Stock Market Telecom sector Update – September 2011

Stock Market Telecom sector Update – September 2011 - GSM net subscriber addition cooling off

GSM subscriber data reported by Cellular Operators Association of India (COAI), which was showing a declining trend since March 2011, grew in September 2011. Net subscriber addition number stood at 6.5mn, up 22% mom, taking the total GSM subscriber base to 618.3mn in September 2011. Even though the mom declining trend in subscriber net addition was altered, GSM subscriber net addition data was weak across all telecom operators, except BSNL and Uninor.

Weakness seen across the board

In September 2011, net addition run rate on mom basis for all operators (except BSNL and Uninor) dropped off again (Refer Exhibit 5 and 6). Among incumbents, Bharti Airtel (Bharti) and Vodafone reported a significant decline in their net subscriber addition numbers, with net addition numbers dropping to merely 0.9mn and 0.8mn, down 18.6% and 25.1% mom, respectively, which led to a decline in their subscriber market share by 20bp and 10bp to 27.9% and 23.5%, respectively. Idea, which bucked the declining trend in subscriber net addition in August 2011, reported a 25.4% mom decline in subscriber net additions in September 2011 to 1.7mn. BSNL emerged as the dark horse by reporting a whopping 16.1% mom jump in subscriber net additions to 0.5mn. Aircel reported almost flat mom subscriber net additions at 0.6mn.

Among new operators, Videocon reported a net decline of 0.1mn subscribers in its subscriber base. Net subscriber addition of S Tel and Loop Mobile declined by 193.0% and 21.7% mom, as these operators added merely 0.1mn and 0.01mn subscribers, respectively. Unlike other players, Uninor reported a whopping 448% mom jump in subscriber net addition by adding 1.9mn subscribers, which led to a 30bp qoq increase in its subscriber market share to 4.8%.

Circle-wise highlights

In September 2011, net addition run rate of all circles (except A circle) improved, the highest being for B circle, which reported addition of 3.2mn subscribers,
up 60.7% mom from 2.0mn in August 2011. This led to an increase in net subscriber addition market share of B circle to 48.7% from 37.0%. For September 2011, in the Metro circle, 0.6mn subscribers were added, up 44.3% mom, with Aircel reporting the highest net addition of 0.16mn subscribers, followed by Idea, Vodafone and Bharti, which reported 0.15mn, 0.13mn and 0.09mn net subscriber additions, respectively. Subscriber addition run rate of A circle declined by 16.4% mom to 1.9mn as against 2.3mn in August 2011. Subscriber addition in C circle increased to 0.8mn from 0.6mn in August 2011.