Tag Archives: Telecom

Weekly Portfolio Review: 19 December 2010

It is interesting to read the news reports to see the reason for up or down of share market every day – sometimes it is quite funny or weird! The last Monday Sensex closed up 183 points ‘taking support from positive Europe markets’, on Tuesday another 107 points high ‘amid hopes that dip in inflation rate will lead the Reserve Bank to halt the tightening of key policy rates for now’. However the Sensex was down by 151 points on Wednesday ‘reacting to profit booking in global peers. Rate sensitive sectors like realty and banks were under pressure ahead of Reserve Bank of India’s credit policy meet’ and then it closed higher by 217 points on Thursday, ‘after the RBI kept short term lending and borrowing rates unchanged’. Net effect is that the Sensex ended 356 points high at 19,865 and Nifty 91 points at 5,949 for the week.

In fact, one day it was up with the hope that RBI would halt the tightening of rate, next day it was down under pressure ahead of RBI’s meet and following day it went up as RBI kept rate unchanged!

The major news for the market last week was the official announcement of parting of Honda from the join venture, Hero Honda. It has been in the news for quite sometimes now and the uncertainty has ended with this formal announcement. But the ‘analysts’ are still divided on the outcome and long term effect on the company after Honda leaving the JV.

Good buys in my watch list

Script Sector 3 Years Target Current Price Expected Margin
KSB Pumps Engineering 1,072.00 501.15 114%
Graphite India Engineering 200.00 97.80 104%
Tata Sponge Iron Metal 700.00 352.95 98%
Mazda Engineering 207.00 111.80 85%
Tractors India Ltd Construction 1,150.00 631.30 82%
Divis Laboratories Pharma 1,095.00 602.10 82%
Zensar Tech IT 289.00 160.00 81%
Swaraj Engines Auto Ancil 850.00 481.45 77%
Tech Mahindra IT 1,074.00 669.45 60%
Opto Circuits Healthcare 450.00 280.95 60%
BHEL Engineering 3,567.00 2,304.70 55%
HUL FMCG 446.00 294.40 51%

I will be buying KSB Pumps and Tata Sponge Iron in coming week. Graphite India is within my top 5 holding, so not buying now.

News Update

Indian GSM telecom operators added a whopping 17.45 million new subscribers in November, taking the all-India GSM cellular subscriber base to 526.18 million, cellular operators’ association COAI said on Friday. Bharti Airtel, the largest GSM player, added 3.10 million new users in November, taking its total subscriber base to 149.39 million. It had 28.39 per cent market share as of the end of November, 2010, it added. – Indian Express, Dec 16, 2010

Bharti Airtel Ltd. plans to expand its mobile network coverage in Madagascar by about 25 percent in 2011 to attract customers in rural areas. The expansion will offer services to a further 5 million to 6 million people. The company plans to invest $50 million over 18 months and wants to increase customers to 3.2 million in Madagascar within a year from 2 million now. – Bloomberg, Dec 14, 2010

The Hero Group on Thursday announced that it would buyout the entire 26 per cent stake of its partner Honda Motor Company Group in Hero Honda thus breaking its 26-year-old partnership. Hero Honda will continue to produce and sell the existing models, while new models would be also launched. However, all future products will be rolled out under the new licensing agreement between Hero Group and Honda. Hero Honda brand name will also be changed over time. The new licensing arrangement signed between the Hero Group and Honda Motor Co., Japan, would also enable higher growth by giving it (Hero Group) the freedom to develop its own research and development capabilities and exploit global export and manufacturing opportunities.  The two-wheeler major will also start exporting products across the globe and look for manufacturing opportunities.  – The Hindu, Dec 16, 2010

State-run power producer NTPC may approach the government next fiscal for permission to raise funds through a follow-on public offer to part-finance power equipment purchases worth an estimated Rs 1,50,000 crore.  – The Economic Times, Dec 17, 2010

