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In 1956 Final Judgment, the final judgment limited the Bell System to
Common Carrier Communications and Government projects but
preserving the long-standing relationships between the manufacturing,
researches and operating arms of the Bell System. In this judgment AT&T
retained bell laboratories and Western Electric Company. This final
judgment brought to a close the justice departments seven –year-old
antitrust suit against AT&T and Western Electric which sought separation
of the Bell Systems Manufacturing from its operating and research
functions. AT&T was still controlling the telecommunication industry.
YE
AR
First operational land lines were laid by the government near Calcutta
1851 (seat
of British power)
1881 Telephone service introduced in India
Merger with the postal
1883 system
Formation of Indian Radio Telegraph Company
1923 (IRT)
Merger of ETC and IRT into the Indian Radio and Cable
1932 Communication
Company (IRCC)
Nationalization of all foreign telecommunication companies
1947 to form the
Posts, Telephone and Telegraph (PTT), a
monopoly run by the
government's Ministry of
Communications
Private sector was allowed in telecommunication equipment
1980 manufacturing
Conversion of DOT into two wholly government-owned
1986 companies: the
Videsh Sanchar Nigam Limited (VSNL) for international
telecommunications
and Mahanagar Telephone Nigam Limited (MTNL) for service in
metropolitan areas.
Telecom revolution in many other countries which resulted in better
quality of
services and lower tariffs and finally resulting in opening for the private
1990 sector
services and lower tariffs and finally resulting in opening for the
private sector
1997 Telecom Regulatory Authority of India created.
The telecom industry is one of the fastest growing industries in India. With
a growth rate of
45%, Indian telecom industry has the highest growth rate in the world.
The improvement in the standard of living and the development of
infrastructure and connectivity are some of the mains reasons for the
significant growth of the telecom industry. The Indian Telecommunications
network with 200 million connections is the fifth largest in the world and
the second largest among the emerging economies of Asia. Today, it is
the fastest growing market in the world and represents unique
opportunities for U.S. companies in the stagnant global scenario. The total
subscriber base is increasing day by day. The wireless technologies
currently in use are Global System for Mobile Communications (GSM) and
Code Division Multiple Access (CDMA).
1.4 METHODOLOGY
The proposed methodology for the study of Telecom Industry is as
follows:
• Data collection methods: The data that would be used in
the analysis will be only secondary data because of time and
AT&T now offers long distance service in competition with half a dozen
major and many minor competitors while retaining ownership of a
subsidiary that produces telephonic equipment, computers and other
electronic devices. During the same period Great Britain’s national
telephone company was sold to private investors as was Japan’s NTT
telephone monopoly. For telegraphy and data transmission, Western
Union was joined by other major companies, while many multinational
firms formed their own telecommunications services that link offices
scattered throughout the world. New technology also brought continuing
changes in the providers of telecommunication. Private companies such
as Comsat in the United States were organized to provide satellite
communication links within the country.
The focus is also shifting away from broadband to what it can actually
achieve. Next Generation Telecommunications better describes this new
environment and is essential for the emerging digital economy. Important
services that depend on NGT include tele-health, e-education, e-business,
digital media, e-government and environmental applications such as
smart utility meters.
One of the drivers behind the industry changes are the declining revenues
experienced by the telecom in their traditional markets. Over the past 10
years or so, fixed-line operators have been affected by deregulation, a
severe industry downturn, declining prices and major inroads by mobile
services. In addition, people are drifting to other forms of communication,
For the time being however, voice will remain the killer application for
mobile with some data services included as support services and niche
market services. 4G (i.e., Wi-MAX/LTE) is the real solution for mobile data
and by 2015 it is expected that the majority of mobile revenues will come
from data.
Figure - 3.1
• Fixed-lines
• Mobile
• The Internet
The State of the market though has been changing. This has been mainly
characterized by increasing competition, mainly due to the numerous
players in the telecom industry. The boom in the telecom industry can be
mainly attributed to increasing private sector participants. There also has
been an increased independent regulation by these companies.
Approximate
Year broadband Annual change
subscribers (million)
By the end of 2010 there will be well over 500 million fixed broadband
subscribers worldwide and broadband will account for around 35% of all
internet connections.
3.5 CONCLUSION
The success of the smart phone, especially the Apple i Phone, has finally
sparked consumer interest in using mobile broadband services. This has
resulted in an increase of traffic on existing mobile networks and created
a more pressing need to develop 4G technologies, such as LTE, as it can
deliver a fully IP-based infrastructure that will allow for mass use of these
applications over the network. LTE development took an important step in
late 2009 with Ericsson and TeliaSonera launching the world’s first and
largest commercial 4G LTE network in Stockholm.
There is no doubt that the next ten years will bring further exiting
developments to the increasingly vital telecommunications industry. The
foundations for change are already in motion and the continuing
deployment of high-speed broadband and developments relating to 4G
technology will provide the infrastructure to ignite the new innovations
and revolutions of the future.
India is now a major base for the telecom industry worldwide. Thus Indian
telecom sector has come a long way in achieving its dream of providing
affordable and effective communication facilities to Indian citizens. As a
result common man today has access to this most needed facility. The
reform measures coupled with the proactive policies of the Department of
Telecommunications (DOT) has helped provide extraordinary growth for
the sector.
