GSM net-adds get stronger on low entry price
GSM net-adds inch higher at record 9.3mn (ex-RCOM) v/s 8.5mn in Dec-08
GSM subscriber net-adds for Jan-09 has been the highest ever at 9.3mn (ex-RCOM) v/s 8.5mn in Dec-08 (8.1mn ex-RCOM) driven by sharp reduction in the entry cost of prepaid connections. The additions from RCOM's newly launched GSM pre-paid plan (which got overwhelming response according to the co. mgmt) is not reflecting in these numbers, including which the GSM additions could move over 10mn for Jan-09. Idea (2mn v/s 1.5) & Vodafone (2.4mn v/s 2.2) continue to drive the incremental net-adds. Although the subscriber additions have been ramping up, we believe that revenue contribution remains of prime importance considering the low entry cost schemes being launched by the operators especially by RCOM & Idea.
n Bharti Airtel reported flat additions of 2.73mn subscribers
n Idea (incl. Spice) added record 2mn subscribers v/s 1.5mn in Dec-08 led by healthy net-adds in Mumbai & Bihar Circles, which together have already crossed 1mn mark.
n Vodafone added a strong 2.4mn subscribers v/s 2.17mn in Dec-08 led by new circle launches. BSNL surprises with net-adds of 1.3mn v/s sub 1mn additions over the last 12 months.
Bharti Airtel's net-adds at 2.73mn during Jan-09 remained flat v/s Dec-08 and also continue to remain above our estimate of 2.5mn/ month for FY09E. We note and appreciate Bharti's strategy of focusing on revenue market share at the same time maintaining its subscriber market share.
Idea Cellular (incl. Spice) added record 2mn subscribers in Jan-09 v/s 1.5mn in Dec-08 backed by healthy net-adds in Mumbai & Bihar circles, which is driven by new low entry cost scheme. Subscribers in Mumbai & Bihar together have increased to 1.1mn in just 6 months of service launch. Spice also added healthy 0.15mn subs v/s 0.09mn in Dec-08.
RCOM has not reported the subscriber numbers yet. RCOM's net-additions for Jan-09 hold importance as it would give first impression of its newly launched pan GSM services with an attractive low entry prepaid scheme.
Others: Vodafone's net-adds have risen strongly over the last few months to 2.4mn in Jan-09 (v/s 2.17mn in dec-08) led by service launches in new circles. BSNL's net-adds of 1.3mn have surprised us considering its additions of ~0.6-0.9mn over the last six months.
We continue to believe that the reported subscriber numbers have little importance as the same is driven by lower entry price pre-paid schemes which although boost volumes but may not result in meaningful revenue contribution. We highlight that revenue and minutes market share would gain importance over the subscriber market share going forward.
Bharti Airtel remains our preferred pick in the sector.
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