X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Cellular: Net addition tapers - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Mar 20, 2003

    Cellular: Net addition tapers

    Despite uncertain policy environment the cellular segment continues to grow at a stellar rate. The advent of Wireless in Local Loop (WiLL) services has resulted in further fall in air time charges. This combined with the growing second hand market for mobile handsets has enabled cellular players to grow subscriber base at an average rate of 5% on a month-on-month basis since January 2001. The total cellular subscriber base crossed the 10 m mark in December 2002 and is all set to cross the 12 m mark by the end of March 2003.

    If one were to go a step further, net additions per month has started to show first signs of growth plateauing in recent months. The impact is apparent after December 2002 when Reliance launched its WiLL services. Reliance has targeted a subscriber base of 10 m in the first year of operation, which is a significant number by any yardstick. Though there are limitations i.e. both the caller and the receiver have to be Reliance's subscribers to take advantage of competitive rates, the overall package is attractive. While cellular player charge Rs 1.5 per SMS, Reliance offers the same service free of cost. Other players have also commenced WiLL services in a limited way. To combat WiLL service, mobile operators are expected to reduce air time charges further in the near future. It is a wait and watch situation at the current juncture.

    Bharti, with more than 3 m mobile subscribers as of February 2003, continues to dominate the cellular scene. Given its presence in 15 circles, the company has reaped maximum benefits from the sharp spurt in demand for mobile services till now. Bharti now commands a market share of 25%. The nearest competitor is Hutch (14%), which is predominantly focused in urban markets. BSNL, in less than one year of commencement of operations, has managed to cross the 1.5 m subscriber mark in February 2003 (13% market share). We expect BSNL's market share to stagnate at the current juncture till it augments its capacity. In the phase-I of BSNL's plan, the PSU major's planned capacity was 1.5 m lines. The subscriber base has already crossed this level in February 2003. In the second phase, it has plans to augment capacity to 2.5 m lines, which is expected to commence soon.

    The threat of competition from WiLL will continue to have a negative impact on cellular players. Already the airtime reduction in 3QFY03 resulted in blended revenues (average of pre-paid and post paid) falling by 6% to Rs 767 per month per user. Further reduction will add to the pressure on margins. That said, the elasticity of demand to a fall in tariff has been impressive in case of cellular segment. Just to put things in perspective, for Bharti in 3QFY03, average blended monthly minutes per user increased by 8%. The rise was more significant in case of post paid customers (24% in a single quarter). On one hand, cellular players are facing an uncertain regulatory environment and on the other, competition is increasing. Given this backdrop, the risk profile of telecom stocks is on the higher side and as a result, it is wise to exercise caution before taking investment decisions.

     

     

    Equitymaster requests your view! Post a comment on "Cellular: Net addition tapers". Click here!

      
     

    More Views on News

    Bharti Airtel: A Good Quarterly Performance (Quarterly Results Update - Detailed)

    May 6, 2016

    Bharti Airtel has reported a8.4% YoY growth in the topline and an increase of 2.8% YoY in the bottomline for the quarter ended March 2016.

    Bharti Infratel: Ends the Year Positively (Quarterly Results Update - Detailed)

    Apr 27, 2016

    Bharti Infratel has reported a 7.3% YoY growth in the topline and an increase of 18.7% YoY in the bottomline for the quarter ended March 2016.

    Bharti Infratel: A Good Quarter (Quarterly Results Update - Detailed)

    Apr 8, 2016

    Bharti Infratel has reported a 4.9% YoY growth in the topline and an increase of 11.5% YoY in the bottomline for the quarter ended December 2015.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE TECK


    Aug 17, 2017 (Close)

    S&P BSE TECK 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS