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Last Updated : Jul 07, 2012 11:34 AM IST | Source: Moneycontrol.com

Emkay expects reasonable volume growth in telecom

Emkay Global Financial Services has come with its earning estimates on Telecom sector for June quarter. For Q1FY13 the research firm expects reasonable volume growth as the wireless segment saw some tactical tariff cuts by Bharti in Q4FY12 to boost the traffic on network and re-gain its lost minutes market share.

 
 
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Emkay Global Financial Services has come with its earning estimates on Telecom sector for June quarter. For Q1FY13 the research firm expects reasonable volume growth as the wireless segment saw some tactical tariff cuts by Bharti in  Q4FY12 to boost the traffic on network and re-gain its lost minutes market share.

Emkay Global Financial Services results preview on Telecom sector:

For Q1FY13 we expect reasonable volume growth as the wireless segment saw some tactical tariff cuts by Bharti in  Q4FY12 to boost the traffic on network and re-gain its lost minutes market share. Increase in competitive intensity  would continue to impact voice ARPM. 

Wireless revenue is expected to grow 3.1% qoq for our coverage universe. Idea is expected to maintain its outperformance  with 4.3% QoQ growth while for Bharti it is expected at 3.3% QoQ. ARPU is expected to remain flat  for Q1FY13 as compares ~1% growth in last quarter for coverage companies. 

Minutes on network is estimated to grow in the range of 3-7% for our coverage universe. We estimate traffic  growth of 6.6% QoQ for Idea while for Bharti it is expected at 4.8% QoQ. ARPM is expected to decline by  1.3%/1.0%/1.9% QoQ for Bharti/Idea/Rcom. Bharti has adopted tactical strategy of tariff cuts during Q4FY12 in  selected circles to re-gain its lost minutes market share which would lead to decline in ARPM. 

Subscriber addition during Q1FY13E is expected at 23.2mn v/s 26.6mn in the last quarter. Subscriber addition  has slowed down but Bharti has maintained it momentum and it is expected to add 6mn subscriber in Q1FY13  v/s 5.6mn in Q4FY12. 

Consolidated EBITDA of coverage universe is estimated to grow 8.1% QoQ with EBITDA margin improvement of  104bps. PAT is expected to grow by 13% sequentially for our coverage companies. 

Regulatory overhang would continue till some clarity emerges on spectrum reserve pricing for upcoming auction of  1800MHz band. Cash outflow for the incumbent operators on one-time fees, spectrum renewal would get better clarity  with finalization of reserve price. We strongly believe if the reserve price is maintained at Rs36.2bn/Mhz, it would lead  to lack of participation from the industry. 

Bharti is our preferred pick in the sector followed with Idea. We maintain our cautious stance on Rcom.

Company

Net Sales (Rs mn)

Growth (%)

APAT (Rs mn)

Growth (%)

Q1FY13

Q1FY12

YoY

QoQ

Q1FY13

Q1FY12

YoY

QoQ

Bharti Airtel19848416982817%6%12609121524%25%
Idea Cellular556724515823%4%3147172483%47%
Rel Comm53509494018%1%1835158416%-44%
Tulip Telecom683065394%3%483772-37%-27%

First Published on Jul 7, 2012 10:36 am
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