NTPC, the state-run power producer, signed a power purchase agreement (PPA) with the West Bengal government yesterday for a thermal unit it will be setting up at Katwa (Bardhaman district). “The total investment for the 2×800 Mw Katwa project will be Rs 9,600 crore, roughly around Rs 6 crore per Mw. Discussions are also going on for a greenfield (new) project at Santaldih (Purulia district),” – Business Standard, Dec 14, 2010

Public sector undertaking National Thermal Power Corporation Limited (NTPC) today signed a power purchase agreement with Punjab State Power Corporation Ltd (PSPCL) for a 2,640-Mw coal-based thermal power project at Gidderbaha, being undertaken at a cost of Rs 15,000 crore. – Business Standard, Dec 13, 2010

Gujarat plans to treble its cement production capacity in 3-5 years. Proposals have been invited from cement companies like ACC , ABG, Ambuja Cement, Emami , Indiabulls, Adani group, Ultratech and L&T and the state hopes to raise its capacity from 20 million tonnes per annum to 70 million tonne. – The Economic times, Dec 17, 2010

Interesting Read

Record car sales mark 2010 for Indian auto sector

Record sales made 2010 a special year for automakers in India, which also saw the iconic Maruti 800 take a bow from big cities, Hero split with Honda and demand for the promising Nano sputter following a string of accidents. For a country whose economy has been expanding at near 9% rate, it was not surprising that automobile sales broke all records between July and October to average a growth of 30%. Such was the appeal of the country and the appetite of the Indian motorist that Bugatti launched its Veyron 16.4 Grand Sport, which at Rs 16 crore became the costliest car in India, while other niche marques Aston Martin and Spyker Cars said they too would drive in soon. http://www.hindustantimes.com/Record-car-sales-mark-2010-for-Indian-auto-sector/Article1-640211.aspx

Car Trouble In India

India’s automobile industry has raced from a crippling slowdown to scorching growth in less than two years. But a severe shortage of parts is applying the brake in this otherwise rosy journey. http://www.forbes.com/2010/12/15/forbes-india-auto-industry-faces-ugly-turn.html

FMCG cos fastracked expansion in 2010

A total of 13 acquisitions in 2010, mostly global, that is how Indian companies announced their arrival in the global FMCG space as they looked to fastrack their way to international expansion. Led by Godrej, which had seven acquisitions on its account, domestic firms, including Marico (2 buyouts) and Dabur (2 acquisitions) and Emami (1 buyout) went on a global buying-spree during the year. The total valuations of the acquisitions could not be ascertained as the firms decided to keep it under wraps except in one or two cases.  http://www.indianexpress.com/news/domestic-fmcg-cos-fastracked-expansion-via-buyouts/726409/

Food in the fast lane

Although the market for ready-to-eat (RTE) and ready-to-cook (RTC) foods is still nascent, the fact that there is heightened activity from brands in both these segments points to the opportunities they see in them. While there is a lot more in Indian cuisine in RTE, RTC foods are more about non-traditional foods such as soups, noodles and pasta; vermicelli is also popular. For instance, Maggi is seeing some serious competition from big and small, national, regional and retail brands now. http://www.hindustantimes.com/Food-in-the-fast-lane/Article1-637647.aspx

HUL: from survival to revival

A year ago, India’s largest consumer firm by revenue seemed to be floundering. Here’s how the company achieved a turnaround. http://www.livemint.com/2010/12/13220503/HUL-from-survival-to-revival.html

Telcos unlikely to start tariff war in 3G

Consumers awaiting high-speed third-generation (3G) services should be ready to shell out a premium for data as telecom players gear up to rollout their services over the next few months. Industry experts say the price war fought during the 2G days will not hold true for the 3G services considering the hefty prices that operators have paid for acquiring licences. http://timesofindia.indiatimes.com/business/india-business/Telcos-unlikely-to-start-tariff-war-in-3G-/articleshow/7097008.cms

All that’s cheap is not good

Avoid buying stocks based on cost alone. Highly priced stocks may be expensive but provide better returns. Whenever we buy a product or service, we look at its cost. Cheaper products seem more affordable and hence attractive to buy. The same applies to stocks. Low-priced ones attract more buying interest. However, do they give good returns? One must know how to compare stocks, the pricing and how to find value for money. http://www.business-standard.com/india/news/all-that%5Cs-cheap-is-not-good/417884/

