Indian telecom sector review: FinQuest Securities

FinQuest Securities has come out with its report on Indian telecom sector.

Bharti Airtel added 2.01 mn subscribers in April 2012, as against 2.5 mn subscribers added in March 2012, thus taking its total wireless subscriber base to 183.29 mn. The company added 0.81 mn subscribers in the metros and 'A' circle, while it added 0.60 mn and 0.61 mn subscribers in the 'B' and 'C' category circle. During the month of April 2012, for the company the percentage share of net addition was higher than the company's market share, thus resulting in 4 bps increase in subscriber market share to 27.33%. The percentage share of net addition in subscribers in April 2012 was 30.98% as compared to the company subscriber market share of 27.33%. In most of the major circles the company witnessed increase in subscriber market share during April 2012 as compared to the previous month. Lowering competitive intensity will help the company in terms of pricing power going ahead while we expect the company to witness further increase in subscriber market share in the 'B' and 'C' circles.customers will now pay 3p/10 KB of data, 70 per cent less over the earlier tariff of 10p/10KB.

Idea Cellular has exhibited impressive performance during the past several months adding substantial number of subscribers on its network aided by the mobile number portability (MNP) and the recent 2G license cancellation. All these regulatory and legal issues seem to have benefited the company in mopping up the subscribers at much higher rate than its subscriber market share. The subscribers on the company's network increased by 1.49 mn in April 2012 to 114.21 mn. Major subscriber addition for the company happened in the 'A' and 'B' circles where it added 0.39 mn subscribers and 1.01 mn subscribers to take the total subscribers there to 50.48 mn subscribers and 56.21 mn subscribers respectively. The company lost GSM subscriber market shares in the important circles of Maharashtra, Gujarat, Kerala and Mumbai during the month. Overall the GSM subscriber market share of the company in April 2012 rose 6 bps to 17.03% as at the end of April 2012.

Vodafone's performance was disappointing; it added only 0.82 mn subscribers in April 2012 to take its total subscriber base to 151.28 mn. In the 'Metro' and 'A' circles the company added 0.30 subscribers in April 2012 to take its total subscribers there to 73.47 mn, while in the 'B' and 'C' category circles the company added 0.26 mn subscribers and 0.25 mn subscribers respectively to take the total subscribers there to 65.22 mn and 12.59 mn. The company lost subscriber market share in many of the major 'Metro' and 'A' circles, while it added marginal subscriber market share in Delhi, Mumbai, Kolkatta and Karnataka circles April 2012. Overall the company lost 10 bps subscriber market share in April 2012, to take its total GSM subscriber market share to 22.56%. Vodafone's percentage share of net addition in subscribers has remained very poor as compared to its subscriber market share during the past several months and during April 2012 it was just 12.62% as compared to the company subscriber market share of 22.56%.

Sector overview: As per Telecom Regulatory Authority of India (TRAI) data, the total telecom subscribers in India (GSM + CDMA + Wire-line) at the end of March 2012 rose by 7.85 mn subscribers to 951.34 mn as compared to February 2012. TRAI is yet to release the April 2012 data. The total wireless subscriber base (GSM + CDMA) in the metros and 'A' circle as at the end of March 2012 stood at 427.78 mn as compared to 425.21 mn during February 2012, while the total subscriber base in the 'B' and 'C' category circles stood at 372.26 mn and 119.13 mn respectively, up 3.75 mn M-o-M and 1.69 mn M-o-M respectively. As per the TRAI's data, India's total tele-density increased to 78.66% at the end of March 2012. as against 78.10% as at the end of February 2012, while the wireless tele density in the country as at the end of March 2012 rose to 76%, as against 75.42% at the end of February 2012. The urban wireless tele-density increased to 162.82%, while the rural wireless tele-density at the end of March 2012 increased to 38.33%. As per the TRAI's report, the number of actual active subscribers, based on the Visitor Location Register (VLR) at the end of March 2012, was 683.02 mn, as against the total wireless subscriber base as on that date of 919.17 mn. Broadband subscriber base increased marginally from 13.54 mn in February 2012 to 13.79 mn in March 2012.

Institutional holding more than 40% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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

Read More