Angel Broking's Telecom sector Update – October 2011 - GSM net subscriber addition continues to be low

GSM's net subscriber addition data reported by Cellular Operators Association of India (COAI), which demonstrated a slight recovery in September 2011, again grew moderately by 1.2% mom in October 2011. Net subscriber addition number stood at 7.1mn in October 2011, taking the total GSM subscriber base to 625.4mn. Even though the mom declining trend in subscriber net addition was altered, GSM subscriber net addition data was weak across all telecom operators, except Idea and Uninor.

Operator-wise highlights

In October 2011, net addition run rate on mom basis for most telecom operators improved slightly, aided by the festive season. Among incumbents, Bharti Airtel (Bharti) and BSNL reported almost stagnant mom net subscriber addition at 0.9mn and 0.5mn, respectively, for October 2011. Idea again maintained its lead in net subscriber additions by adding 1.6mn subscribers, increasing its subscriber market share to 16.3% from 16.2% in September 2011. Vodafone reported net subscriber addition of 0.9mn, up 8.9% mom, taking its total subscriber base to 145.9mn. Aircel reported addition of 0.5mn subscribers, down 18.9% mom.

Among new operators, Uninor emerged as a pleasant surprise by adding 2.7mn subscribers (highest amongst all GSM operators), up 39.1% mom. This led to a jump in its subscriber market share to 5.2% in October 2011 from 4.8% in September 2011. Other new operators continued to struggle to gain market share in net subscriber addition. Videocon reported a net decline of 0.2mn subscribers in its subscriber base. Net subscriber addition of S Tel and Loop Mobile declined by 5.0% and 28.0% mom, as these operators added merely 0.04mn and 0.01mn subscribers, respectively.

Circle-wise highlights

In October 2011, net addition run rate of all circles (except Metro circle) improved, the highest being for C circle, which reported addition of 1.1mn subscribers, up 35.8% mom from 0.8mn in September 2011. This led to an increase in net subscriber addition market share of C circle to 15.6% from 12.5% in September 2011. In the Metro circle, merely 0.2mn subscribers were added in October 2011 (down 52.4% mom), with Idea reporting the highest net addition of 0.07mn subscribers, followed by Vodafone and Bharti, which reported net subscriber addition of 0.046mn and 0.043mn, respectively. Subscriber addition run rate of A circle increased by 20.9% mom to 2.4mn in October 2011 as against 1.9mn in September 2011. Subscriber addition in B circle increased to 3.4mn in October 2011 from 3.2mn in September 2011.

Source : Equity Bulls

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