(Note: The above figures have been updated as on 24th March, 2010 with
available data from the TRAI websites and the TRAI annual reports. Please
keep in mind that the annual report for 2010 is yet to be released and
hence there might be a slight difference between the reported figures and
the actual figures)
The government has fixed Rs 3,500 crore as the reserve price for pan-
India 3G spectrum and Rs 1,750 crore for Broadband Wireless Access
(BWA) services. What this means is that given the very limited number of
slots available for the auctions, the government is sure to garner at least
Rs. 20000 crore if not more from the auctions of the spectrum for both 3G
and BWA combined.
The auction for the 3G spectrum begins on April 9 which will be followed
by the auction for BWA.
However, Qualcomm's plans to use the BWA spectrum for offering TD-LTE
– the advanced version of 3G technology — has not gone down too well
with the other wireless players.
The service providers for the telecom sector in India are led by Bharti,
Reliance, Vodafone Essar, BSNL and IDEA Cellular. Other important
The Rural subscribers are still far behind the Urban subscriber base, hence
it shows that there are still a number of avenues for further growth in the
rural areas. Whereas in the urban areas the revenue per user has come
down to a level wherein further entries into the market would only cause
the revenues to go down even further to a point wherein the sustenance
of the industry would be difficult.
The figures favour Nokia over the other manufacturers which suggest that
Nokia has greater market reach in India as compared to the others.
The subscriber base currently stands at over 500 million, and it still boasts
of a huge growth rate per quarter.
The two major reasons that have fuelled this growth are low tariffs
coupled with falling handset prices.
The CDMA market has increased it market share upto 30% thanks to
Reliance Communication. This is a contradicting trend, since the CDMA
market has been declining globally.
The other reason that has tremendously helped the telecom Industry is
the regulatory changes and reforms that have been pushed for last 10
years by successive Indian governments.
One segment of the market that has been puzzling is broadband Internet.
Despite the manner in which the country’s Internet market has been
booming, India’s move into high-speed broadband Internet access has
been distinctly slow. And, while there appears to be considerable
enthusiasm amongst the population for the Internet itself, this has not
been reflected in broadband subscription numbers. In 2006 India
witnessed a good surge in broadband users with the total subscriber
base in the country expanding by almost 200% to just over 2
million by years end. Despite this surge, broadband penetration in
India still remains around only 0.2%; broadband services still account
for only 25% of the total Internet subscriber base, still in itself
comparatively low. So, if 70% of total population is rural, the scope for
growth in this Industry is unprecedented
Fig. 4.2: Gross revenue over the years (data for period ’08-‘09 is
incomplete)
1. Network expansion
a. 1 Billion connections by the year 2015
b. Provision of mobile coverage of 90% geographical area by
2010
2. Rural telephony
a. One phone per two rural households by 2010 (about 80 million
rural connections)
b. Reduce urban-rural digital divide from present 25:1 to 5:1 by
2010
3. Broadband
a. Broadband with minimum speed of 1 mbps
b. Broadband coverage for all Grampanchayats by the year 2010
4. Infrastructure Sharing
a. USO subsidy support scheme for shared wireless
infrastructure in rural areas with about 18,000 towers by 2010
b. Increase sharing in urban areas to 70% by 2010
6. Manufacturing
a. Making India a hub for telecom manufacturing by facilitating
more and more telecom specific SEZs
b. Quadrupling production in 2010
c. Achieving exports of 6 times from present level of 0.5 billion in
2010
8. International Bandwidth
a. Facilitating availability of adequate international bandwidth at
competitive prices to drive ITES sector at faster growth
Fixed 37.96
Mobile 391.76
Total 429.72
Licenses issued
Basic 2
CMTS 60
UAS 224
One often looks at the mobile market in India as something that can be
looked at as a benchmark for the World. However the large companies in
India are miniscule in comparison to the Big Companies in Chineasuch as
China Mobile (392 Million subscribers as opposed to Bharti’s 62 Million,
RCom’s 45.5 Million, and BSNL’s 40 Million odd) and China Unicom (168
Million subscribers). Vodafone and Spain’s Telefonica are the other 2 big
names that come to mind. So it’s quite clear that Indian Mobile Operators
today are looking at the Chinese models of scalability and also picking up
and modifying their operational model because in both markets,
consumer responses to pricing and ARPU’s will be similar in the long run.
In the current situation, Indian Mobile Telecom operators will not have the
liberty to innovate fast enough, they will not have the opportunity to scale
high value services. The reasons for Indian firms’ enthusiasm for foreign
acquisitions are many. By acquiring international companies, Indian
companies get easy access to new markets, new products and the latest
technology. By buying domestic companies in other countries, they can
enter protected or heavily regulated overseas markets much more easily.
The strategy allows them to benefit from economies of size and scale, and
to increase their presence along the value-addition chain, such as by
While on the topic of margins and efficiencies, it must be noted that Indian
Telecom Operators are very efficient when it comes to administrative,
sales and marketing and technical expenses as opposed to their western
counterparts. A Mint Study says the following. As a percentage of sales,
Selling, General and Administrative expenses account for 15% for Indian
companies (against 20% for Western operators). Other key costs are inter
connect charges (12% for Indian operators, against 15% to 20% for
Western companies), license fees (10%, 5-9%), personnel (7-8%, 10-15%)
and network (11-12%, 15-17%). This leaves Indian companies with a
handsome 36% to 40% as operating profit against 12% to 30% for
Western operators. As these numbers show, Indian mobile companies are
saving on sales and marketing. They also focus on prepaid customers,
which lower their customer support costs. They share infrastructure. Most
importantly, perhaps, they outsource whatever they possibly can.’
