Riding on its strong data spectrum holding and data network coverage, country’s top telco Bharti Airtel has gained a ‘buy’ rating from ICICI Securities. The equity research firm has also placed a buy rating for Idea Cellular, but a sell for Reliance Communication (RCom).
“We continue to prefer Bharti Airtel as it is well positioned to capture higher incremental data revenue market share led by its. Moreover, Bharti Airtel would see better operating leverage as its data network is relatively under-utilised,” ICICI Securities said in its report on the telecom sector.
Talking about the top three operators’ performance in the second quarter of FY16, it maintained that Bharti Airtel led the pack with data revenue growth of 61% YoY compared to 47% and 60% YoY for Vodafone India and Idea, respectively.
Bharti Airtel’s data revenue market share among top three stood at 43.8%, up 123bps YoY followed by Idea’s at 25.2% in Q2FY16 . The company’s data network utilisation was also lowest among peers. Higher operating leverage benefit from improvement in 3G BTS utilisation for Bharti Airtel as it has only 392 3G subscribers per 3G cell site compared to 604 3G subscribers and 493 subscribers for Vodafone India and Idea, respectively, in Q2FY16.
In addition, Bharti Airtel has rolled out 4G cell sites, and expansion of 4G subscriber penetration for company should also drive utilisation. However, the research firm showed concerns both for Bharti Airtel and Idea over deceleration in data revenue growth, and management’s cautious commentary on voice RPM due to continued competitive intensity.
