Expects telcos revenue growth to be modest in Q4: Angel

Angel Broking has come out with its results estimates on Telecom sector for March FY12. For 4QFY2012, the research firm expects revenue growth to be modest on the back of improvement in ARPM, growth in VAS share in mobility revenue and decent growth in subscriber base. Amongst the top three listed operators, we expect Bharti and Idea to post revenue growth of 2.7% and 3.2% qoq, respectively. RCom is expected to post revenue growth of merely 2.2% qoq.

On the EBITDA margin front, we expect margins of Bharti, Idea as well as RCom to decline by 43bp, 67bp and 65bp to 31.8%, 26.1% and 28.0%, respectively. We believe industry dynamics point toward a possible consolidation in the long run and expect few operators, including Bharti, Vodafone, RCom, Idea, BSNL, Aircel and Uninor, to be the survivors out of the current 14 operators.

Bharti continues to be our preferred pick amongst telcos 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 sector.

Company	Net Sales		Net Profit
	4QFY12E	% chg	4QFY12E	% chg
Bharti	18,973	2.7	1,090	7.8
Idea	5,193	3.2	191	-4.9
RCom	4,933	2.2	152	-18.4

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