All this takes a toll on the quality of service but there are some obvious
cost advantages – if they are taken beyond National Boundaries, then
results can be fantastic in terms of higher profits and also greater
technological innovation + diversification of risk.
The DoT Guidelines with respect to M & A’s has ensured that the Indian
Market will be more or less competitive. While there is no doubt that the
market is growing at a frantic pace, the following need to be considered:
- Mergers of telecom licences will be allowed only within the same
service area.
- A telecom company can sell equity to another company only after
3 years from getting a license.
- Merged telecom companies should not command more than 40%
Market Share. (this used to be 67%)
- No M & A activity to be allowed if the number of operators in a
service area fall below 4.
- No investor with 10% stake in an existing telecom company will
be allowed to merge or acquire another telecom company.
The M & A guidelines ensure that the Indian Mobile Domain is not big
enough to be owned only by 2 or 3 majors. So possibly operators’
expectations from the market have also been recessed. As addressed
above, there are multiple reasons as to why Telecom Operators are
looking to go abroad. – beyond the Indian Market.
Stel - 0.74%
Uninor - 6.32%
Vodafone - 14.63%
Loop - 0.28%
Idea - 8.93%
Sistema - 2.09%
Tata - 17.46%
Aircel - 8.74%
MTNL - 0.30%
BSNL - 10.89%
Bharti - 14.92%
Reliance - 14.70%
Here we will analyze the strengths of the telecom industry as a whole. The most
important factors are:
• It is the biggest market for the Telecom Industry, second only to China.
• It has the highest growth rate globally in terms of sheer numbers of
subscribers.
• Technology is advanced and easy to implement: For telecom industry
the technology is really advanced and more and more investment is
done on technology to get world class infrastructure and knowhow to
put in this field. The Telecom sector is going to add 3G spectrum as its
latest up-gradation.
• Fastest Growing Mobile Market in the World.
• Even though the ARPUs are low, there are a number of Consumers who
are willing to pay higher amounts for cutting edge services.
6.1.2 Weaknesses
• Low ARPU
6.1.4 Threats
• Brand pull exists to some extent for brands like Airtel /idea/ Vodafone
• Customer Switching Costs is low
• Cost of new connection is low
Capital Requirement
Incumbent Advantages
Price wars
Is low
➢ Online Chat
➢ Satellite phones
As the sector is open for both private and public players there are huge
number of players in the market which requires a proper picturing of rules
and regulation. The government has created bodies like DOT, TRAI, DTS
which takes care of the rules and regulations. The first policy the National
Telcom Policy was announced in 1994. The Telecom Regulatory Authority
of India (TRAI) was setup in 1997 and the second National Telecom Policy
came into effect in mid 1999. In January 2001, the Telecom Disputes
Settlement and Appellate Tribunal (TDSAT) started functioning and a
policy was announced for additional licenses especially in the area of
basic and mobile services. In November 2003, the Unified Access (Basic &
Cellular) Service License (USAL) was introduced as a first step towards a
Unified License Regime Technology and allows provisioning any kind of
service.
Achievements:
As against the NTP 1994 target of provision of 1 PCO per 500 urban
population and coverage of all 6 lac villages, DoT has achieved an urban
PCO penetration of 1 PCO per 522 and has been able to provide
telephone coverage to only 3.1 lac villages. As regards provision of total
telephone lines in the country, DoT has provided 8.73 million telephone
lines against the eighth plan target of 7.5 million lines.
NTP 1994 also recognized that the required resources for achieving
these targets would not be available only out of Government sources
and concluded that private investment and involvement of the private
sector was required to bridge the resource gap. The Government invited
private sector participation in a phased manner from the early nineties,
initially for value added services such as Paging Services and Cellular
Mobile Telephone Services (CMTS) and thereafter for Fixed Telephone
Services (FTS). After a competitive bidding process, licenses were
awarded to 8 CMTS operators in the four metros, 14 CMTS operators in
18 state circles, 6 BTS operators in 6 state circles and to paging
operators in 27 cities and 18 state circles. VSAT services were liberalised
for providing data services to closed user groups. Licences were issued
to 14 operators in the private sector out of which only nine licencees are
operational. The Government has recently announced the policy for
Internet Service Provision (ISP) by private operators and has commenced
licensing of the same. The Government has also announced opening up
Objectives
g. Lay down and ensure the time period for providing local and long
distance circuits of telecommunication between different service
providers;
m. Keep register maintained under clause (l) open for inspection to any
member of public on payment of such fee and compliance of such
other requirements as may be provided in the regulations;
Demand Analysis
The total number of telephones has increased from 76.53 million on March
31, 2004 to 363.95 million on October 31 2008. While 94.63 million
telephones were added during the twelve months of 2007-08, about more
than nine million subscribers are being added every month during the
6.3.4 Technology
Existing Technologies:
2G cellular systems combined with GPRS are often described as 2.5G, that
is, a technology between the second (2G) and third (3G) generations of
mobile telephony. It provides moderate speed data transfer, by using
unused time division multiple access (TDMA) channels in, for example, the
GSM system. Originally there was some thought to extend GPRS to cover
other standards, but instead those networks are being converted to use
the GSM standard, so that GSM is the only kind of network where GPRS is
in use. GPRS is integrated into GSM Release 97 and newer releases. It was
originally standardized by European Telecommunications Standards
Institute (ETSI), but now by the 3rd Generation Partnership Project (3GPP).
