While subscriber churn continues to be very highfor every 10 subscribers telcos acquire, only 1 stays backSeptember data for telcos shows there has been a slowing in subscriber acquisition costs, largely through a cut in dealer commissions. In the case of Bharti Airtel, customer acquisition costs are down 100 bps as a share of revenues in September and this was 300 bps in the case of Idea. That is why, despite top line wireless revenues having fallen by 2-4% on a sequential basis for listed telcos like Bharti, Vodafone, Idea and RCom, ebitda margins have stabilised for Bharti and RCom, have risen marginally for Idea, and hugely for Vodafone (Vodafone data is available on a half-year basis), though that is largely due to the fall in its capex, from R2,430 crore in April-September 2011 to R1,700 crore in April-September 2012.
The evidence on the discounting of tariffs slowing is largely anecdotal, but the auctions suggest telcos are now behaving a bit more rationally, which is why firms like RCom decided to stay away from the auctions and even those who looked like they were going to bid for more circles eventually bid for less. Norways Telenor, which played havoc with industry fortunes with its per-second billing, was operating in 13 circles before its licence was cancelled and has now bid for just 6 telecom circles (and this time around, Telenor is not going to be in Mumbai). Which is why revenues per minute have stabilised for Bharti and Idea, and have risen a bit for Vodafone and RCom. And while voice revenues continue to fall, data revenues have grownfrom 3.1% of revenues in September 2011 to 5.1% in September 2012 for Bharti. For telecom investors, the next few weeks in which the government will decide on reserve prices are going to be critical.