UBS Securities, in its research report, said there is a strong co-relation between margins and revenue market share (RMS) of telecom operators in Asia.
The UBS report analyzed Bharti Airtel, Idea Cellular and Vodafone India, the top three telecom operators in India in terms of revenue.
Bharti Airtel, the leading telecom operator in India, has a revenue market share of 30.3 percent and EBITDA margin of 38.9 percent.
Vodafone India has a revenue market share of 21.3 percent and EBITDA margin of 31.1 percent.
Idea Cellular has a revenue market share of 19.4 percent and EBITDA margin of 27.8 percent.
The UBS report indicates that the merger between Vodafone and Idea Cellular will assist the two operators to enhance EBITDA margins.
In addition to India, UBS Securities analyzed market share of operators in Indonesia, Thailand, Korea and Australia.
Market shares in Philippines have changed materially in the past five years with Globe Telecom gaining almost 10ppt market share from PLDT. EBITDA margins and market shares in Philippines, show PLDT’s wireless margins have come closer to Globe’s vs a 5-10ppt premium as it has ceded market share.
In the Philippines, PLDT’s margins have now become equal to Globe, as its market share has come down to Globe levels. This compares with five years ago, when PLDT’s mobile margins were 12-13ppt higher, for 15-20ppt higher revenue market share.
In Indonesia, Telkomsel’s margins are 20ppt and 13ppt higher than XL and Indosat, respectively, for roughly 35-40ppt higher market share.
In Thailand, AIS’s margins are 8ppt higher than DTAC and 25ppt higher than True for 20-25ppt higher market share.
In Australia, Telstra have 16-22ppt higher margins for 20-30ppt higher market shares.
In Korea, SKT has 7-10ppt higher margins for 25-30ppt higher market share.
UBS Securities said that there is a strong evidence of operating leverage, which implies margins of the combined Idea-Vodafone entity can improve with greater revenue and operating scale.