WiMax
WiMAX is a wireless digital communications system, also known as IEEE
802.16, that is intended for wireless "metropolitan area networks". WiMAX
can provide broadband wireless access (BWA) up to 30 miles (50 km) for
fixed stations, and 3 - 10 miles (5 - 15 km) for mobile stations. In contrast,
the WiFi/802.11 wireless local area network standard is limited in most
cases to only 100 - 300 feet (30 - 100m).
With WiMAX, WiFi-like data rates are easily supported, but the issue of
interference is lessened. WiMAX operates on both licensed and non-
licensed frequencies, providing a regulated environment and viable
economic model for wireless carriers. WiMAX can be used for wireless
networking in much the same way as the more common WiFi protocol.
WiMAX is a second-generation protocol that allows for more efficient
bandwidth use, interference avoidance, and is intended to allow higher
data rates over longer distances.
SS7
There are two essential components to all telephone calls. The first, and
most obvious, is the actual content—our voices, faxes, modem data, etc.
The second is the information that instructs telephone exchanges to
establish connections and route the “content” to an appropriate
destination. Telephony signaling is concerned with the creation of
standards for the latter to achieve the former. These standards are known
as protocols. SS7 or Signaling System Number 7 is simply another set of
protocols that describe a means of communication between telephone
switches in public telephone networks. They have been created and
controlled by various bodies around the world, which leads to some
specific local variations, but the principal organization with responsibility
3G
3G is a short term for third-generation wireless, and refers to near-future
developments in personal and business wireless technology, especially
mobile communications. The third generation, as its name suggests,
follows the first generation (1G) and second generation (2G) in wireless
communications
Emerging Technologies
• Presence services
• Instant messaging
• Multimedia advertising
• Multiparty gaming
• Videostreaming
• Web/Audio/Video Conferencing
• All customers will enjoy fast Web browsing, with rapid access to
graphics-heavy Internet sites.
Mobile TV
Characteristics of an MVNO:
• Main added value that MVNO provides is billing and customer care
functions. In that sense MVNOs own the customers.
• MVNOs generally provide both voice and data services to end users
through a paid up subscription agreement.
IPv6 Features:
4G TECHNOLOGY
There is no formal definition for what 4G is; however, there are certain
objectives that are projected for 4G. These objectives include: that 4G will
be a fully IP-based integrated system. 4G will be capable of providing
between 100 Mbit/s and 1 Gbit/s speeds both indoors and outdoors, with
premium quality and high security.
The above figure shows the decreasing trend in the number of wireline
subscribers in India. This suggests that people are shifting from fixed
wired lines to other alternatives for voice communications.
The internet subscriber base in India has also been on the gradual rise.
In India, a country with a large number of it’s population living in the rural
regions, most of the population does not have access to computers. This
shows that the usage of computers is gradually on the rise, and with it, so
is the internet usage.
It suggests that most of the rise in subscribers are coming from the more
aware customers in the urban and sub-urban regions.
The teledensity has been rising constantly. Showing that the penetration
of mobile services has been on the rise.
The teledensity will keep growing because the penetration in the rural
areas is still not complete. Thus, this suggests that even though India has
high tele-density in the urban areas, the sub-urban and rural areas can
still improve much further.
From the above graph we can see that the net sales will show a positive
growth with an approximate increase of 10000 crores a year which is a
good sign for the future of the telecom industry.
The above graph shows an increasing trend in the net profits, but the margin of
increase is small compared to the net sales this may be attributed to the stiff
competition among service providers and low pricing.
○ Bharti Airtel
○ Reliance Communication
○ Idea cellular
○ Vodafone Essar Gujarat
○ Bharat Sanchar
○ Supreme telecom
○ HFCL Infotel
○ Tata tele Mah
• During the last few years, Vodafone Group has entered into arrangements
with network operators in countries where the Group does not hold an
equity stake. Under the terms of these Partner Market Agreements, the
Group and its partner operators co-operate in the development and
marketing of global products and services, with varying levels of brand
association.
• Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest
Telecommunications Company providing comprehensive range of telecom
• Today, it has about 46 million line basic telephone capacity and 0.6 million
Data One broadband customers
• BSNL is the only service provider, making focused efforts and planned
initiatives to bridge the Rural-Urban Digital Divide.
• BSNL has installed Quality Telecom Network in the country and now
focusing on improving it, expanding the network, introducing new telecom
services with ICT applications in villages and winning customer's
confidence.
• In fact there is no telecom operator in the country to beat its reach with
its wide network giving services in every nook & corner of country and
operates across India except Delhi & Mumbai.
• The company continues to maintain its edge in the utilities and public
networks (non-DoT) segment.
• It bagged major projects from Tata Cellular, Sky Cell, Western Railway and
Indian Oil Corporation, etc.
• HFCL Infotel Ltd., the first basic telephony services provider for Punjab
and it launched its operations on 16th October, 2000.