My Portfolio

Return

My Portfolio BSE Sensex NSE Nifty
This Week 1.46% 1.82% 1.56%
This month -0.21% 1.75% 1.46%
This Year 8.80% 13.74% 14.38%
Since 1-1-2009 122.78% 105.92% 101.04%
Since 1-1-2008 49.74% -1.69% -2.15%
Since 1-4-2007 86.03% 51.96% 55.66%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 8 3 Years 97
Graphite India Telecom 5 2 Months 1
HUL FMCG 5 5 Months 12
Mangalam Cements Cements 5 3 Months -17
Swaraj Engines Auto Ancillory 5 2 Months 3

Shares I bought this month

Company Average Cost
Tata Sponge Iron 368.41
Graphite India 95.62
BHEL 2,339.58
HUL 302.01
Tractors India Ltd 690.22
Swaraj Engines 491.85

Shares I sold this month

Company Average Price

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 219 2.6 Years
Dabur India 153 4.6 Years
Tata Global Beverages 115 2.0 Years
Berger Paints 159 3.8 Years
Infosys 97 3.0 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
KSB Pumps -11 3 months
Honeywell Automation -14 1 month
Tata Communication -25 11 months
Mangalam Cement -17 2 months
Divi’s Laboratories -15 1 month

Archive of previous portfolio reviews

Bharti Airtel, A good long term pick

Bharti Airtel and Tata Communications are two companies from the telecommunication sector in my watch list. Both are a good buys at the current market price with a long term perspective. Bharti Airtel current market price on 28th April is 293.80 and Tata Communication is available at 271.50. Since the market has been treating telecom sector stocks very badly for some time, its market valuation has become attractive. The current market treatment is mainly due to intense competition in the Telecom market which has resulted in aggressive price war and dented the profitability. But it is considered as a short term phenomena.

The immediate future of Bharti Airtel continues to remain pretty cloudy. Long term investments with 5-7 years horizon until when the positive effects of consolidation in the sector could be more pronounced in nature. The company is also well-placed to benefit from the 3G revolution. Post Africa’s Zain acquisition, the company is in a better position to diversify its revenue source and allay the fears of saturation in the Indian markets. Bharti Airtel’s acquisition of 15 of Zain’s African mobile networks will make it one of the five largest mobile groups in the world by subscriber connections, according to the latest Wireless Intelligence operator-group rankings.

2009-10 Result

Consolidated sales grow by 12% during FY10, 5% during 4QFY10 compared to same period last year. Growth for the full year was led by a 38% rise in revenues from the passive infrastructure segment. Revenues from the mobile services segment stands at 63% of sales and has increased by 7% from last year. Mobile subscriber base grows by 36% during the year. Total count of subscribers stood at around 128 m at the end of March 2010.  Operating margins decline by 0.5% during the year owing to higher network operating costs (as percentage of sales). Net profit drops by 1% during 4QFY10 as compared to same period last year, grows by 17% during the full financial year 2009-10. While higher interest income aids profit growth, the higher tax expenses curbs growth during the year. Exceptional items during the year and quarter relate to acquisition related costs such as advisory and professional fees directly attributable to the acquisitions in Bangladesh and Africa. It recommended a dividend of Re 1 per share.

Subscribers

One can reasonably expect a lot of potential growth in subscriber numbers that is still remaining in the India’s telecom industry. India added a record 20 million new mobile subscribers in March 2010. India had 584.32 million subscribers at the end of March, which indicates that 49.6 percent of Indians have mobile connections, according to TRAI. India’s largest operator, Bharti Airtel had a 21.84 percent share of the market at the end of March 2010, followed by Reliance Communications with 17.53 percent share, and Vodafone Essar with a 17.26 percent share, TRAI said.

Mobile phone operator Vodafone Essar has added 3.6 million new users in March to pip number one player Bharti Airtel in mobile subscriber additions.  Bharti Airtel and Reliance added 3 million subscribers each.

Competition and Price war

Indian mobile operators have dropped voice call rates to below 0.01 Indian rupees per second in a bid to gain market share, even as new entrants are rolling out services. These gains have come at the expense of lower average revenue per user and fewer calling minutes used by subscribers. Last year, the offer of a pay-per-second plan by a new operator triggered off a price war, leading to charges of predatory pricing by some telecom operators. In Q4 2009, new telecom operators such as MTS and Uninor extended the price wars with 30 paise per minute plans which led to many cases of multiple number ownerships and churn rates. Revenue per minute (a key measurable in the telecom industry) is expected to fall by five to six per cent.

3G Spectrum

All eyes are now on the 3G auctions in which the operators are expected to participate aggressively. Failing to win 3G spectrum in metros and Circle ‘A’ areas could place them at a disadvantage vis-à-vis competition. They would, therefore, be prepared to incur higher cash outflows.

Zain Deal

The last quarter gone by also saw Bharti Airtel entering into an agreement with the Zain Group to acquire Zain Africa assets for $10.7 billion. “In the short term, Zain Telecom’s financials may have some negative overhang on Bharti’s consolidated results but on a long term basis the same would prove to be earnings accretive. The key points to be monitored are market share gains in key geographies like Nigeria, the operational turnaround of Zain Telecom’s African operations and the acceptability and success of Bharti`s model in Africa,” Sharekhan Securities said in a recent report.

Airtel is to takeover Zain’s mobile operations in 15 African countries which cover a total population of over 450 million with telecom penetration at approximately 32 percent. As well as its home market of India, Airtel also launched in Sri Lanka in 2009 and acquired Warid Telecom in Bangladesh in January 2010, bringing its total to 18 markets, a global footprint surpassed only by the large European operator groups and its new African rival, MTN. Based on Q4 2009 pro forma data, international (non-Indian) markets will account for around 30 percent of Airtel’s total connections following completion of the Zain deal.

For an enlarged Airtel Group, the challenge is obtaining approvals. Given Airtel’s domestic market is in the midst of a next-generation rollout and calls for consolidation, managing existing operations whilst steering a pan-African purchase seems a daunting challenge. Airtel already has the experience of managing one of the fastest growing markets in the world. A major opportunity for Airtel would be to transplant their Indian pricing model into some of the low-usage markets Zain occupies to drive usage quickly and garner market share. Hard work lies ahead for the Indian company to turn Zain’s loss making operations into a profitable business venture.

New Services

Airtel digital TV Recorder

Recently, Airtel digital TV- the DTH service from Bharti Airtel launched ‘Airtel digital TV Recorder’, an enhanced Set Top Box (STB) with capability to record live television, anytime, anywhere. A first of its kind example of convergence between the mobile and TV screen, Airtel offers customers the convenience, to record their favorite shows using their mobile phones from anywhere in the world.

Airtel has also introduced the first universal remote in India, 9 interactive (iTV) applications, a multilingual EPG, low battery indicator and more that offer customers the freedom to book movie ticket or update themselves on the latest stock news.

3G enabled smart phones

Taiwan-based handset maker HTC entered into an exclusive partnership with cellullar operator Bharti Airtel to launch a 3G-enabled smartphone priced at Rs 9,990. As per the alliance, the touchscreen phone will be available in the country exclusively on Airtel networks.  With the operators gearing up to launch the 3G service by the end of this year, the handset makers are coming up with 3G-enabled handsets. Besides, service providers like Airtel and Vodafone had already launched the 3G version of Apple’s iPhone in India.

Airtel Talkies, World Sim and Khel Radio

Airtel Talkies a new service that offers previews and trailers of movies which are yet to come. It also offers all time classic movies in five languages – Hindi, Tamil, Telugu, Kannada and Malayalam.

