In reports that could trigger a supremacy race between leading telecom players, equity research firms JM Morgan Stanley and UBS Securities have suggested that Reliance Communication Ventures Ltd (RCoVL) has surpassed Bharti Airtel Ltd in terms of average usage but had lower revenue per subscriber.
In separate reports analysing the financial results of RCoVL, which is set to enter the elite club of 30 Sensex scrips on the Bombay Stock Exchange next month, the two global firms said that RCoVL had a higher average minute of usage (MOU) in the March 2006 quarter, notwithstanding a lower share of overall wireless subscriber additions and a lower average revenue per user (ARPU).
Comparing the two telecom players on various counts, the UBS Investment Research report said that RCoVL's wireless division had a lower ARPU than GSM players like Bharti and Hutch Essar in the latest quarter. However, RCoVL's higher minutes of usage (MOUs) indicated higher usage profile of its subscribers, the report added.
RCoVL has posted gross ARPU of Rs 375 for the March 2006 quarter, which was more than 15 per cent lower than Bharti's figure in the same quarter and represented a sequential decline of 8.5 per cent.
However, the two firms pegged the minutes of usage at 532 minutes per month for RCoVL as compared to 431 for Bharti -- which is the most valuable listed telecom player as of today with a market capitalisation of Rs 79,809.84 crore as compared to Rs 39,244.14 crore of RCoVL.
JM Morgan Stanley said in its report that the life-time packages, lower-denomination prepaid coupons and changes in interconnect regime was primarily responsible for the drop in ARPUs.
However, the two firms pegged the minutes of usage at 532 minutes per month for RCoVL as compared to 431 for Bharti -- which is the most valuable listed telecom player as of today with a market capitalisation of Rs 79,809.84 crore as compared to Rs 39,244.14 crore of RCoVL.
JM Morgan Stanley said in its report that the life-time packages, lower-denomination prepaid coupons and changes in interconnect regime was primarily responsible for the drop in ARPUs.
The UBS report added that profitability tends to be low under the life-time schemes in initial months.
On a cautious note, UBS report said the accounting practice of RCoVL was still in a flux and hence the trends may not be sustainable in future.
The UBS report also said the profitability and return on investment was lower for RCoVL compared to Bharti, based on the analysis of spread per minute and subsequently the capex- spread ratio.