Indian Telecom - 3Q Industry Revenue up 4% - Motilal Oswal

INDIAN TELECOM: 3QFY11 industry revenue up 4% QoQ; Strong performance by Idea; Bharti stable; RCom share < 9%

While 4% QoQ growth for the industry was broadly in line, market share trends reconfirm stable/improving performance for GSM incumbents.

Adjusted gross revenue (gross revenue less interconnect charges) increased 4% QoQ and 13%YoY to ~Rs221b.

While RCom recorded its lowest AGR share of 8.8% (vs 10% in 2QFY11) Vodafone, Idea and Tata Tele recorded their highest AGR market share.

Bharti, Vodafone Essar and Idea together account for >65% pan-India revenue market share; potential consolidation could drive further consolidation in the industry.

Potential inflection in RPM could be a structural positive for the sector though regulatory uncertainty persists.

Valuations at 4.7-5.7x FY13 EV/ proportionate EBITDA remain attractive. Maintain Buy on Bharti and Idea.

Source : Equity Bulls

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