Telecom Industry

Overview of Telecom Industry

Indian Telecom Services Three types of players exists in ' Telecom Industry India ' community State owned companies like - BSNL and MTNL Private Indian owned companies like Reliance Infocomm and Tata Teleservices
Telecom Services India

Foreign invested companies like Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications etc

Overview
Supply Demand Barriers to entry Bargaining power of suppliers Bargaining power of customers Competition

Overview- Financial Year 09

49% YoY increase in its subscriber base during the 12month period Growth remained robust in the GSM mobile space India's mobile subscriber base grew by 50% YoY, from 261 m to 391 m

Wireless Subscribers (in Million)

Ratio Analysis

Ratio Analysis
Ratios
Current Ratio
NP Margin (%) EPS PE Ratio Debt Equity Debt Asset Interest Coverage Debtors Turnover Asset Turnover

Bharti Airtel
Reason
Cash & Bank
Service Income Profit after tax Market Price

Mar - 07 Mar - 08 Mar - 09 % Change

0.47
22.46

0.57
23.99

0.69
24.10

47
5.3

21.27 17.94

32.9 12.55

40.79 7.67

91 -57.2

0.47
0.32 26.47 14.31 0.75

0.33
0.24 29.51 12.28 1.03

0.28
0.22 30.38 12.78 1

-40.4
-31.3 14.7
-10.7 33.33

Equity
Fixed Assets EBIT Debtors Fixed Assets

ROCE (%)
RONW (%)

29.06
35.35

27.95
30.94

28.4
28.13

-2.2
-20.4

EBIT
Equity

Ratio Analysis
Ratios
Current Ratio NP Margin (%) EPS PE Ratio Debt Equity

Idea Cellular
Mar - 08
0.43 15.33

Mar - 07
0.87 11.44

Mar - 09 % Change
0.98 9.91 12.6 -13.3

Reason
Cash & Bank Net Sales

1.94 48.73 1.95 0.66 2.99

35.89 0.62 14.96 23.04

3.96 25.94 1.84 0.65 3.89

38.28 0.61 16.92 29.48

3.23 15.52 0.67 0.4 2.55

39.32 0.74 11.2 8.87

66 -68.1 -65.6 -39.3 -14.7

3.9 19.3 -25.1 -61.5

Profit after tax

Market Price Equity Assets EBIT Net Sales Net Sales EBIT PAT

Debt Asset
Interest Coverage Debtors Turnover Asset Turnover ROCE (%) RONW (%)

Ratio Analysis
Ratios
Current Ratio
NP Margin (%) EPS PE Ratio Debt Equity Debt Asset Interest Coverage Debtors Turnover Asset Turnover ROCE (%) RONW (%)

Reliance Comm
Reason
Current Liabilities
Non-rec Income

Mar - 07 Mar - 08 Mar - 09 % Change

1.77
18.63

0.95
17.45

1.45
30.47

-18.1
63.5

11.78
35.65 0.71 0.42 8.43
15.9 0.7 10.96 11.74

12.53
40.56 0.82 0.45 5.01
15.61 0.77 9.65 10.41

23.27
7.5 0.6 0.37 2.59
11.72 0.76 7.01 9.29

97.5
-78.9 -15.4 -11.9 -69.2
-26.2 8.5 -72.5 -20.8

Profit after tax

Market Price Long term debt Long term debt Interest Exp Debtors Sales Equity Share Capital

ANALYSIS OF CASH FLOW STATEMENT OF TELECOM SECTOR

RELIANCE COMMUNICATIONS
Mar '07 Mar '08 Mar '09

Net Profit Before Tax

Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents

2420.85
10469.12

2604.09
2982.8

4815.07
1884.87

-4883.86 4645.92 10231.18 -10162.73 68.45

-11263.87 6234.75 -2046.32 2240.4 192.66

-7650.54 6405.25 639.58 205.57 845.15

ANALYSIS OF CASH FLOW STATEMENT OF RELIANCE COMMUNICATIONS:

OPERATING ACTIVITY

- I Increase in the financial income from 715-1045 i.e 44%. - I Increase in debtors from 425 1641 i.e 286%.
INVESTING ACTIVITY

- I Additions of fixed assets from 5250 17393i.e 231%. - I Sale of fixed assets from .26 to 10 .
FINANCING ACTIVITY

- I Proceeds from short-term borrowings from 2629 9639 i.e 266%. - I Proceeds from debentures of 3000.

BHARTI AIRTEL
Mar '07 Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents -7975.05 340.13 473.03 307.43 780.46 -11648.41 898.03 -290.53 793.47 502.94 -10894.38 -672 286.77 503.31 790.08 4601.37 8107.95 Mar '08 6972.54 10459.85 Mar '09 8161.54 11853.15

ANALYSIS OF CASH FLOW STATEMENT OF BHARTI AIRTEL:

OPERATING ACTIVITY

- I Increase in the trade and other payables 493.3 to 3016.2 i.e 500%. - I Unrealized foreign exchange gain from 136 to 1516 i.e 1000%.
INVESTING ACTIVITY

- I Purchase of investments from 175 to 270 i.e 55%. - I Purchase of fixed deposits 149.
FINANCING ACTIVITY

- I Cash credit facility of Rs. 146. - I Payment of cash-credit up to 91 and repayment of long-term loan.

IDEA CELLULAR
Mar '07 Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents -2275.09 2340.07 1670.09 149.64 1819.73 -5956.18 2131.29 -1322.67 1819.73 497.06 -7655.36 7639 1847.37 497.06 2344.43 502.06 1605.11 Mar '08 1044.36 2502.22 Mar '09 1001.21 1863.74

ANALYSIS OF CASH FLOW STATEMENT OF IDEA CELLULAR:

OPERATING ACTIVITY

- I Loss on the sale of fixed assets i.e 15.12. - I Increase in depreciation from 756-1472 i.e 94.7%.
INVESTING ACTIVITY

- I Purchase of fixed assets and intangible assets. - I Payment for the purchase of shares of Spice Communications Ltd.
FINANCING ACTIVITY

- I Proceeds from short-term borrowings from 221 to 449 i.e 100%. - I Convertible Preference shares issue.

Executive Summary

Interfirm Comparison 2008-09

Ratios Current Ratio NP Margin (%) Debt Equity Airtel 0.69 22.58 Idea 0.98 9.91 Reliance 1.45 30.47

0.28
ROCE (%)

0.67 11.2 8.87

0.6 3.01 9.29

28.4
RONW (%)

28.13

Budget Impact
Indirect gain from additional banking licenses Rate of MAT: 15% to 18% Good news for 3G Players

Future Prospects

 Customers

Technologies Rural Penetration eg.TATA-Dainik Samachar , Reliance Grameen Phone (FWP) 3G Customer Decrease in CPUS Increase in ARPU Boost in Device Manufacturers Opportunities

Credits
Purvi Asher Ritika Poojari Kushboo Vora Sagar Shah Chitra Bhosle 02 44 60 53 06

THANK YOU