Bharti Airtel launched this month a new SIM card for global travellers through which a customer can save upto 85% on international calls. Bharti Airtel and Radio Mirchi announced a new tie-up to offer mobile radio service, ‘Mirchi Mobile’ allowing Airtel’s mobile subscribers to listen to Radio Mirchi’s FM radio services of any region. It also launched a new value added service, ‘Khel Radio’ for the subscribers of UP East, UP  West, Bihar, Mumbai,Maharashtra, and Goa. Now the Airtel subscribers can enjoy bollywood quizzes, antakshari, pehchaaan kaun and exciting games with exotic prizes everyday. Airtel prepaid and postpaid customers can access this portal by calling 56655 at a charge of Rs 1/min.

Network expansion and upgrade

The recent $1.3 billion contract with Ericsson to supply its industry-leading portfolio of energy efficient 2G/2.5G radio base stations, circuit and packet core, microwave transmission and Intelligent Network will improve voice quality and faster data access to its customers. Bharti Airtel can now look forward to reduce time to market and enable the fast rollout of 3G services as its core and transport network will be 3G-ready. The expansion, according to the agreement, will cover some of the latest technologies within the wireless world. According to Ericsson, this will bring better quality voice to end users, support more users in using one base station, enhanced data rates using Evolved EDGE technology and other new services.

Reference:

India Adds Record 20 Million Mobile Subscribers in March

April 27, 2010

http://www.pcworld.com/businesscenter/article/195025/india_adds_record_20_million_mobile_subscribers_in_march.html

Airtel launches World SIM

April 26, 2010

http://infotech.indiatimes.com/news/telecom/Airtel_launches_World_SIM/articleshow/5859922.cms

Bharti Airtel follows OnMobile in launching geographical barrier-free mobile radio services

April 26, 2010

http://www.telecomtiger.com/fullstory.aspx?storyid=8984&section=S126

Bharti Airtel launches ‘Khel Radio’ exclusive Bollywood portal

April 22, 2010

http://www.cellbharat.com/blog/7075/bharti-airtel-launches-khel-radio-exclusive-bollywood-portal/

Mobile tariffs likely to go down further

Apr 21, 2010

http://timesofindia.indiatimes.com/biz/india-business/Mobile-tariffs-likely-to-go-down-further/articleshow/5838005.cms

Top 5 Stocks to Invest in Indian Markets

April 19, 2010

http://trak.in/tags/business/2010/04/19/top-5-stocks-indian-markets/

Bharti Airtel to become global mobile superplayer: WI

Apr 15, 2010

http://www.indiainfoline.com/Markets/News/New-Wireless-Intelligence-operator-ranking-sees-Indian-market-leader-enter-top-five/4816163891

Record TV Shows Using Your Mobile Phone With Airtel

Apr 15, 2010

http://tech2.in.com/india/news/general/record-tv-shows-using-your-mobile-phone-with-airtel/119312/0

Bharti, RCom, Idea Cellular may post lower Q4 profits

April 12, 2010

http://www.thehindubusinessline.com/2010/04/13/stories/2010041352150400.htm

Bharti Airtel Selects Ericsson for Network Expansion

April 06, 2010

http://voice-quality.tmcnet.com/topics/voice-quality/articles/80907-bharti-airtel-selects-ericsson-network-expansion.htm

Airtel Talkies brings movie content on mobiles pre-release

April 05, 2010

http://economictimes.indiatimes.com/news/news-by-industry/media/entertainment-/entertainment/Airtel-Talkies-brings-movie-content-on-mobiles-pre-release/articleshow/5763054.cms

HTC in tie-up with Airtel for 3G smart phone handset

April 03, 2010

http://indiatoday.intoday.in/site/Story/91154/Business/HTC+in+tie-up+with+Airtel+for+3G+smartphone+handset.html


Consolidation bells to ring in telecom sector

Times of India
MUMBAI: The world’s fastest growing telecom market is all set to witness big-ticket investments and consolidation post the Bharti Airtel’s purchase of Zain’s African assets. Weaker firms are bound to scramble and seek out stronger partners in a bid to take cover from intense competition for market share. Consolidation would soon be the name of the game.

http://timesofindia.indiatimes.com/articleshow/5720433.cms

Bharti Airtel

3 November 2009

Bharti Airtel, is Asia’s leading integrated telecom services provider with operations in India and Sri Lanka. Bharti Airtel has been at the forefront of the telecom revolution and has transformed the sector with its world-class services built on leading edge technologies. Bharti Airtel is the largest mobile telephony operator in the GSM space in India. Apart from being the largest player in the mobile segment with subscribers in all the 23-telecom circles of the country, Bharti Airtel also provides varied services like fixed line, broadband and retail Internet access.

