>Telecom Sector (CENTRUM)

Mobile subs adds buoyant

􀂁 BSNL performance drives higher net adds: Ex-RCom GSM, the industry added 10.8mn subs in Mar 2009 vs. 9.2mn in Feb. The performance is primarily driven by higher net adds of BSNL (2.5mn vs. 1.5mn last month), Vodafone (2.8mn) and four new circle launches by Aircel.

􀂁 Subs net adds to remain robust: More launches in Apr (Idea in Orissa, MTS in TN, Aircel in Mumbai) will provide further impetus to subs net adds, in our view. However, we remain cautious of increasing non-active subs base in the disclosed numbers.

􀂁 Bharti increases subs net adds to 2.8mn: Bharti added 2.8mn subs during Mar, taking its subs base to 93.9mn. B and C circles continued to contribute majority (56%) of Bharti’s net adds during the month.

􀂁 Idea (incl. Spice) maintains net adds run rate at 1.5mn: Idea continues to garner robust incremental market share in new circles of Mumbai (20%) and Bihar (27%). These circles contributed 316,000 subs during Mar- 09 vs. 165,000 last month. However, it added meager 85,000 subs in Spice’s Punjab and Karnataka circles in Mar 2009 vs. 96,000 in Feb.

􀂁 Bharti is top pick; reiterate BUY on Idea: Bharti’s valuation premium over peers has narrowed significantly after its recent price performance. At 7.2x FY10E EV/EBITDA, we believe Bharti is relatively better priced compared to RCom, which trades at 6.5x FY10E EV/EBITDA. We recommend a strong Buy for Idea as it continues to strengthen its leadership position.

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