comparative financial analysis of telecom companies in india

CHAPTER 1 INTRODUCTION TO THE INDIAN TELECOM INDUSTRY

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HISTORY The history of telecommunication industry started with the first public demonstration of Morse’s electric telegraph, Baltimore to Washington in 1844. In 1876 Alexander Graham Bell filed his patent application and the first telephone patent was issued to him on 7th of March. In 1913, telegraph was popular way of communication. AT&T commits to dispose its telegraph stocks and agreed to provide long distance connection to independence telephone system. In 1956, 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. In 1982 , AT&T was requested to divestiture its stock ownership in Western Electric; termination of exclusive relationship between AT&T and Western Electric; divestiture by Western Electric of its fifty percent interest in Bell Telephone Laboratories, AT&T ‘s telecommunication research and development facility, is a jointly owned subsidiary in which AT&T and Western Electric each own 50% of the stock; separation of telephone manufacturing from provision of telephone service and the compulsory licensing of patents owned by AT&T on a non-discriminatory basis. It was telecommunication act of 1996 that true competition was allowed. The act of 1996 opened the market to all competitors. AT&T being the first telecommunication company paved the road for the telecommunication industry as well as set the policy and standards for others to follow. 1.1 Beginning of telecommunication in India The era of telecommunication in India started from the year of 1851 with the initiative from govt. of India near the city of Calcutta now known as Kolkatta. However the rapid growth in telecom industry came into picture after the year of 2002-03 onwards as the more number of service providers came into existence. Since 2002-03 there is rapid change in the technology and increase in numbers of subscribers in the Indian telecom industry till now. The following are the milestones in the Indian telecom industry.

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 1851 First operational land lines were laid by the government near Calcutta.  1881 Telephone services introduced in India.  1883 Merger with postal system.  1923 Formation of Indian radio Telegraph Company.  1932 Merger of ETC and IRT into Indian Radio and Cable Communication Company.  1947 Nationalization of all foreign telecommunication companies to form the posts,

telephone and telegraph, a monopoly run by the government’s ministry of communications.  1985 Department of telecommunication established , an exclusive provider of

domestic and long-distance services that would be its own regulator.  1986 Conversion of dot into two wholly government – owned companies the VSNL

for international telecommunication and MTNL for services in metropolitan areas.  1997 Telecom regulatory authority created.

Telecommunication is important not only because of its role in bringing the benefits of communication to every corner of India but also in serving the new policy objectives of improving the global competitiveness of the Indian economy and stimulating and attracting foreign direct investment. Indian Telecom industry is one of the fastest growing telecom markets in the world. In telecom industry, service providers are the main drivers; whereas equipment manufacturers are witnessing growth and decline in successive quarters as sales is dependent on order undertaken by the companies. Today the Indian telecommunications network with over 375 Million subscribers is second largest network in the world after China. India is also the fastest growing telecom market in the world with an addition of 9- 10 million monthly subscribers. The teledensity of the Country has increased from 18% in 2006 to 33% in December 2008, showing a stupendous annual growth of about 50%, one of the highest in any sector of the Indian Economy. The Department of Telecommunications has been able to provide state of the art world-class infrastructure at globally competitive tariffs and reduce the digital divide by extending connectivity to the unconnected areas. India has emerged as 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

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most needed facility. The reform measures coupled with the proactive policies of the Department of Telecommunications have resulted in an unprecedented growth of the telecom sector. There is a cut-throat competition in the Telecom industry as more and more advanced technology is developed in very short time. Once the people get addicted to 2G technology by the time new players come up with latest technology called 3G and EDGE. The thrust areas presently are:

1. Building a modern and efficient infrastructure ensuring greater competitive environment 2. With equal opportunities and level playing field for all stakeholders. 3. Strengthening research and development for manufacturing, value added services. 4. Efficient and transparent spectrum management 5. To accelerate broadband penetration 6. Universal service to all uncovered areas including rural areas. 7. Enabling Indian telecom companies to become global players.

Recent things to watch in Indian telecom sector are: 1. 3G and BWA auctions 2. MVNO 3. Mobile Number Portability 4. New Policy for Value Added Services 5. Market dynamics once the recently licensed new telecom operators start rolling out

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6. Services. 7. Increased thrust on telecom equipment manufacturing and exports. 8. Reduction in Mobile Termination Charges as the cost per line has substantially reduced 9. Due to technological advancement and increase in traffic.

India's telecom sector has shown massive upsurge in the recent years in all respects of industrial growth. From the status of state monopoly with very limited growth, it has grown in to the level of an industry. Telephone, whether fixed landline or mobile, is an essential necessity for the people of India. This changing phase was possible with the economic development that followed the process of structuring the economy in the capitalistic pattern. Removal of restrictions on foreign capital investment and industrial de-licensing resulted in fast growth of this sector. At present the country's telecom industry has achieved a growth rate of 14 per cent. Till 2000, though cellular phone companies were present, fixed landlines were popular in most parts of the country, with government of India setting up the Telecom Regulatory Authority of India, and measures to allow new players country, the featured products in the segment came in to prominence.

