Telecom is one area in India where significant improvements have happen……..after 3) The growth in sales is still above normal. . Due to rapid growth of sales and profit margins, new players are getting attracted to the Industry giving rise to more and more competitors…… Like uninor,videocon comes in growth stage idea, airtel, reliance comes under maturity period, bsnl, mtnl comes under decline stage.
From the above figure we can easily state that among all the telecom operator BSNL is having highest current ratio and it represent that BSNL is having very good liquidity and can pay off their short term liability very easily as they are marinating huge cash reserves.
The earnings per share is a good measure of profitability . EPS ratio calculated for a number of years indicates whether or not the earning power of the company has increased. From Earning per Share perspective Bharti Airtel is considered to be most attractive company as the company’s earning potential have been increased irrespective of the increase in competition in the Indian telecom market.
debtor’s turnover ratio indicates the number of times the debtors are turned over a year. The higher the value of debtor’s turnover the more efficient is the management of debtors or more liquid the debtors are .Among all the players of telecom industry Idea and Bharti both have good liquidity position because their ability to convert debtors into cash is better from any other player in the industry which also signifies that their risk of loss due to bad debt will becomes low. BSNL is maintaining very low debtor turnover ratio which can be because of liberal credit which they offer to their customers.
Return on Capital Employed Ratio of AIRCEL is 4.785 for the year 2008-2009, which indicate that the company is earning 4.8 percent return on the total capital employed that consists of fixed assets , investments and net working capital. Projected return on capital is even worse i.e. 3.76 for 2009-10 ……Return on capital employed is one of the key ratios that determine the fate of the company in the future. Through the graphs we can easily see that most of the companies are having negative trend in the past years due to their inability to meet the competition and rapid changes in technological environment. Only few of the private players like Bharti and Idea have improved their return on capital and have positive trend in the returns over the past 5 years.
Net profit ratio shows that Bharti Airtel ,Aircel and Idea cellular are having positive trend in past five years. Company’s like BSNL have to work hard to break out their negative trend. from the above inferences it can be concluded that BSNL is having very weak financial position as compared to Bharti Airtel and Idea Cellular. Trends of previous 5 years have shown that company has slowly deteriorated his position i.e. from the leader to loser. If the same trend continues in the next few years than we can see death of this giant company.
debt fund analysis
FUNDAMENTAL ANALYSIS OF TELECOM SECTOR
WWW.TRAI.GOV.IN www.moneycontrol.com Ernst & Young report Indian Cellular Association, January 2011
The Telecom Industry in India is in its growth stage private operators also are providing services which is giving rise to more choice. The Telecom sector in India is experiencing a stage of Mature Growth This is leading to an increase in the level of supply and lower prices. Profit Margins will start declining over time. The new players in the industry are: Datacomm S Tel Ltd Unitech Wireless Ltd By Cell Telecommunications Swan Telecom Pvt. Ltd
1851: First operational landline was laid down near Kolkata. 1881: The telephone sector started in India . 1985: DOT(Department of telecom) was established . 1986: DOT converted into two a) VSNL b) MTNL 1986:Department reorganized the Telecommunication Circles with the Secondary Switching Areas as basic units. 1994 : First National Telecom Policy was introduced and the sector was opened up for privatization. 1998: First tariff order issued in –thus reforms effective from 1998.
1999 : The second National Telecom Policy was introduced to take the telecom sector to next level. 2004 : The policy for Broadband was defined with the aim to increase the internet penetration in India. Broadband was define initially as 128 Kbps which was later changed to 256 kbps. Thursday, Jan 20. The MNP scheme was launched first in Haryana in Nov 2010 and now all set to be implemented in all around the nation. 27th September 2011 - 100 SMS per day per SIM for all the customers.
Service Provider wise Market Share as on 31.10.2011
Reasons for high growth are changes or initiatives taken in the recent years.1. One Indian Plan launched in 2006 heated up the price war in India.2. New Licenses given by Government in 2008 added up in ongoing competition – 120 new licenses awarded.3. Lowest tariffs in the world with local calls reaching 10 paise/min and STD tariffs dropping to 50 paise/min from high tariffs of 17 Rs/min in 19944. Reduction in Handset prices has made mobile a common weapon tool.
1. Threat of New Entrants - Low2. Bargaining Power of Suppliers – High3. Bargaining Power of Buyers – High4. Threat of Substitute Products – Low5. Intensity of Rivalry among Competitors - High
Bharti Airtel Idea Cellular Ltd. Liquidity Ratios Liquidity Ratios Debt/Equity 0.27 Debt/Equity 0.85 Current Ratio 0.82 Current Ratio 0.61 Quick Ratio 0.77 Quick Ratio 0.51 Interest Cover 45.69 Interest Cover 4.13