net subscriber additions was along expected lines, thus our estimates remain unchanged. Bharti continues to be a better bet due to its low-cost integrated model (owned tower infrastructure), potential opportunity to scale up in Africa, established leadership in revenue and subscriber market share and relatively better KPIs. However, overall we remain Neutral on the telecom sector.

Shares held by Financial Institutions/Banks

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment