NEW DELHI: India’s telecom sector has a cause to celebrate, with strong evidence of domestic valuations keeping pace with the highest valued mobile telephone companies in the world – China Mobile and Vodafone.

An analysis of Bharti Enterprises subscriber numbers and stock performance, for example, shows its ratings comparable with China Mobile, the big daddy of mobile telephony in China and Vodafone, the world’s second largest mobile company.
Last week, China Mobile toppled Vodafone to become the world’s most highly valued telecom firm. China Mobiles shares closed at HK$51.50, valuing the company at US$131.46 billion, while Vodafone’s shares closed at 110 p in London, valuing the firm at US$123.11 billion.

China Mobile, with 200 million subscribers, is also the world’s largest mobile operator, ahead of Vodafone’s 186 million global subscribers.

Vodafone, however, remains ahead in terms of its global footprint across 54 countries. In India, it invested US$1.5 billion in Bharti in October 2005.

China Mobile’s subscriber base works out to about 8.3 times and Vodafone’s roughly 7.75 times Bharti’s 24.3 million subscribers. Bharti Enterprises boasts of a 21.2% market share, in comparison to China Mobile’s 40%.

Interestingly, at an average share price of Rs 412, Bharti’s valuation works out to about $16 billion or Rs 72,000 crore. Analysts point out that this mirrors China Mobile and Vodafone, as their valuations, just as with subscriber numbers, works out to around 8.3 times and 7.75 times that of BhartiTele ‘s respectively. The striking feature of this comparison is that subscriber and valuation multiples are exactly comparable and proportionate across three firms.

This is a conclusive evidence that Bharti’s valuation (minus some of its other businesses such as Long Distance, and others), even at a fraction of China Mobile and Vodafone’s subscriber base, is globally benchmarked.
Given economies of scale and projections of doubling of mobile subscribers to 200 million by December 2007, it should be fair to expect Bharti to exceed 40 million subscribers before the close of financial year 2006-07, with a proportionate increase in shareholders value.

With these impressive valuations, it is no surprise that like Birlas and Tatas in the recent past, Hutch and Essar are similarly embroiled in bitter battles for control.

The flip side of this spectacular performance is its propensity to strengthen the argument for charging big bucks to these multi-billion dollar corporations in the controversial allocation of 3G spectrum.

Source- http://timesofindia.indiatimes.com

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