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Telecom Industry
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Overview of Telecom Industry Indian Telecom Services
Three types of players exists in ' TelecomIndustry India ' community -
State owned companies like - BSNL and
MTNL
Private Indian owned companies like -
Reliance Infocomm and TataTeleservices
Foreign invested companies like
Hutchison-Essar, Bharti Tele-Ventures,
Escotel, Idea Cellular, BPL Mobile,
Spice Communications etc
Telecom Services India
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Overview Supply
Demand
Barriers to entry
Bargaining power of suppliers
Bargaining power of customers
Competition
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Overview-Financial Year 09
49% YoY increase in its subscriber base during the 12-
month period
Growth remained robust in the GSM mobile space
India's mobile subscriber base grew by 50% YoY, from261 m to 391 m
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Wireless Subscribers (in Million)
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Ratio Analysis
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Ratio Analysis Bharti Airtel
Ratios Mar - 07 Mar - 08 Mar - 09 % Change Reason
Current Ratio 0.47 0.57 0.69 47 Cash & Bank
NP Margin (%) 22.46 23.99 24.10 5.3 Service Income
EPS 21.27 32.9 40.79 91 Profit after tax
PE Ratio 17.94 12.55 7.67 -57.2 Market Price
Debt Equity 0.47 0.33 0.28 -40.4 Equity
Debt Asset 0.32 0.24 0.22 -31.3 Fixed Assets
Interest Coverage 26.47 29.51 30.38 14.7 EBIT
Debtors Turnover 14.31 12.28 12.78 -10.7 Debtors
Asset Turnover 0.75 1.03 1 33.33 Fixed Assets
ROCE (%) 29.06 27.95 28.4 -2.2 EBIT
RONW (%) 35.35 30.94 28.13 -20.4 Equity
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Ratio Analysis Idea Cellular
Ratios Mar - 07 Mar - 08 Mar - 09 % Change Reason
Current Ratio 0.87 0.43 0.98 12.6 Cash & Bank
NP Margin (%) 11.44 15.33 9.91 -13.3 Net Sales
EPS 1.94 3.96 3.23 66 Profit after tax
PE Ratio 48.73 25.94 15.52 -68.1 Market Price
Debt Equity 1.95 1.84 0.67 -65.6 Equity
Debt Asset 0.66 0.65 0.4 -39.3 Assets
Interest Coverage 2.99 3.89 2.55 -14.7 EBIT
Debtors Turnover 35.89 38.28 39.32 3.9 Net Sales
Asset Turnover 0.62 0.61 0.74 19.3 Net Sales
ROCE (%) 14.96 16.92 11.2 -25.1 EBIT
RONW (%) 23.04 29.48 8.87 -61.5 PAT
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Ratio Analysis Reliance Comm
Ratios Mar - 07 Mar - 08 Mar - 09 % Change Reason
Current Ratio 1.77 0.95 1.45 -18.1 Current Liabilities
NP Margin (%) 18.63 17.45 30.47 63.5 Non-rec Income
EPS 11.78 12.53 23.27 97.5 Profit after tax
PE Ratio 35.65 40.56 7.5 -78.9 Market Price
Debt Equity 0.71 0.82 0.6 -15.4 Long term debt
Debt Asset 0.42 0.45 0.37 -11.9 Long term debt
Interest Coverage 8.43 5.01 2.59 -69.2 Interest Exp
Debtors Turnover 15.9 15.61 11.72 -26.2 Debtors
Asset Turnover 0.7 0.77 0.76 8.5 Sales
ROCE (%) 10.96 9.65 7.01 -72.5 Equity Share
CapitalRONW (%) 11.74 10.41 9.29 -20.8
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ANALYSIS OF CASH FLOW
STATEMENT OF TELECOM
SECTOR
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RELIANCE COMMUNICATIONSMar '07 Mar '08 Mar '09
Net Profit Before Tax 2420.85 2604.09 4815.07
Net Cash From Operating Activities 10469.12 2982.8 1884.87
Net Cash (used in)/from
Investing Activities -4883.86 -11263.87 -7650.54
Net Cash (used in)/from Financing Activities 4645.92 6234.75 6405.25
Net (decrease)/increase In Cash and Cash
quivalents 10231.18 -2046.32 639.58
Opening Cash & Cash Equivalents -10162.73 2240.4 205.57
Closing Cash & Cash Equivalents 68.45 192.66 845.15
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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.
ANALYSIS OF CASH FLOW STATEMENT OF
RELIANCE COMMUNICATIONS:
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Mar '07 Mar '08 Mar '09
Net Profit Before Tax 4601.37 6972.54 8161.54
Net Cash From Operating Activities 8107.95 10459.85 11853.15
Net Cash (used in)/from
Investing Activities -7975.05 -11648.41 -10894.38
Net Cash (used in)/from Financing Activities 340.13 898.03 -672
Net (decrease)/increase In Cash and Cash
quivalents 473.03 -290.53 286.77
Opening Cash & Cash Equivalents 307.43 793.47 503.31
Closing Cash & Cash Equivalents 780.46 502.94 790.08
BHARTI AIRTEL
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ANALYSIS OF CASH FLOW STATEMENT OF
BHARTI AIRTEL:
OPERATING ACTIVITY
- IIncrease 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.
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Mar '07 Mar '08 Mar '09
Net Profit Before Tax 502.06 1044.36 1001.21
Net Cash From Operating Activities 1605.11 2502.22 1863.74
Net Cash (used in)/from
Investing Activities -2275.09 -5956.18 -7655.36
Net Cash (used in)/from Financing
Activities 2340.07 2131.29 7639
Net (decrease)/increase In Cash and Cash
quivalents 1670.09 -1322.67 1847.37
Opening Cash & Cash Equivalents 149.64 1819.73 497.06
Closing Cash & Cash Equivalents 1819.73 497.06 2344.43
IDEA CELLULAR
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ANALYSIS OF CASH FLOW STATEMENT OF IDEA
CELLULAR:OPERATING ACTIVITY
- ILoss 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.
- IPayment 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.
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Executive Summary
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Interfirm Comparison
2008-09Ratios Airtel Idea Reliance
Current Ratio 0.69 0.98 1.45
NP Margin (%) 22.58 9.91 30.47
Debt Equity
0.28 0.67 0.6ROCE (%)
28.4 11.2 3.01
RONW (%)
28.13 8.87 9.29
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Budget Impact Indirect gain from additional banking licenses
Rate of MAT: 15% to 18%
Good news for 3G Players
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Future Prospects
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Customers
Technologies
Rural Penetrationeg.TATA-Dainik Samachar , Reliance
Grameen Phone (FWP)
3GCustomer
Decrease in CPUS Increase in ARPU
Boost in Device Manufacturers
Opportunities
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Credits Purvi Asher
Ritika Poojari
Kushboo Vora
Sagar Shah
Chitra Bhosle
02
44
60
53
06
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THANK YOU