With the launch of 4G services by Reliance Jio (RJio), it could likely mark the end of CDMA services, according to ICICI Securities.
The brokerage house believes, it is critical for RJio as completion of 850MHz spectrum refarming by RCom infers that RJio could use the spectrum (through sharing/trading route) for its 4G-850MHz pan-India launch. RCom has already vacated 850MHz in nine circles. Due to strong data card business, 55 per cent of CDMA revenues come from post-paid, which could be a low hanging target for RJio. Also, as CDMA subscribers migrate to less-efficient 1800MHz for voice service and no handset barrier, they could be poached by the top-3 operators, thus providing a cushion to their market share loss to RJio.
ICICI Securities believes Bharti Airtel is best positioned in this regard as around 70 per cent of CDMA subscribers are concentrated in its leadership circles. The brokerage house sees risk to RCom’s revenues / EBITDA from migrating its subscribers to GSM/4G. Though the company has offered lucrative tariffs to migrate for the first month, which subscribers could likely opt (through internal MNP), but post 90-days subscribers can choose to avail MNP again.
ICICI has ‘Buy’ on Bharti Airtel and Idea Cellular with target price of Rs 480 and Rs 180, respectively. However, the brokerage has ‘Reduce’ on Reliance Communications with target price of Rs 43.
On Thursday, Bharti Airtel, Idea Cellular and Reliance Communications were at Rs 346.25, Rs 99.90 and Rs 46.80, respectively