RELATED ARTICLES |
Investors appear disappointed by the sedate and below-expectation India wireless volumes (minutes of usage) reported by telecom companies, even as the underlying revenue per minute trends seem less affected. In terms of sequential growth in revenue per minute, Bharti reported 1.2 per cent up-tick, Idea showed 4.1 per cent rise while Reliance showed flat growth (0.4 per cent). Vodafone, an important player in the market, showed 2.6 per cent growth. On a year-on-year basis, there was three per cent fall in case of Bharti, while the average revenue per minute was flat for Reliance Communications and Idea Cellular.
With several telecom players entering the scene in 2009, there are now no less than 15 participants in the mobile s space across India and no less than seven operating in each circle. The competition has been correspondingly intense, driving down average mobile tariffs almost across the board from an average 76 paise in early 2009 to in some cases less than 39 paise today.
“Pricing appears to have bottomed. All operators saw average revenue per minute rise sequentially. We think it will take 3-4 quarters for customers to roll over onto the higher headline tariffs recently announced, suggesting this theme will continue for some time,” said Chris Hoare, an analyst at London-based New Street Research.
Telcos continued to report lower revenues on per user basis too. In India, Bharti’s average revenue per user dropped to Rs 183 from Rs 190 in the April-June quarter and Rs 202 in the July-September quarter in 2010. In Africa, average revenue per user remained stagnant at $ 7.3 on a quarter-on-quarter basis while there was one per cent drop on a year-on-year basis.
Reliance reported a similar trend where wireless revenue per user dropped from Rs 103 in the April-June quarter to Rs 101 in the July-September period. The same figure in the July-September quarter in 2010 was Rs 122.
Idea also reported figures of Rs 155 from Rs 160 in the preceding quarter, while the same metric was at Rs 167 in the year-ago period. The trend was visible in Vodafone India too where average revenue per user stood at Rs 168, a drop of nearly one per cent quarter-on-quarter and a higher 5 per cent drop in year-on-year term.
“Second quarter 2011-12 earnings reports from the listed India wireless players disappointed — revenues, EBITDA, as well as net income (ex-forex) came in below our expectations. Miss on India wireless expectations was driven by weak volume growth and margins for Bharti and Idea Cellular; Reliance Communications surprised marginally on volumes but disappointed on margins,” said Rohit Chordia, telecom analyst, Kotak Institutional Equities.
The rise in churn rates (the rate at which customers leave for a competitor) for both Bharti and Idea Cellular have also surprised given the broad assumption of reducing competitive intensity in the market. For instance, monthly churn at Bharti’s India mobile services rose to 7.2 per cent in the July-September quarter against 6.4 per cent in previous quarter and 5.9 per cent in the July-September quarter in 2010. However, the churn rates reduced in Africa.
At Idea Cellular, blended churn (combines pre-paid and post-paid) rose to 9.9 per cent in July-September 2011 from 9.6 per cent in the April-June quarter and 8 per cent in July-September, 2010. For Reliance, churn rates appeared to have been contained at 4 per cent quarter-on-quarter while rising by 50 basis points on a year-on-year basis.
Mercifully, margins were resilient for telcos in September quarter. Brokerage Motilal Oswal, despite seasonal weakness with quarter-on-quarter decline of less than 100 basis points said, “Bharti maintained margins due to improvement in Africa while RCom/ Idea suffered a 60-100 basis points decline Q-o-Q due to tepid revenue growth,” said the brokerage.
 Limited.JPG)
Post new comment