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Bharti vs. RCOM: Which one is better? - Views on News from Equitymaster
 
 
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  • Dec 21, 2010

    Bharti vs. RCOM: Which one is better?

    One company is the largest mobile operator in the country. It has the largest market share in terms of subscribers as well as revenues. This company is Bharti Airtel. The other has given a serious competition to the incumbent. It has emerged as one of the top five operators in almost half the time that it took the market leader. This company is Reliance Communications (RCOM).

    So which one of these should one invest in? The market leader? Or the latter that has emerged as the serious competitor?

    In the next few articles, we will try to highlight the differences between these two companies on different parameters. Our intention is to provide information to the reader so that he can decide for himself as to which company is better to invest in.

    In this article we will start with evaluating the two companies on the basis of their subscriber and revenue market shares.

    Bharti Airtel is undoubtedly the largest telecom operator in the country. Therefore, one might ask - "Is it correct to compare the market shares of the two companies? Won't this just reflect Bharti as the leader?"

    Well, yes and no. What we will do is to see the trend in the market shares of the two companies. That is, how have they gained or lost shares over a period of time.

    We first start with the subscriber market share.

    Source: COAI, AUSPI

    While clearly Bharti is the market leader in terms of subscriber market share, however, over a period of time its share of subscribers has been declining. On the other hand, the subscriber market share of RCOM has been on an upward trend.

    Let us now take a look at the revenue market shares of the two companies.

    Source: COAI, AUSPI

    Again, Bharti emerges as a clear winner in terms of revenue market share. However, again its total share has been declining in recent times. On the other hand, the revenue market share for RCOM has been rising. But if we compare both the graphs we see that while RCOM has been closing the gap in the area of subscriber market share, in terms of the revenue market share the gap still remains very wide. This clearly indicates that while an aggressive approach has definitely helped RCOM in garnering subscribers, it has not been equally successful in translating these subscribers into meaningful revenue generators for the company.

    Bharti vs. RCOM Series - Next | All Articles

     

     

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    20 Responses to "Bharti vs. RCOM: Which one is better?"

    Jasdic

    Jan 3, 2011

    RCOM has Flag Telecom in its portfolio. It was planned that using underground optic fibres RCOM will be able to simultaneously release movies from its media company to all homes across the world. Where is this business now ?

    Like 

    Narayanaswamy

    Jan 2, 2011

    RCOM is poorly run company and the products are of poorer quality across the country. I was among the first one to use their services and also tried it again after a few years to see if they have improved. The quality has only worsened. It would be the same for millions of customers but typical of any Reliance company, strategy the marketing plan is driven from the govt corridors and their attrative marketing campaigns lure customers. I am sure in the longer run Bharti would go beyond RCOM by miles

    Like 

    VMS

    Dec 30, 2010

    Undoubtedly Bharti(ya) is the BEST.

    Like 

    vimal

    Dec 29, 2010

    I think Fix deposit in Bank is better than bharati and rcom.

    Like 

    manish

    Dec 28, 2010

    Rcom is a company involved in scams after scams

    Like 

    saby

    Dec 28, 2010

    Rcom is a company involved in scams after scams and has duped its investors just like all other ADAG group of companies. so keep away from it.

    Like 

    kalyan mukherjee

    Dec 24, 2010

    I feel that most investors get their emotions involved while making investment decisions. I really don't care which is better or worse. The only thing I worry about is what will make more money for me. On that account I strongly feel that Bharti is fully priced. Where as RCOM still has left a lot of money on the table for the taking. I would strongly urge everyone to buy RCOM and then sell after a 20-30% gain. This is how you make money, not by wondering which is better company.

    Like 

    Harshal

    Dec 24, 2010

    Rcom is a horrible company but if this article is on investment..at 125Rcom is a jackpot..pan india GSM and CDMA license, 3G license, broadband license thousands of towers...man its a sure jackpot in making...

    Like 

    mangudi m s

    Dec 23, 2010

    i personally feel that bharti coud be clear leader of business prospective because they are not only telecom also retail business and many more in pipeline

    Like 

    Mr Telecom

    Dec 23, 2010

    RCOM is a terribly run company compared to Bharti. Mr Ambani has his hands in too many different businesses and he has a very low quality management team. I recall around July 2009, one person from their management team openly came on CNBC and announced that no need to worry (though the stock was close to an all-time low) that in 90 days they expect the increase in subscribers to cover up damage done by their severe price cuts. This was complete garbage as you can see their profits wither even 18 months later. Where is that person now? Why did he lie to his investors? What kind of garbage corporate governance is this? Add to that the scam after scam after scam that these people are involved in. Why can't they do clean business? Companies like thi give India a bad name. It's no surprise that Rcom's stock is at an ALL TIME LOW, I repeat, ALL TIME LOW (not 52-week low but the lowest this garbage stock has ever been in the lifetime of its operations and the entire 5-10 year bull market of India), when the market is testing new highs.

    That said, once the telecom sector picks up (next few months), because of the amount that Rcom has corrected, and its highly volatile nature, it will badly outperform Bharti, probably 2x or more. That doesn't mean it's a better run company or a better investment. Just that it's been beaten down way too much and will have to catch up to some degree if market equivalence theories have any meaning.

    I still cannot believe how a stock with an 800 rupee high is trading at 120 today, when the market is close to its high. Poor job, Rcom. You've lost a lot of trust of investors. Even if your company were to pick up now, once you've lost trust, it's not easy to earn it back.

    Like 
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    More Views on News

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    May 6, 2016

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    Feb 4, 2016

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    Nov 23, 2015

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