Equity Research

May 19, 2011 BSE Sensex: 18086

Subscriber Watch
Telecom
Top pick Bharti Airtel

April ’11

Subscriber additions fall on seasonal impact
Reason for report: Monthly update
GSM net additions in April ’11 excluding Reliance Communications (RCom) and Tata Teleservices (TTSL) came in at 11.1mn, lower than 14.5mn in March ’11 due to seasonal effects. Net additions for incumbents in April ‘11: BSNL’s net additions reduced by half to about 0.7mn; Vodafone’s came in at 2.4mn, lower than 3.6mn in March, and Bharti Airtel’s (Bharti) at 2.4mn (March ’11: 3.2mn). Idea Cellular (Idea) continued to report strong numbers with 2.5mn net additions v/s 2.7mn a month ago. New entrants (Videocon, Etisalat, Uninor, S Tel and MTS) maintained a steady uptrend with their market share reaching 5.6% of the total subscriber base in April ‘11. Their share in terms of net additions was 15.7% for April ‘11 compared to 13.2% in March ‘11. In terms of market share, Bharti maintained its leadership position with a share of 20.1% as of April ’11 (20.2% in March ’11). Vodafone and Idea also maintained their market share at 16.7% and 11.2% respectively.

Table 1: Net subscriber additions
(mn) Nov-10 Aircel BAL RCom TTSL Loop BSNL GSM Idea MTNL Vodafone Videocon Etisalat Uninor S Tel MTS 1.2 3.1 3.0 1.8 0.0 3.0 2.8 0.0 3.1 1.1 0.1 2.4 0.2 0.7 Dec-10 1.4 3.1 3.3 1.6 0.0 3.2 3.0 0.0 3.1 0.6 0.1 2.3 0.2 0.7 Jan-11 1.7 3.3 3.2 1.8 0.0 2.2 2.5 0.0 3.1 (1.3) 0.2 1.8 0.2 0.7 Feb-11 1.7 3.2 3.3 1.6 0.0 1.5 2.5 0.0 3.6 0.6 0.2 1.3 0.2 0.5 20.1 Mar-11 1.3 3.2 3.5 1.5 0.0 1.4 2.7 0.0 3.6 0.5 0.3 1.2 0.1 0.4 20.0 Apr-11 1.1 2.4 2.5* 1.3* 0.0 0.7 2.5 0.0 2.4 0.1 0.2 1.5 0.2 0.4* 15.3

Vikash Mantri, CFA
vikash.mantri@icicisecurities.com +91 22 6637 7161

Total 22.6 22.7 19.4 * Apr ‘11 numbers for RCom, TTSL and MTS have not been released yet Source: COAI, AUSPI, I-Sec Research

Satish Kothari
satish.kothari@icicisecurities.com +91 22 6637 7510 Please refer to important disclosures at the end of this report

1 13.2 TTSL 82.1 14.0 3.1 4.5 1.2 134.2 0.0 Etisalat 0.5 0.7 16.9 2.2 24.0 764.6 138.5* 819.3 745.3 2.2 15.8 8.7 2.1 9.1 1.0 Feb-11 8. AUSPI.1 BSNL GSM 13.0 7. Etisalat. I-Sec Research Table 2: Net subscriber additions (as % of total) (%) Nov-10 Aircel 5.1 5.4 130.6 5.0 10.5 16.5 0.2 137.1 BSNL GSM 78.2 81.1 804.8 Videocon 5.1 17.6 Etisalat 0.2 5. AUSPI.6 84.8 10.4 MTNL 0.2 1.1 18. I-Sec Research Dec-10 6.2 18.5 20.0 16.2 4.7 50.2* 90.2 51.1 6.8 2.8 159.9 MTS 2.8 81.8 S Tel 0.6 100.0 22.1 2.0 0.4 BAL 13.9 100.2 16.7 1.0 5.0 15 5.Telecom – Subscriber Watch.7 89.1 0.7 13.3 TTSL 7.4 9.9 132.7 1.0 6.1 11.0 Source: COAI.0 Mar-11 6.0 RCom 122.3 Uninor 10.1 3.5 10 7.3 8.6 17.3 6.5 BAL 149.1 0.7 MTS 7. 2011 Chart 1: New entrants’ subscriber share 6.9 16.3 2.7 0.5 2 .5 * Apr ‘11 numbers for RCom.4 152.3 ICICI Securities Chart 2: New entrants’ net additions share 25 15.4 0.6 2.5 12.9 4.7 RCom 13.9 (%) 5.0 164.6 Total 722.5 155.9 Total 100. TTSL and MTS have not been released yet Source: COAI.3 86.5 13.0 0.4 8.1 2.7 16.3 127.1 15.2 3.6 10.6 4.3 21.9 Loop 0.5 5.0 -6. Uninor.7 14.0 0.4 100.8 MTNL 5.2 2.0 Feb-11 Mar-11 Nov-10 Dec-10 Jan-11 Apr-11 5 Feb-11 Nov-10 Dec-10 Mar-11 Jan-11 Apr-11 Apr-11 7.5 5.1 17.3 0.2 100.7 1.6 9.6 85. AUSPI.5 89.2 124.5 0.0 3.2 1.5 0.5 0.7 Loop 3.1 87.2 135.1 87.2 1.6 6.7 7. I-Sec Research Mar-11 54.0 Apr-11 56.0 5.0 9.1 Idea 78.7 7.9 Videocon 6.6 7.7 128.3 12.1 86.5 7.4 784.3 13.4* 3.4 0.4 83.2 Vodafone 121.0 3.1 7.7 Uninor 16.0 4.1 5.6 100.9 0.0 Jan-11 8.6 2.3 Idea 12.2 (%) 5.0 6. S Tel and MTS Source: COAI.2 86.8 13.1 92.8 53.9 17.5 2.2 Vodafone 13.6 S Tel 2.8 162. May 19.4 125.3 15.0 Table 3: Total subscribers (mn) Nov-10 Dec-10 Jan-11 Feb-11 Aircel 48.9 1.4 20 19.8 Note: New entrants include Videocon.1 13.8 84.3 0.5 9.1 3.

