Telecom

Earnings Watch for June Quarter 2008 of Telecom Operators

We have analysed the Q1 results of the listed telecom companies and our findings can be
regrouped as follows:
Sensex 15,168
 During Q1 FY 09, a total 25.65 million new subscribers were added. Telecom
major Bharti Airtel maintained its hegemony with 25.5% market share followed
by RCom and Vodafone with 18.1% and 17.5% market share respectively.

 Excellent growth in net sales was reported by Bharti and Idea of over 40% yoy
followed by Spice Telecom growing by 36% yoy despite steep tariff cuts that
took place in the quarter. However, RCom was the hardest hit with mere 10%
yoy growth.

 The best performer was Bharti that managed to grow its net profit by 45% yoy.
MTNL’s PBIDT tumbled but net grew by 15%. Idea registered robust growth in
both net sales and PBIDT but its net plunged by 12.7% yoy thanks to steep
increase cost of 66%.
Nifty 4,530
 The net sales of the listed companies as a whole grew by 28.2% but net profit
growth was flat.

 Due to increasing subscriber base Average Revenues Per Users (ARPUs)

continued to fall however it was held to some extent by the increase in Minutes
of Usage (MoUs).

 Losses due to exposure to Forex losses hit many a companies during the
quarter though some companies did not route it thru P/L Account. For instance,
the hardest hit was RCom with Rs 108.82 crore (excluding Rs 399.12 crore on
FCCBs) followed by Bharti Airtel 148 crore. Idea Cellular suffered Rs 15.2 crore
during the quarter.

Market Share as on June 30, 2008

Bharti Rcom Vodafone BSNL Idea Tata Tele MTNL Others

1%
6%
10% 26%
Deepak Tiwari 9%
Research Analyst
13%
deepakt@arthamoney.com 18%

T: + 91 22 4063 3111 17%

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Listed companies’ Share in Q1 FY09 Revenues

Bharti Airtel Idea Cellular MTNL Reliance Com Shyam Telecom Spice

0% 2%

24%

52%
8%

14%

Operating Profit Margins of Listed Companies during Q1 FY09

38%
40% 33% 33% 32%
35%
30%
25%
20% 15% 14%
15%
10% 2%
5%
0%
MTNL
Bharti Airtel

Reliance Com
Listed telecos

Shyam Telecom

Spice
Idea Cellular

Net Sales growth during Q1 FY09 (YoY %)

40.65 47.11
50 36.31
40 28.21
30 18.1
20 10.19
10 -6.08
0
-10
Reliance Com
MTNL
Listed telecos

Bharti Airtel

Shyam Telecom

Spice
Idea Cellular

PBIDT growth during Q1 FY09 (YoY %)

41.37
50
16.45
9.2
0.14 -13.49 -83.73 -26.32
0
MTNL
Bharti Airtel

Telecom
Reliance Com
Listed telecos

Spice
Idea Cellular

Shyam

-50

-100

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Net Profit growth during Q1 FY09 (YoY %)

100
44.86
50 -79.39
15.15 -58.51
-0.78 -12.67
0

Telecom
MTNL
Bharti Airtel

Reliance Com
Listed telecos

Idea Cellular

Shyam
-50

-100

Growth in Total Expenses during Q1 FY09 (YoY %)

120 105.04
100
80 66.16
60
34.22 31.42 34.25
40 18.68
20 -1.19
0
-20 Listed telecos Bharti Airtel Idea Cellular MTNL Reliance Com Shyam Spice
Telecom

Quarterly Performance: A snap shots of listed telecom Companies.

Standalone Q1 FY09 results Rs Crore YoY % Growth

30 day
returns Net Operating OPM Net Total
CMP (%) PE sales PBDIT profit PAT % Sales PBDIT PAT exp.
Listed
telecos 27.77 15121.12 5329.87 5040.77 2650.76 33 28.21 9.2 -0.78 34.22
Bharti 839.6 17.21 23.17 7893.01 3095.62 2977.84 2046.79 38 40.65 16.45 44.86 31.42
Idea 89.7 1.53 24.34 2173.18 760.19 721.59 235.54 33 47.11 41.37 -12.7 66.16
MTNL 107.2 23.01 12.8 1121.65 334.06 167.75 115.2 15 -6.08 0.14 15.15 -1.19
RCom 442.25 0.92 43.54 3557.97 1127.55 1126.46 347.38 32 10.19 -13.49 -58.5 34.25
Shyam
Tele 90.5 17.76 1457.05 56.45 3.17 0.95 -0.98 2 18.1 -83.73 -79.4 18.68

Spice 73.65 0.96 -30.67 318.86 9.28 46.18 -93.17 14 36.31 -26.32 --- 105.04
Source: Prowess, Artha Money Research NB: All figures have been taken on standalone basis. CMP as on August 5, 2008

ARPU is on declining trend across the sector

Telecos Bharti Airtel Idea Cellular MTNL RCom

Quarter ended Jun-08 Mar-08 Jun-08 Mar-08 Jun-08 Mar-08 Jun-08 Mar-08

Mobile ARPU (Rs.) 350 357 278 287 426 474 282 317

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