• During 2003-04, The Company launched its Prepaid Mobile product and a
complete range of innovative value Added Services and Data products
were launched in May 2004, by the introduction of DSL-high speed
Internet product.
7.2.9 Sify
Sify is India’s largest provider of Broadband service that explores the true
potential of the Internet. It offers high speed, high quality, low cost and
easy to use Internet connection at home in two categories: Broadband
and Hi-Speed Plans
• The subscribers’ base growth in Rajasthan has been 8.5 - 12% per month,
starting from the network launch on 30th September 2008.
Ratio analysis helps in assessing a company’s strengths and weaknesses. It acts a yard
stick to set goals for improvement. It is a powerful analytical tool for measuring
performance of a firm.
Current ratio:
• This ratio indicates the short term solvency of the company. This indicates the amount of
current assets that exists per rupee of current liability. Higher the ration the more
comfortable is the firm in repaying its current liabilities.
• The current ratio of the industry is 1.22; this indicates that the industry is comfortable in
repaying its current liabilities.
• This ratio indicates the cushion that shareholder’s funds provide on the debt. If this ratio is
1:1, this means that its capital structure is made of an equal amount of debt and
shareholder’s funds.
• Higher the ratio more will be the burden in the form of interest payments for the firm.
• The debt equity ratio of the industry is 0.35; this means the industry does not rely much
on debt instruments.
• The industry depends more on the shareholder’s funds for its functioning.
• Is profit before interest and tax divided by capital employed. Capital employed
includes equity shareholder’s funds and long term debt.
• This ratio indicates the profit earned per rupee of capital employed.
• The ROCE for the industry is 9.72% for the year 2008-09. This indicates for every
one rupee of capital employed generates a profit of 9.72 rupees.
BHARTI AIRTEL
Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar
09 08 07 06 05 04 03 02 01 00
Key Ratios
Turnover Ratios
571. 474. 509. 447. 500. 0.0 0.0 0.0 0.0 0.0
Inventory
62 19 03 74 51 0 0 0 0 0
12.7 11.0 12.1 12.5 22.0 0.0 0.0 0.0 0.0 0.0
Debtors
7 6 0 4 8 0 0 0 0 0
-
12.4 15.8 10.6 0.3 0.2 0.0 0.5
Interest Cover Ratio 4.80 5.93 4.2
7 1 5 9 7 4 8
2
39.7 41.8 40.7 36.2 36.7 0.0 0.0 0.0 0.0 0.0
PBIDTM (%)
4 1 0 3 0 0 0 0 0 0
30.3 29.4 27.5 22.4 23.8 0.0 0.0 0.0 0.0 0.0
PBITM (%)
1 9 2 6 0 0 0 0 0 0
33.4 39.4 38.9 34.1 32.6 0.0 0.0 0.0 0.0 0.0
PBDTM (%)
2 5 6 3 9 0 0 0 0 0
32.1 36.6 35.7 31.6 28.2 0.0 0.0 0.0 0.0 0.0
CPM (%)
9 1 8 9 2 0 0 0 0 0
-
33.1 34.8 34.0 22.5 23.9 0.1 0.1 0.1 0.4
ROCE (%) 1.1
7 3 7 5 6 6 7 1 1
7
- - - - -
32.3 39.4 43.0 31.8 23.8
RONW (%) 0.2 0.4 1.4 2.5 0.4
5 6 4 2 8
7 7 7 5 0
Debt Equity Ratio of Bharti Airtel Ltd. is 0.3 for the year 2008-2009. This
indicates that the company does not employ much of debt in its capital
structure. The company relies more on shareholder’s funds.
Current Ratio of Bharti Airtel Ltd. is 0.61 for the year 2008-2009. This
means that the company is having lesser current assets to pay off its
current liabilities.
Fixed Assets Turnover Ratio of Bharti Airtel Ltd. is 1.04 for the year
2008-2009. This ratio exceeds the industry standards. This indicates that
assets are being fairly utilized by the company.
Inventory Turnover Ratio of Bharti Airtel Ltd. is 571.62 for the year
2008-2009. So the stock velocity of Bharti is 0.63 .Therefore, Bharti Airtel
takes less than a day to rotate its stock. It stock velocity is better off than
the industry standards.
Debtor Turnover Ratio of Bharti Airtel Ltd. is 12.77 for the year 2008-
2009. So the debtor velocity is 28.58 days. Thus Bharti takes on an
average 33 days to collect its receivables.
Interest Coverage Ratio of Bharti Airtel Ltd. is 4.8 for the year 2008-
2009. This means its profit is 4.8 times the interest expense. Its position
is comfortable when compared to the industry standards.
Gross Profit Margin Ratio of Bharti Airtel Ltd. is 39.74% for the year
2008-2009, means that Bharti is making a profit 39.74%. before deducting
the expenses.
Net Profit Ratio of Bharti Airtel Ltd. is 22.77% for the year 2007-2008
which is higher than the the industry standards. This indicates efficiency
in operations.
Return on Net Worth of Bharti Airtel Ltd. is 32.35 for the year 2008-
2009. It earns 32.35 rupees per rupee invested by the investors.
Turnover
Ratios
Net Profit Ratio of Reliance Communications is 5.47% for the year 2008-
2009. This is higher than the industry standards, so this goes to show the
efficiency in operation of the company.
