Saturday, August 18, 2012


Weak net adds; Uninor posts decline while Bharti leads
In July 2012 the GSM operators across India (excluding Reliance Communications [RCom] and Tata Telecommunications [Tata Tele]) added a meagre 1.70 million subscribers, taking the cumulative GSM subscriber base to about 679.05 million, an increase of 0.25% over the June 2012 base. 
The July 2012 net additions of 1.7 million represented a decline of about 63% month on month (MoM) following a 36% drop in the net additions in June 2012. This was the second consecutive month of a decline in the net additions.
The decline in the net addition numbers was led by Uninor, which posted a decline of over 1 million in the total subscriber numbers for the month. The major incumbent operators, Bharti Airtel and Idea Cellular, also posted a significant drop in their net additions.
View: The Indian telecommunications (telecom) space is plagued with a myriad of policy issues and regulatory uncertainty. The business environment also remains tough. We, therefore, maintain our cautious stance on the sector. However, amongst the listed telecom companies, Bharti Airtel appears to be the most resilient and agile to face the regulatory and competitive risks on account of its strong balance sheet. We, thus, prefer Bharti Airtel from a long-term perspective. Though in view of the business risk in the short term and the absence of any major triggers we have downgraded our recommendation on the stock from Buy to Hold and reduced our price target for it from Rs362 to Rs310.