We believe that India?s telecom operators are in a ?wait and watch? mode on account of three key reasons: 1) the impending launch of Reliance Jio (we expect 2H FY16E), which remains a largely unknown event for the sector; 2) as a result, operators have not reduced voice
discounts as they remain worried about subscriber attrition and loss of revenue market share (RMS), as voice still accounts for c75% of revenues; and 3) while data growth remains strong, the monetization appears delayed as operators are introducing ?rate cutter? packs.
As operators look to increase their data capacities, we expect network capital expenditures to be front ended as well, resulting in poor cash flow conversion. We expect the stocks under our coverage to remain range bound until RJio?s eventual launch or there is an
increase in pricing.
