Telecom - TRAI Q4 data update

India Infoline News Service | Mumbai |

Q4 financial data released by TRAI shows wireless industry gross revenues grew at an accelerated pace of 3.1% qoq vs. an adjusted 2.8% in Q3.

Q4 financial data released by TRAI shows wireless industry gross revenues grew at an accelerated pace of 3.1% qoq vs. an adjusted 2.8% in Q3. Idea yet again led industry growth with an 8.9% qoq rise in gross revenues and ended FY13 with 15.7% revenue market share (RMS), a rise of 83bps qoq. On the other hand, Bharti lost 43bps RMS as its gross revenue growth of 1.7% qoq lagged that of industry, though Q4 included bad debt provision. BSNL & MTNL combine RMS share continues to be highly volatile, rising 30bps qoq. Unlike Bharti, Vodafone revenues outpaced industry growth at +5.2% qoq which supported a 45bps rise in RMS to 23%. Uninor, as expected, continues to sheds revenues in non operating circles though the pace of gross revenue decline accelerated to 14% qoq and RMS dropped below 2%. Rcom's gross revenue performance improved qoq driven by better traffic growth though still below Q4 industry run rate.


A likely improvement in tariffs, though gradual, along with robust data growth augurs well for the sector even as regulatory clouds persist; in lieu of recent correction in Bharti, we upgrade the stock to BUY with unchanged 9-12 month target of Rs340 while lower out rating on Idea to Market Performer but retain 9-12 target of Rs140. 


Idea continues trend of RMS gains, Bharti rev share dips marginally

Wireless industry revenues grew faster at 3.1% qoq vs. 2.8% on an adjusted basis in Q3; Idea, expectedly led industry growth as it posted a robust 8.5% qoq rise in Q4 traffic which translated in to an 8.9% jump in gross revenues and company ended FY13 with RMS of 15.7%. Bharti lagged industry revenue rate and saw a slight dip in RMS while Vodafone raised its RMS to 23% driven by 5.2% qoq rise in Q4 revenues. Uninor saw steep revenue fall in Kolkata, Mumbai and WB as it truncates operation in these circles which led to 14% qoq fall in GR. 

 
Financial summary
  Bharti Idea
Y/e 31 Mar (Rs m) FY14E FY15E FY14E FY15E
Revenues 897,449 990,874 252,664 283,232
yoy growth (%) 11.7 10.4 12.5 12.1
Operating profit 280,004 310,143 67,209 75,623
OPM (%) 31.2 31.3 26.6 26.7
Reported PAT 36,949 48,302 13,293 16,507
yoy growth (%) 62.4 30.7 31.5 24.2
         
EPS (Rs) 9.7 12.7 4.0 5.0
P/E (x) 29.7 22.7 33.9 27.3
Price/Book (x) 2.0 1.9 2.9 2.6
EV/EBITDA (x) 6.2 5.0 8.2 7.4
Debt/Equity (x) 1.2 0.8 0.9 0.9
ROE (%) 7.1 8.7 8.9 10.1
RoCE (%) 8.3 9.4 9.5 11.0
Source: Companies, India Infoline Research
 

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