Indian Telecom

The disappointment is widespread
Revenues of Bharti ,RCOM and Idea were below expectations by varying degrees. Bharti and beat the EBIDTA margin estimates on consolidates basis(not for wireless).Idea suffered the pains of fast network expansion of the new and old circles and disappointed on margins too.
All companies' toplines were estimates; lower tax rate and non operating items helped Bharti and RCOM beat the net profit estimates.

Bharti
2Q08 revenue grew 7.3% to Rs 63,374 mn (below 1.9% estimates)
EBIDTA margin : 42.8 %

RCOM
2Q08 revenue grew 6.4% to Rs 45,785 mn (below 6.0% estimates)
EBIDTA margin : 42.8 %
RCOM sold 5% stake in tower subsidiary

Idea
2Q08 revenue grew 5.7% to Rs 15,622 mn (below 6.5% estimates)
EBIDTA margin : 32.7 %
Higher network expenses and higher than expected tax charge

Reduction in Minutes of Usage(MoU) and lower than expected usage has resulted in lower than expected ARPU and belief that Indian telecom sector is not infallible. Penetration to rural areas will put more pressure on ARPU.

Universal decline in MoU:
Bharti : 1.7%
RCOM: 4.0%
Idea: 5.5%
This clearly indicates that existing customers are not increasing the usage fast enough to compensate for lower-usage incremental customers.

QoQ revenue growth reduction due to falling ARPU although subscriber growth remains strong.

EBIDTA margins
Bharti & RCOM show growth of EBITDA marginsdue to economies of scalewhere as that of Idea falls due to network expantion.

Non Voice revenue
Ratio=(Non Voice Revenue)/(Mobile Revenue) is lowest in India and is declining further.
Bharti says that due to low voice tarrifs in India,non voice will take time to take off.

Estimates:
It is estimated that 354mn subscribers by FY3/09 and 452mn by FY3/10
Bharti,being an incumbent, should gain market share in near term.On the other hand,with the possibility of the GSM network, RCOM could face a slight decline. ARPU estimates go down faster than expected:
2-3% increase in Bharti
2-3% decrease in RCOM