Uninor - CY11 cash burn to continue - Motilal Oswal

UNINOR 4QCY10: Strong revenue traction; CY11 guidance implies high cash burn to continue; RPM up 10% QoQ

While revenue traction for Uninor continues (up 87% QoQ) to be strong, EBITDA loss and cash burn levels have remained unchanged over the past 4 quarters.

We are positively surprised by 9-10% QoQ increase in RPM and ARPU which probably reflects abating tariff competition from challengers.

Uninor's RPM is only at 5-10% discount to GSM majors which we believe will continue given the incumbency advantage enjoyed by its larger peers.

Uninor has guided for ~Rs30b EBITDA loss and ~Rs10b capex in CY11 implying that cash burn at ~Rs40b will remain similar to CY10 levels.

Net debt has increased 169% QoQ to ~Rs24b. Regulatory overhang is impacting credit availability - project financing is not feasible due to ongoing 2G turmoil.

Source : Equity Bulls

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