ICICI Direct has published report on the Indian telecom sector. The key highlights of the report are as follows:
The net subscriber additions have shown a slight improvement. However, they continue to be on the lower side. The recent price hike by operators has already started showing in the ARPM but its full effect is yet to be seen.
We expect a Re 0.02 improvement in ARPM by financial year 2013 across players on the back of the recent price hike. ARPM expansion would aid the margins. However, rising amortisation cost, 3G rollout costs and rising interest cost would exert downward pressure on profitability.
TRAI has recently suggested reducing call termination charges from Re 0.20 per minute to Re 0.10 per minute from January 2012 and doing away with it by January 2014. Such a move could bring down the mobile tariffs further and hurt Bharti Airtel and Vodafone Essar as they are currently a net earner of termination charges. Idea would see no such impact as they are currently more or less neutral on call termination charges.
The Department of Telecommunications (DoT) announced the draft of the New Telecom Policy 2011. The draft did take cognizance of the need for enhanced broadband penetration in the country and need for additional spectrum. However, it lacked clarity when it came to one-time spectrum fees and pricing along with spectrum re-farming. Both Bharti Airtel and Idea Cellular (under our coverage universe) would be impacted the most by one-time spectrum fees and spectrum re-farming.
Subscriber addition rises again:
After falling for six straight months till August 2011, subscriber addition has risen for two straight months, though not significantly. The telecom industry added 7.1 million GSM subscribers in October 2011 as against 6.5 million in September 2011. The total GSM subscribers for the industry stood at 625.4 million. The subscriber addition is still considerably below the October 2010 number, which was 14.7 million.
Uninor- continues to surprise brilliantly:
After being the highest net adder in September 2011, Uninor continued the trend by adding 2.7 million subscribers against 1.9 million in September 2011. The share of net additions for Uninor was 37.4 per cent, the highest for any operator in October just like in September.
Top 3 fail to impress:
While Bharti Airtel and Vodafone reported a marginal rise in their subscriber addition, Idea reported a decline. Bharti Airtel, Vodafone and Idea added 0.9 million, 0.9 million and 1.6 million as against 0.9 million, 0.8 million and 1.6 million, respectively, in September 2011. Idea had the second highest share in net additions at 23.0 per cent, which was lower than 26.6 per cent in September 2011. While the share in net additions declined for Airtel from 14.3 per cent to 13.3 per cent, it remained flat for Vodafone at 13.0 per cent.
Others:
The subscriber addition for Aircel fell from 0.6 million in September to 0.5 million in October 2011. Other operators in the industry reported a decline in their subscriber base by 0.1 million in October 2011 as against a negligible subscriber addition in September 2011.
