Idea Upcoming Result - Competition and Finance Cost May Dent Profitability

Idea is going to release their result and it is widely expected that revenue, EBITA, EBIT and APRU will be scrutinized by the analyst community. Idea debt level went up due to spectrum buyout and heavy capex to rollout 4G network to compete with Incumbents like Airtel, Vodafone and upcoming Reliance Jio. It is expected that minute and data usages per user will be higher but it will be interesting to see the realization. The finance cost will impact the overall profitability. All will be interested to hear from the management about their plan around 4G to fend off hotly talked about competition with Reliance Jio. For the next two to three quarter, Idea will be spending heavily in advertisement and high ARPU based userbase to secure their main source of revenue.

For Investors, it is advisable to be stay away from the equity delivery or F&O market when it comes of Idea Cellular.

It is also recommended that Investor should not miss the chance if equity price goes down to INR 80 in next 30 days and hold it for more than 12 months to expect handsome return.

Disclaimer : Consult your financial advisor before investing

Why One Should Invest In Bharti Airtel

Bharti Airtel equity in the last one year is living in artificial fear psychosis created by pundits about the entry of Reliance Jio. Reliance Jio last year successfully managed to get the license from government and can offer voice services. It impacted all listed Telecom Operators but Bharti Airtel was caught up in cross fire. Some of the Analyst talks about Airtel mounting debt level, some talk about their concern about upfront payout to government of India for just concluded spectrum auction, some talk about their Africa business, some talk about growing competition from Idea and Vodafone. I feel that in competitive economic environment, above mentioned points would always revolve around market leader but is it fair to create an environment of negative news by continuously talking about threats. I would like to highlight the following and would appreciate reader view

1. Who is the leader in the Indian telecom sector both on revenue and subscribers
2. Who commands highest ARPU in India
3. Who is generating maximum Cashflow
4. Who is generating maximum revenue from Mobile services
5. Who would get benefitted by lowered Spectrum usages charges
6. Who owns maximum Data user
7. Who is having one of the best data ARPU
8. Who is having minimum churn rate among the Incumbent
9. Who launched 4G in multiple cities
10. Who is maintaining continuous innovation in Product positioning
11. Who cleaned up their management within Six months with all new faces and having a guts to give well established business to a person from FMCG
12. Who is aggressive in Broadband services
13. Who spent Millions of $ in acquiring Qualcomm BWA without having plans for it

I must admit that Vodafone is the only competitor generating nearly same APRU like Bharti Airtel. On Bharti Airtel Africa business, one must be rest assured that once US picks then it will have cascading positive impact on Europe and other continents including Africa. Once that happen then the currently so called African operation would generate the same kind of result the way Jaguar is generating for struggling Tata Motors.

Regarding Reliance Jio entry into voice and data segment of telecom sector would carry no to little impact. I have been hearing for the last two and half year that Reliance Jio is near to launch but they are still on the design table. In my point of view, they are minimum 4 quarter away from full launch and by that time Bharti Airtel would sweep up license area with their 4G launch. One must not ignore that Bharti is having running system in place to do soft launch to realign infrastructure to refine the service defects but that’s not the case with Reliance Jio. The nearest competitor Vodafone and Idea is entangled with Tax authorities. Any tax penalty on both the companies would change their financial dynamics.

In conclusion, potential investor must read the analyst report from all leading analyst firm and their targets for Bharti ranges from 360 to 430 INR but they criticize Bharti Airtel when its trading below INR 310.

In conclusion, any investor must do their own analysis and invest particularly in the case of Bharti Airtel if they really wanna to get rewarded.