9- 8- 7- 6- 5- 4- 3- 2- 1- Mar Mar-
Mar Mar Mar Mar Mar Mar Mar Mar Mar -00 99
KEY
RATIOS
:
Curren 0.66 0.84 0.76 0.8 0.93 0.89 0.51 0.41 0.47 0.43
t Ratio 0.76
Turnov
er
Ratios
Fixed 0.58 0.63 0.46 0.41 0.34 0.31 0.39 0.38 0.27 0.23
Assets 0.67
Invent 280. 295. 326. 180. 143. 137. 137. 134. 94.3 78.9 40.7
ory 23 19 83 33 04 44 11 11 5 5 2
Debtor 37.3 38.2 35.8 17.2 13.5 13.4 11.1 9.72 7.84 7.12 5.59
s 2 8 9 1 3 9 5
Interes 3.38 2.49 1.5 1.1 0.2 0.21 -0.14 -0.51 0.23 -1.63
t Cover
Ratio 1.94
PBIDT 30.7 36.6 34.8 36.6 32.1 21.6 35.3 24.8 -12.7 42.4 167.
M (%) 1 5 5 3 3 8 2 7 33
PBITM 23.6 19.4 19.3 17.5 4.44 4.99 -3.79 - 24.1 189.
(%) 7 1 3 25.3 5 22
18.1 4
PBDTM 21.39 29.6 27.0 23.7 16.1 -0.56 11.6 -3.03 - 60.9 -
(%) 7 4 2 7 2 62.6 8 283.
Debt-to-Equity Ratio is 0.95 for the year 2008-2009, which means that
company using more of debt instruments. This also indicates the
company’s assets are primarily financed through debt.
Current Ratio of IDEA is 0.76 for the year 2008-2009. This indicates that
the company might face problems in meeting their current liabilities.
Better current asset management is required.
Fixed Assets Turnover Ratio of IDEA is 0.67 for the year 2008-2009.
This Performance is better off than the industry standards. This indicates
that assets are being fairly utilized by the company.
Debtor Turnover Ratio of IDEA is 37.32 for the year 2008-2009. Hence
debtor velocity is 9.78 days. Thus, IDEA on an average takes 10 days to
collect its receivables.
Interest Cover Ratio of IDEA is 1.94 for the year 2008-2009, which
means that the profit it earns is about twice the amount of interest
obligation. The ratio is lesser than industry standards. The indications are
not very positive.
Gross Profit Margin Ratio of IDEA is 30.71 for the year 2008-2009,
means that IDEA is making a profit 30.71% on sales, before meeting its
expenses.
Return on Capital Employed Ratio of IDEA is 11.61 for the year 2008-
2009, which indicate that the company is earns rupees 15.59 per rupee of
capital employed.
Return on Net Worth of IDEA is 9.88 for the year 2008-2009, which
means it earns rupees 9.88 per rupee invested by the investors.
Turnover Ratios
Debt Equity Ratio of Vodafone is 0.13 for the year 2008-2009. This
indicates equity shareholder’s funds are the major source of funds for the
firm.
Current Ratio of Vodafone is 1.69 for the year 2008-2009. This indicates
that the company‘s current assets are sufficient to pay off the current
liabilities.
Interest Cover Ratio of Vodafone is 42.29 for the year 2008-2009, which
means that Vodafone‘s profits is 42.29 the interest expense. The company
is comfortable with regard to interest payments.
Gross Profit Margin Ratio of Vodafone is 37.86% for the year 2008-
2009, means that Vodafone’s margin on sales before meeting expenses is
37.86%.
Net Profit Ratio of Vodafone is 26.13% for the year 2008-2009, which is
higher than the industry standards. This indicates efficiency in operations.
KEY RATIOS 9- 8- 7- 6- 5- 4- 3- 2- 1-
Mar Mar Mar Mar Mar Mar Mar Mar Mar
Current Ratio 2.04 1.92 1.8 1.56 1.25 0.89 0.77 0.7 0.57
Turnover
Ratios
Fixed Assets 0.24 0.27 0.3 0.33 0.34 0.35 0.32 0.35 0.31
Debtors 5.94 5.86 5.83 5.59 6.3 9.07 5.84 5.09 5.22
Interest Cover 6.1 11.2 8.53 210. 76.8 2.08 10.1 3.72
Ratio 3.82 3 77 7 8
PBIDTM (%) 33.8 46.4 52.2 52.4 47.2 53.0 40.7 56.8 41.8
4 1 8 1 3 5 5 3
PBITM (%) 16.4 25.8 26.4 18.4 21.6 2.99 20.8 8.76
5.68 6
PBDTM (%) 43.7 49.9 49.3 47.1 52.7 39.3 54.7 39.4
32.3 4
CPM (%) 39.2 48.9 50.6 54.4 45.6 38.6 53.2 39.4
30.0 6
APATM (%) 9.3 22.5 24.7 25.6 14.1 0.84 17.2 6.4
1.9 9
ROCE (%) 1.89 5.84 10.0 11.4 8.17 10.0 1.15 8.6 3.49
RONW (%) 2.92 9.34 11.9 13.0 8.44 0.44 9.58 3.29
0.71 3
Current Ratio of BSNL is 2.04 for the year 2008-2009. This indicates that
the company‘s current assets are sufficient to pay off its current liabilities.
