Telecom - TRAI Q1 data update

India Infoline News Service | Mumbai |

Wireless industry gross revenues grew 5.2% qoq and 9.3% yoy led by the above three telcos.

Bharti Airtel reported a strong 95bps qoq jump in Q1 revenue market share (RMS) which now stands at 30.9%. The three large GSM operators-Bharti, Idea and Vodafone together gained 191bps RMS qoq and their combined revenue share now exceeds 70%. Wireless industry gross revenues grew 5.2% qoq and 9.3% yoy led by the above three telcos. Idea’s gross revenue growth of 9% qoq yet again outpaced that of industry and comes on the back of an equally strong 8.9% rise in Q4 FY13; Idea RMS improved 57bps to 16.2% and its revenue market share exceeds that of Rcom and Tata group combined. Uninor RMS declined marginally by 10bps to 1.7% though from Q2 onwards, the impact of shutdown in non-licensed circles would be removed as the company reported revenues from six operational circles. Although uncertainty still persists in terms of spectrum pricing, one time charge etc, we believe the worst may be over from a stock perspective; retain BUY on Idea and upgrade Bharti post recent price correction. Rcom remains a Market Performer. 


Industry gross revenues up 5.2% qoq driven by Bharti, Idea and Vodafone

As per TRAI data for Q1 FY14, wireless industry gross revenues increased 5.2% qoq driven by robust performance from Bharti (+8.5% qoq), Idea (+9% qoq) and Vodafone (+7% qoq). Both Bharti and Idea had reported improved RPM and data usage in their respective Q1 results, which supported revenue growth. Rcom revenue share dipped slightly by 22bps to 7.6% while that for BSNL+MTNL combine fell 52bps to 6.6%.  


Worst may be over from a stock perspective; retain BUY on Idea

Q1 results showed a strong uptick in pricing and we expect the upward bias to sustain over the near term. Moreover, regulatory uncertainty may not be over but such concerns are probably baked in current valuations. We retain BUY on Idea and upgrade Bharti to BUY post recent correction in stock price. Rcom remains a Market Performer with 9-12 mth target of Rs110.  


Financial summary

Bharti

Idea

Rcom
Y/e 31 Mar (Rs m)
FY14E
FY15E
FY14E
FY15E
FY13E
FY14E
Revenues
865,065
955,118
267,994
304,136
219,921
237,511
yoy growth (%)
7.7
10.4
19.3
13.5
7.0
8.0
Operating profit
269,035
308,503
78,522
90,024
63,997
73,391
OPM (%)
31.1
32.3
29.3
29.6
29.1
30.9
Reported PAT
35,637
52,374
17,298
22,077
8,238
8,552
yoy growth (%)
56.6
47.0
71.1
27.6
22.8
3.8
EPS (Rs)
8.9
13.1
5.2
6.7
4.0
4.1
P/E (x)
32.1
21.9
28.8
22.6
27.8
26.8
Price/Book (x)
1.9
1.8
3.1
2.8
0.7
0.6
EV/EBITDA (x)
6.6
5.3
7.6
6.5
9.7
8.0
Debt/Equity (x)
1.1
0.8
0.9
0.9
1.1
1.1
ROE (%)
6.4
8.4
11.4
13.0
2.4
2.4
RoCE (%)
7.6
10.0
11.4
13.3
4.6
4.6
Source: Companies, India Infoline Research
 

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