Angel Broking has come with its December quarterly earning estimates for telecom sector. The research firm expects revenue growth to be modest on the back of improvement in KPIs and decent growth in subscriber base. Amongst the top three operators, we expect Bharti and Idea to post revenue growth of 5.0% and 5.2% qoq, respectively. RCom is expected to post revenue growth of merely 3.7% qoq.
Angel Broking's quarterly earning estiamtes on telecom sector:"During 3QFY2012, share prices of Bharti Airtel (Bharti) and Idea Cellular (Idea) plunged by 9.1% and 16.4%, respectively, due to increasing concerns on the regulatory front and added cash outgo burden on telecom companies due to INR depreciation against USD by ~12% qoq as there is huge forex debt in their books, which leads to higher interest outgo in domestic currency terms. TRAI released the much-awaited new telecom policy in October 2011, which was a qualitative extension of the proposed draft in February 2011. The draft just laid the background for the forthcoming strategies to be adopted by the Department of Telecom (DoT); however, it lacked details on spectrum and license-related issues as well as on M&A policies in the sector." "Momentum in net subscriber additions declines Over September-November 2011, subscriber net addition was weak (lowest since the last few years) across all telecom operators. Indian subscriber base grew at an average rate of merely 0.7% mom, led by incumbents such as Idea, which added 3.8mn subscribers from September-November 2011. Idea was followed by RCom, Bharti, Vodafone and Aircel, which added 2.0mn, 1.9mn, 1.8mn and 1.2mn subscribers over September- November 2011, growing at an average rate of 0.7%, 0.6%, 0.6% and 1.0% mom, respectively. Amongst new entrants, Uninor emerged as a surprise by adding 4.5mn subscribers over September-November 2011, leaving behind all the other telecom players. Although subscriber base grew for all telecom players, net addition run rate slided steeply for every player in November 2011. However, we have already priced this in our our estimates. Thus, a trend was spotted with most incumbents (Bharti, Vodafone, Idea, BSNL and Aircel) maintaining their subscriber market share over September-November 2011. However, Idea's subscriber market share grew to 11.8% in November 2011 from 11.5% in September 2011."Outlook and valuation"For 3QFY2012, we expect revenue growth to be modest on the back of improvement in KPIs and decent growth in subscriber base. Amongst the top three operators, we expect Bharti and Idea to post revenue growth of 5.0% and 5.2% qoq, respectively. RCom is expected to post revenue growth of merely 3.7% qoq."| Company | 3QFY12E | Reco. | |||
| Net Sales | % Chg | Net Profit | % Chg | ||
| Bharti Airtel | 18,133 | 5 | 1,445 | 14.1 | Neutral |
| Idea | 4,858 | 5.2 | 154 | 45.3 | Neutral |
| Rel Comm | 4,969 | 3.7 | 144 | -42.9 | Neutral |
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