Debtor Turnover Ratio of BSNL is 5.94 for the year 2008-2009. So the
debtor velocity is 61.29 days i.e. BSNL takes on an average 61 days to
collect its receivables. The debtor turnover ratio is higher than the
industry standards.
Interest Coverage Ratio of BSNL is 6.1 for the year 2008-2009, which
means that BSNL earns profit which is 6.1 times interest obligations. So
the company is comfortable with regard to interest payment.
Gross Profit Margin Ratio of BSNL is 33.84 for the year 2008-2009,
means that BSNL is making a profit before interest, depreciation and tax
of 33.84%. BSNL being a public sector company has been able to generate
gross profit higher than the industry standards.
Net Profit Ratio of BSNL is 1.9 for the year 2008-2009, which is lower
considering then industry standards. Better expense management is
required.
Return on Capital Employed Ratio of BSNL is 1.89 for the year 2008-
2009, which indicate that the company earns 1.89 rupee per rupee of
capital employed.
Return on Net Worth of BSNL is 0.71 for the year 2007-2008, which is
lower considering the industry standards. This indicates that the firm
earns a profit of 0.71 rupees per rupee invested by shareholders.
Debt-Equity
44.15 1.48 0.80 0.50 1.05 1.41
Ratio
Turnover
Ratios
Interest
-4.67 0.19 1.46 3.08 3.64 1.94
Cover Ratio
Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar
09 08 07 06 05 04 03 02 01 00
Current Ratio 0.14 0.19 0.26 0.31 0.24 0.20 0.47 2.90 3.30 3.89
Turnover
Ratios:
Fixed Assets 0.17 0.20 0.24 0.27 0.25 0.20 0.18 0.18 0.27 0.43
12.9 29.0
Debtors 6.00 6.15 6.82 8.32 9.52 2.87 1.96 5.23
7 8
- - - - -
Interest Cover -1.18 -1.17 -0.74 0.05 1.21
0.82 0.56 0.49 0.64 0.79
- - -
18.9 11.5 12.0 23.1 44.7 52.5
PBITM (%) 35.8 30.6 46.8 2.29
2 5 4 9 9 2
1 7 2
- - -
10.4 17.7 58.3 - 31.5
PBDTM (%) 28.5 21.2 5.25 3.79 52.8
6 1 5 9.20 4
0 0 3
- - -
10.6 17.7 14.7 - 25.4
CPM (%) 28.7 21.4 5.09 3.64 54.6
9 1 1 9.86 5
3 8 5
14.6
ROCE (%) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
3
RONW (%) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.11
The debt equity ratio of HFCL Infotel in the year 06-07 is 66.61. This
indicates that the company employs a lot of debt in its capital structure.
This ratio is very high when compared to the industry standards.
The current ratio of HFCL Infotel is 0.14. This indicates that it might
have problems in repaying its current liabilities through its current assets.
Their position is not satisfactory considering the industry standards.
Fixed Assets Turnover Ratio of HFCL Infotel is 0.17 for the year 2008-
2009. This ratio is lower than the industry standards. This indicates that
assets are not being utilized effectively by the company.
Inventory Turnover Ratio of HFCL Infotel is 110.13 for the year 2008-
2009. So the stock velocity of Supreme telecommunication is 3.31.
Therefore, Supreme telecommunication takes on an average 3 days to
rotate its stock.
Interest Coverage Ratio of HFCL Infotel is -1.18 for the year 2008-2009,
which means that Supreme telecommunication‘s profits are not sufficient
to meet its interest obligations.
Gross Profit Margin Ratio of HFCL Infotel is 1.84 for the year 2008-
2009, means that HFCL Infotel makes a profit of 1.84% before meeting its
expenses.
Net Profit Ratio of HFCL Infotel is -66.38 for the year 2008-2009. The
performance of the company is very poor considering the industry
standards. The company is not able to meet its expenses.
Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar
Key Ratios
09 08 07 06 05 04 03 02 01 00
Turnover Ratios
- - - - -
Interest Cover
0.48 0.28 -0.74 2.6 2.4 1.2 1.0 1.0 -0.75 -1.83
Ratio
9 3 1 9 7
- - -
30.5 28.5 7.1 9.1 27. 12.
PBIDTM (%) 22.31 7.0 12.1 179.
5 2 1 4 33 34
4 0 64
-
35. 46. 24. 29. 30. 273.
PBITM (%) 7.54 2.78 -9.40 64.3
98 30 76 78 33 72
3
- -
14.8 18.4 26. 11. 0.1 16. 329.
PBDTM (%) 9.69 6.2 97.8
5 2 11 24 0 14 27
4 2
- -
14.7 18.3 26. 11. 0.1 16. 329.
CPM (%) 9.64 6.3 97.8
9 7 11 24 0 14 27
2 2
Fixed Assets Turnover Ratio of Tata Teleservices is 0.43 for the year
2008-2009. This ratio is lower than the industry standards. This indicates
that assets are not being utilized effectively by the company.
Debtor Turnover Ratio of Tata Teleservices is 8.78 for the year 2008-
2009. So the debtor velocity is 41.57 days. The company on an average
takes 41.57 days to collect its receivables.