The structure of Bharti Airtel is divided into three business units: Mobile Services, Airtel Telemedia Services and Enterprise Services. It has recently launched a new service called Direct-to-Home (DTH) service by the name of Airtel Digital TV. Recently much advancement happened in Bharti Airtel like Apple iPhone 3G came in India via Airtel and Airtel Digital Service launched during the second half of 2008.

Bharti Airtel is a professionally managed company with a dynamic, innovative and focused management. Mobile communication segment has bright growth opportunity in India. Bharti Airtel is the market leader in India.

The company posted sales of 373 billion for the year ended March 2009. During the period FY05 to FY09, the company grew its sales and profits at compounded annual rates of 46% and 59% respectively.  The operating profit margins during the said period have never dipped below 33%. The NPM have shown a steady increase from 15.24% in Mar05 to 22.67% in Mar09. The reported return on net worth has always been over 27%, touching the high of 35.23% in Mar07. This just goes to show what fantastic value Airtel has created for its stakeholders. The company has been steadily reducing its debt levels for the last 5 yrs.

The company has recommended its maiden dividend of Rs 2 per share (dividend payout of 5%). Keeping in mind that it has crossed its peak capex requirements (for spreading its presence across India), the company expects to generate free cash flows and subsequently reward its investors in return.

The future of the telecommunications industry in India continues to look promising. India has the worlds second largest population and that means there will be a growing need for telecommunications services. With an estimated middle class of 500 million within a decade, India’s consumer demand will provide the telecommunications industry with plenty of room to grow. As is common in most countries, the telecommunications indystry in India is controlled by a few powerful players who dominate the market. Bharti Airtel is the largets of these companies, with 24.7% of the market as of the forth quarter of 2009. Its next largest competitors are Reliance Communications with 17.7% and Vodafone Essar with 17.4%.

Bharti Airtel’s well capitalized position, strong cash flows, and dominant market share make it a company with excellent prospects looking forward. In addition, its corporate ties to Bharti Enterprises provides it with the opportunity to engage in profitable cross-promotional advertising with other popular brands.

Why it is best time to enter in this company? At current market price of 299.95, it is a the lower end of 52 weeks low. The current condition in the telecom industry such as price war created a negative sentiments in the market and caused the crash in the market price of its shares. But this is just a short term concern and large operators like Bharti Airtel can easily come out of this mess and the company have a better long term prospects. Its long term investment outlook is very positive as it dominates a market that has enormous growth prospects. The share price has stabilized around $300 and is a buying opportunity to obtain ownership in a solid company at a deep discount. The stock is a bargain and an excellent way for investors to diversify their portfolios.

Yes, now it is your company! Get to know more about the company, keep an eye on it. You will not sell your company unless and until it is really warranted.

Related Link:

Update

About Company

Investor Relations

Market Information

Bharti Airtel and Limelight Networks partners for global Content Delivery Network services

Bharti Airtel, Asia’s largest integrated telecom provider today announced a strategic partnership with Limelight NetworksR for Content Delivery Network (CDN) services in the Indian market place. The partnership will help Limelight NetworksR to expand its access in one of the fastest growing CDN markets and enable its customers, access to Bharti Airtel’s state-of-the-art IP network in India. With this agreement, Bharti Airtel will now be able to offer Indian content producers, industry leading solutions for the delivery of rich media and enterprise applications, as well as direct access to consumers accessing the Internet, over 900 last mile networks that are directly connected to Limelight Networks’ global platform. 

India Infoline

Related Link:

Drops Savings and Investments recommends investment in Bharti Airtel