News From Telecom World

Indian telcos reported strong growth in Q3

Posted on: January 22, 2009

Top Indian telecom service providers are likely to report robust revenue growth in the third quarter ended Dec. 31, bolstered by strong subscriber additions.

Yet, lower usage by subscribers due to the economic downturn and falling average revenue per user, or ARPU, and call rates are likely to take some sheen off the sector’s growth.

Analysts say with increasing competition leading to a continued fall in tariffs, minutes of usage will become a key parameter to assess a company’s health rather than ARPU.

COMPANIES TO WATCH:

Bharti Airtel Ltd. – reporting 22 Jan
Market Expectations: India’s largest mobile phone company by number of users is likely to report a net profit of INR21.66 billion, up 26% from INR17.22 billion a year earlier, on revenue of INR96.16 billion, up 38% from INR69.46 billion, according to the average of estimates of 16 analysts polled by Dow Jones Newswires.

In the second quarter ended Sept. 30, it reported net profit of INR20.46 billion and revenue of INR90.20 billion.

Key Issues:
ARPU is likely to fall to INR321, from INR331 in the previous quarter, brokerage Prabudas Lilladher said.

The earnings before interest, tax, depreciation and amortization margin is likely to expand by 50 basis points, helped by lower expenditure, despite advertising and subsidy costs on the newly launched direct-to-home business.

Reliance Communications Ltd.
– reporting 23 Jan
Market Expectations: India’s second-largest mobile phone service provider by subscribers is likely to post a net profit of INR13.96 billion, up 1.7% from INR13.73 billion a year earlier, according to the average of estimates of 16 analysts polled by Dow Jones Newswires. Revenue is likely to rise 22% to INR59.56 billion from INR48.74 billion.

The Anil Dhirubai Ambani Group company posted net profit of INR15.31 billion on revenue of INR56.35 billion in the previous quarter.

Key Issues: Brokerage Motilal Oswal expects profit to fall sequentially due to interest costs of INR1.65 billion, compared with a marginal interest income in the second quarter.

The ebitda margin is expected to contract by 290 basis points from a year earlier, and 40 basis points sequentially, dragged by the launch of mobile services under the global system for mobile communications technology, says brokerage Motilal Oswal.

The brokerage expects the company’s ARPU to drop about 3% to INR263 from the second quarter.

Idea Cellular Ltd. – reporting 22 Jan
Market Expectations: The average of estimates of 14 analysts polled by Dow Jones Newswires is for net profit to fall 23% to INR1.82 billion from INR2.37 billion a year earlier. Revenue is likely to rise 52% to INR25.98 billion from INR17.10 billion a year earlier.

The company reported net profit of INR1.44 billion and revenue of INR23.04 billion in the previous quarter.

Key Issues: The October-December period will be the first quarter when Idea will consolidate Spice Communications Ltd.’s numbers with itself, leading to a sharp rise in revenue.

In June last year, Idea said it will buy a 40.8% stake in smaller rival Spice for about INR21.76 billion and then merge Spice with itself via a share swap.

Losses in the recently launched Mumbai and Bihar circles will hurt the company’s profitability, a Bank of America Merrill Lynch note said.

The company’s aggressive rollouts will weigh on the operating margin, with Motilal Oswal forecasting a margin decline of 730 basis points from a year earlier, and 30 basis points from the previous quarter to 25.9%. It expects ARPU to fall 2% sequentially.

Source: Total Telecom

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