The announcement of the Q2FY2006-08 results by two of India’s most integrated telecom companies, Bharti Airtel Ltd[http://www.bhartiairtel.in] and Reliance Communications Ltd[http://www.reliancecommmunications.co.in] this week is an ample proof of the explosive growth that the sector is witnessing.Going forward this would only get more and more exciting.Both these stocks have contributed significantly to the recent run up of the Sensex.
Major Indian Telecom Service Providers include Bharti Airtel Ltd, Reliance Communications Ltd, Hutchison Essar, Idea, Tata Teleservices, BSNL and MTNL. Of these,Bharti is the market leader with a market share of 21.4 %,while Reliance Communications is catching up Bharti with a 20.5 % market share. Going forward,the competition is going to gather more steam,if not anything else, since Reliance Communications is planning a pan India GSM footprint. Other players like Idea are also playing catch up.
Sample this:
As on August 2006,net wireless subscriber base stood at 160 million, showing a CAGR of 38% since 2002.Revenues stood at USD 21.6 billion, showing a CAGR of 21 % since 2002.The number of fixed line[wireline,not the FWPs] subscribers has shown a marginal decline,indicating the acceptance of Wireless Communication among the masses.
Teledensity is at 14.8,a figure that has doubled in the last 3 years.
Bharti Airtel Ltd and Reliance Communications Ltd signed up 41.1 lakh and 35 lakh customers respectively this quarter ,the highest ever subscriber additions on a QoQ basis as on date.To top it,the net subscriber additions this quarter is more than that of China,which is a good signal.
The reasons for such an explosive growth can be attributed to the regulatory authority[migration to the CPP regime,Introduction of Unified Access License etc],declining call charges,availability of handsets at affordable prices,among others.The low ARPU is a cause of major concern.
Going forward Bharti Airtel Ltd,Reliance Communications Ltd,Tata Teleservices Ltd will be the main growth drivers across the whole Information & Communications value chain,due to their end-to-end presence in the ILD,NLD and Access Segments.These companies have been targeting corporates more aggressively through their IPLC and VPN offerings,while there is a growing emphasis on Internet and Broadband-both retail and corporate segments.
Reliance Communications and Tata Teleservices have acquired significant scale in the International Long Distance [ILD] Business through international acquisitions in the recent past.
-Acquisition of Flag Telecom Group [http://www.flagtelecom.com] by Reliance Communications-connecting 28 countries.Flag’s FALCON cable system,has 14 landing stations,providing international connectivity to 12 countries.FALCON is the world’s largest private submarine cable system till date.Flag Telecom Group owns the largest undersea cable system network in the world spanning 65,000 route kms
-Acquisition of Tyco and Teleglobe[now VSNL International],thus making VSNL the fifth largest carrier of voice globally.[http://www.vsnlinternational.com/]
These acquisitions give Reliance Communications and Tata Teleservices an unmatched foothold in the International Long Distance Business.
Going forward,new policies like Number Portability,friendly policies for manufacturing of Telecom Hardware,a comprehensive policy on 3G,will result in accelerated growth.
On the whole,integrated operators are well positioned to deliver accelerated profitability and create unmatched value for all their shareholders.
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