Gross Profit Margin Ratio of Tata Teleservices is 30.55 for the year
2008-2009, means that HFCL Infotel makes a profit of 30.55% before
meeting its expenses.
Key Ratios
1.6
Debt-Equity Ratio 0.00 0.00 0.01 0.05 1.58 9.00
4
14.8 0.6
Current Ratio 0.45 3.91 9.52 2.18 0.28
7 9
Turnover Ratios
0.0
Fixed Assets 0.63 0.54 0.67 0.97 0.44 0.00
0
53.7 0.0
Inventory 51.70 32.85 31.63 30.41 0.00
8 0
0.0
Debtors 4.67 2.97 3.06 4.69 4.40 0.00
0
0.0
ROCE (%) -48.52 0.00 0.00 0.00 0.00 0.00
0
0.0
RONW (%) -48.82 0.00 0.00 0.00 0.00 0.00
0
The debt equity ratio of Sify ltd in the year 2001-02 is .01. This
indicates that the company employs a lot of debt in its capital structure.
This ratio is high considering the industry standards.
The current ratio of Sify ltd is 0.45. This indicates that it might have
problems in repaying its current liabilities through its current assets. Their
position is not satisfactory considering the industry standards.
Fixed Assets Turnover Ratio of Sify ltd is 0.63 for the year 2003-2004.
This indicates that assets are not being utilized effectively by the
company. However, the ratio is in line with the industry standards.
Inventory Turnover Ratio of Sify ltd is 51.74 for the year 2003-2004.
So the stock velocity of Supreme telecommunication is 7.054. Therefore,
Sify ltd takes about 7 days to rotate its stock.
Debtor Turnover Ratio of Sify ltd is 4.67 for the year 2003-2004. So
the debtor velocity is 78.15 days. The company on an average takes
78.15 days to collect its receivables.
Interest Coverage Ratio of Sify ltd is -187.56 for the year 2003-
2004.The company’s profits are not sufficient to meet its interest
obligation.
Gross Profit Margin Ratio of Sify ltd is -68.79 for the year 2003-2004,
means that Sify ltd l makes a loss of 30.55% even before meeting its
expenses.
Net Profit Ratio of Sify ltd is -97.11% for the year 2003-2004. The
performance of the company is very poor considering the industry
standards. The company is not able to meet its expenses.
Enterprise 1,62,852.9
Value 2 1,25,007.91 33906.72 0 0
32359.
Sales 25,761.11 14792.05 6719.99 2733.76 5
Market
Capitalizati
on 156785.52 32683.76 18504.99 0 0
• Bharti Airtel has the highest enterprise value among the top 5 players in the
market. Reliance Communications stands next to Bharti Airtel followed by IDEA.
• However, in terms of sale BSNL leads the other players. This is because of wider
coverage and its presence in the rural areas.
• The market capitalization of Bharti Airtel is the highest in the telecom sector
followed by Reliance.
• The Earnings per Share of Bharti Airtel is the highest among all the telecom
players in the market followed by Reliance and Vodafone.
Enterprise 7,410.4
Value 0 1208.26 0 0 0
Market
Capitaliza
tion 0 364.91 4505.85 0 0
• Tata Tele has the highest enterprise value among the five companies
followed by HFCL.
• Tata Tele reports the highest sale among the 5 players. HFCl ranks 2 in
terms of sales followed by Sify.
• The earnings per share of Tata tele is the highest followed by HFCL.
Budget 2010
• Budget Proposals
1. Full exemption from basic customs duty and CVD to components for
manufacture of battery chargers.
2. Components of Hands-free headphones of mobile handsets
including cellular phones are also fully exempt from customs duty
and CVD.
3. The validity of the exemption from special additional duty on mobile
phones is being extended till March 31, 2011.
4. The Minimum Alternate Tax (MAT) has been increased from 15% in
2009-10 to 18% in 2010-11.
• Budget Impact
1. The exemption from basic customs duty and CVD to components for
manufacture of battery chargers and hands-free headphones of
mobile handsets will make the mobile phones cheaper which in turn
will have a positive impact on their demand.
The number of mobile users per 100 persons is described by tele density.
Currently, the tele density of the Indian telecom sector is 33.23 per cent,
whereas the TRAI expected it to reach around 45 per cent by 2010.
• Alarming Competition
The rising competition from new entrants in the industry, both domestic
and foreign play-ers along with new technologies and their core
competencies, will heat up the competition in the industry.
• Availability of Spectrum
The Government has allowed and framed the policies for introduction of
new technologies in the Indian telecom sector in the form of 3G and Wi-
max. The Department of Tele-com and TRAI are about to auction the
required 3G spectrum to various service providers. The scarcity of
spectrum and the price to be charged at the auction will purely be a
matter of time.
Mobile commerce is the upcoming and growing trend. The increased use
of mobile phones for the purpose of banking, tele-booking, inquiries, and
other commercial ser-vices will lead to further increase in the revenues of
the companies. The increased use of such services is welcomed by the
users as it offers high utility and value for money.
Indian mobile users will soon have the option to switch their service
providers without changing their mobile numbers. Implementation of
mobile number will motivate and stimulate the service providers to
constantly endeavor to further improve their quality of service in order to
retain existing customers and attain new subscribers.
The revenues are showing a fall because of declining call tariff. However,
the profit mar-gins are stable because of rising subscriber base in the