9 0.0 Source: COAI. May 19.7 11.6 16.2 100.8 20.3 MTS 1.9 11.5 16.7 20.0 0.7 16.1 2.6 16.2 100.7 0.1 3.0 Jan-11 6.7 0.9 11.0 0.2 S Tel 0.4 1.0 Uninor 2.6 11.8 Videocon 0.0 2. AUSPI.8 20.4 10.7 BAL 20.Telecom – Subscriber Watch.7 0.4 10.3 1.9 0.4 10.1 16.0 Apr-11 6.1 0.4 1.7 Vodafone 16.1 100.8 0.7 1.3 1.9 11.1 2.1 0.3 1.0 ICICI Securities Mar-11 6.7 0.9 11.5 0.9 TTSL 11.0 Feb-11 6.7 16.3 0.7 RCom 16.8 11.8 20.2 0.2 16.8 Idea 10.7 0.4 BSNL GSM 10.0 0.1 2.8 11.3 100.9 MTNL 0.7 16. I-Sec Research Dec-10 6.1 0. 2011 Table 4: Subscribers (as % of total) (%) Nov-10 Aircel 6.0 0.8 0.8 0.3 0.1 Total 100.4 10.3 16.4 10.0 3 .0 0.9 Etisalat 0.4 16.2 0.8 0.9 11.9 11.4 Loop 0.3 100.8 20.

HOLD: -10 to +10 relative performance. PGDM. accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. to any other person or to the media or reproduced in any form. 2011 ICICI Securities ICICI Securities Limited has been mandated to act as one of the Book Running Lead Managers to manage the IPO of the subsidiary of Reliance Communication Limited. PGDM research analyst and the author of this report or any of their family members does not serve as an officer. Past performance is not necessarily a guide to future performance. financial positions and needs of specific recipient. It is confirmed that Vikash Mantri. ICICI Securities and affiliates expect to receive compensation from the companies mentioned in the report within a period of three months following the date of publication of the research report for services in respect of public offerings. where such distribution. Our research professionals provide important input into our investment banking and other business selection processes. Reliance Infratel Limited. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. This report is based on information obtained from public sources and sources believed to be reliable. ICICI Securities and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. corporate finance. but no independent verification has been made nor is its accuracy or completeness guaranteed. has reviewed the report and. This report has not been prepared by ICICI Securities. director or advisory board member of the companies mentioned in the report. May 19. This report is not directed or intended for distribution to. ICICI Securities and affiliates might have received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of public offerings. ICICI Securities or its affiliates collectively do not own 1 or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. in circumstances where ICICI Securities is acting in an advisory capacity to this company. state. which include earnings from Investment Banking and other business. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. based on their own investment objectives. PGDM. integrated investment banking. viz. in part or in whole. PGDM research analyst and the author of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. compliance or other reasons that may prevent ICICI Securities from doing so. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. SELL: +10 underperformance ANALYST CERTIFICATION We /I. it is believed to be reliable. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way. CFA. or in certain other circumstances. CFA. legal. 4 . Inc. Nothing in this report constitutes investment. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. or use by. Satish Kothari. hereby certify that all of the views expressed in this research report accurately reflect our personal views about any and all of the subject issuer(s) or securities. although its accuracy and completeness cannot be guaranteed. Inc. PGDM. CFA. Satish Kothari. investment banking or other advisory services in a merger or specific transaction. It is confirmed that Vikash Mantri. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. availability or use would be contrary to law. regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The recipient should independently evaluate the investment risks. Satish Kothari. The value and return of investment may vary because of changes in interest rates. Vikash Mantri. I-Sec investment ratings (all ratings relative to Sensex over next 12 months) BUY: +10 outperformance. Analysts aren't registered as research analysts by FINRA and might not be an associated person of ICICI Securities Inc. We and our affiliates have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities and affiliates may act upon or make use of information contained in the report prior to the publication thereof. ICICI Securities. While we would endeavour to update the information herein on reasonable basis. PGDM research analyst and the author of this report. Forwardlooking statements are not predictions and may be subject to change without notice. in so far as it includes current or historical information. The securities discussed and opinions expressed in this report may not be suitable for all investors. ICICI Securities.. transmitted to. Our research professionals are paid in part based on the profitability of ICICI Securities. investment management and brokerage and financing group. Though disseminated to all the customers simultaneously. Disclosures: ICICI Securities Limited (ICICI Securities) and its affiliates are a full-service. Nonrated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies. foreign exchange rates or any other reason. there may be regulatory. We along with affiliates are leading underwriter of securities and participate in virtually all securities trading markets in India. any person or entity who is a citizen or resident of or located in any locality. corporate finance. Actual results may differ materially from those set forth in projections. This report is prepared on the basis of publicly available information. We also certify that no part of our compensation was. their directors and employees (“ICICI Securities and affiliates”) are under no obligation to update or keep the information current. persons reporting to analysts and their dependent family members from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. ICICI Securities and its affiliates might have managed or co-managed a public offering for the subject company in the preceding twelve months. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. not all customers may receive this report at the same time. investment banking or other advisory services in a merger or specific transaction. ICICI Securities generally prohibits its analysts. However.Telecom – Subscriber Watch. who must make their own investment decisions. is. country or other jurisdiction. This may not be taken in substitution for the exercise of independent judgement by any recipient. publication. without prior written consent of ICICI Securities. Also. its subsidiaries and associated companies. copied or distributed.