>SUBSCRIBER WATCH (ICICI SECURITIES)

Subscriber Watch

GSM net adds decline further; Aircel impresses

GSM net adds for May ’09, excluding Reliance Communications (RCom), were at 8.3mn versus 9mn in March ’09, mostly due to lower GSM net adds by Bharat Sanchar Nigam (BSNL) at 0.5mn versus 1mn in April ’09 and 2.5mn in March ’09. Bharti Airtel (BAL) continued to lead with 2.8mn net adds in May ’09, while Vodafone Essar’s net adds were lower at 2.5mn versus 2.8mn in April ’09. Idea’s net adds (including Spice) increased to 1.3mn (1.15mn in April ’09), but Idea lost subscribers in Delhi for the second month in a row.

Aircel continues its impressive performance adding 1.1mn subscribers in May ’09, partly driven by ~180,000 net adds in Delhi and Mumbai. High net adds share of Aircel in Delhi (42.3%) and Mumbai (29.6%), which are almost saturated markets and where subscribers are expected to be less price sensitive, is remarkable.

■ BAL’s net adds of 2.8mn were the highest with net add share at 33.9%, taking subscriber base to 99.5mn. Vodafone slightly lagged at 2.5mn net adds with net add share of 30.6%, taking subscriber base to 74.1mn. Vodafone continued to glean ~20% net adds share in most of the B-circles, where it launched services in FY09.

■ Idea’s net adds improved to 1.3mn from 1.15mn in April ’09 and its net adds share rose to 15.6%. However, Idea’s performance in the two metros was poor, mostly due to strong push by Aircel. Idea continued to lose subscribers in Delhi (30,654 loss in May and 48,465 in April), and its net adds in Mumbai declined to 30,376 (74,232 in April). Among other recently launched circles, Idea’s net adds in Bihar were robust at 199,311 or 23.5% of the net adds (139,058 in March). Idea added 65,218 subscribers in Orissa (launched in April ’09) and 6,066 in Tamil Nadu (launched in May ’09).

■ Aircel added >1mn net adds for the third month in a row, driven by better performance in recently launched circles, especially in highly competitive metro circles of Delhi & Mumbai. Aircel added 99,244 subscribers (42.3% of net add share) in Delhi where it had launched services in March ’09 and added 79,335 subscribers in Mumbai (29.6% of net add share) where it launched services in April ’09.

■ A & B circle net add share increased, though absolute net adds decreased across all categories. B circle net adds increased to 38.3% and A circle net add share rose to 31.9% of the total GSM net adds (ex-RCom), while that for metros declined to 8.5%.

■ Competition to intensify with more launches & mobile number portability, which is expected by year end. Tata Teleservices (TTSL) has announced the launch of its GSM services, Tata DoCoMo by end-June, starting with South India and then in West and North. MTS (earlier Shyam-Sistema) launched its CDMA services in Tamil Nadu and Kerala in April ’09.

To see full report: TELECOM SECTOR