Today the industry offers services such as fixed landlines, WLL, GSM mobiles, CDMA and IP services to customers. Increasing competition among players allowed the prices drastically down by making the mobile facility accessible to the urban middle class population, and to a great extend in the rural areas. Even for small shopkeepers and factory workers a phone connection is not an unreachable luxury. Major players in the sector are BSNL, MTNL, Reliance, Bharti Teleservices, Vodafone Essar, BPL, Tata, Idea, etc. With the growth of telecom services, telecom equipment and accessories manufacturing has also grown in a big way.

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Indian Telecom sector, like any other industrial sector in the country, has gone through many phases of growth and diversification. Starting from telegraphic and telephonic systems in the 19th century, the field of telephonic communication has now expanded to make use of advanced technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. Day by day, both the Public Players and the Private Players are putting in their resources and efforts to improve the telecommunication technology so as to give the maximum to their customers. The wireless subscriber crossed the 261 million subscriber mark at the end of the financial year in comparison to the subscriber base of 165.11 million at the end of March, 2009. It added 95.9 million subscribers in the financial year 2008-09 registering an annual growth rate of about 58.12%. The total subscriber base of wireless services has grown from 33.69 million in March, 05 to 261.07 million in March, 09 which is shown in fig. 1.

Fig 1

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CHAPTER 2

INTRODUCTION TO THE SAMPLE COMPANIES

2.1 INTRODUCTION

 BHARTI AIRTEL LIMITED

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Bharti Airtel Limited, the company's existence was marked in the year 1995. It is a leading Indian telecommunication service provider through three strategic business units namely Mobile Services, Broadband & Telephone Services and Enterprise Services. The company has started with providing mobile service to single circle entity and now it grown to offer services to all 23 telecom circles of India. One of the largest integrated private telecom service providers with an all India mobile footprint, through a combination of organic and inorganic growth. During the year 1997-98 Bharti Airtel Ltd becomes the first private telecom operator to obtain a license to provide basic telephone services in the state of Madhya Pradesh and in the same period the company forms Bharti BT VSAT Ltd., focused on providing VAST solutions across India and Bharti BT Internet Ltd. The company acquired JT Mobiles, cellular services operator in Punjab, Karnataka and Andhra Pradesh and becomes the largest private telecom operator in India during the period of 1999-2000. Also expands its South Indian footprint by acquiring Skycell, Chennai. The company acquired a 30.20% equity interest of Telecom Italia in Bharti Telenet and 18.8% from Bharti Telecom thereby making Bharti Telenet a 100% subsidiary of Bharti TeleVentures. BTVL also holds an effective 74% equity in Bharti Mobile and 100% equity in Bharti Cellular. Bharti Telenet has entered into license agreements to provide fixed-line services in the Haryana, Delhi, Tamil Nadu and Karnataka Circles. Airtel launched IndiaOne, India's first private sector national and international long distance service in the year of 200102. The company incorporated India's first private submarine cable landing station with joint venture from SingTel in the same year. In 2002-03 the company made a brief corporate restructuring by merging all the mobile operations into Bharti Cellular Limited and all fixed line, long distance and data services into Bharat Infotel Limited. Bharti Airtel made a historic strategic partnership with IBM and Ericsson for outsourcing the company's core IT and network activities and also launched Blackberry wireless solution India, as a result of an exclusive tie-up with Research in Motion (RIM). BTVL's two subsidiaries Bharti Cellular Ltd and Bharti Infotel Ltd have been merged with the company in the year of 2004. Subsequently Bharti Broadband Ltd and Satcom Broadband Equipment Ltd has become the subsidiaries of the company after the above said merger. During the year 2005 Bharti Airtel Ltd expand its

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wing to Rajasthan and North East Circles also by the acquisition of Bharti Hexacom, which owns Licenses to operate cellular services in the Rajasthan and North East Circles. Bharti Airtel Ltd noted as 'Indian Mobile Operator of the Year 2005' by Asian Mobile News, became the top-most Telecom Company and was featured amongst the top three companies across the sectors in the ET 500 published in June 2005 and the company Introduced Stock and Portfolio Tracker on the mobile in association with the Bombay Stock Exchange, it was the first of its kind. The agreement was emerged with Ericsson and the company in 2005-06 to provide managed services and expands its GSM/GPRS network into rural India in 15 circles under managed capacity expansion. During the year 2006-07 Bharti Airtel has entered into agreement with Microsoft to offer software and services for the Small and Medium business market in India. The company also has an agreement with Google to offer services on Airtel Mobile. Also an agreement with Adani Group to connect Mundra Port and special Economic Zone. A Three year contract with Nokia at an estimated value of US$400 million to expand its managed GSM/GPRS/EDGE networks in eight Airtel circles and deploy a pan India WAP solution across its networks. The company was conferred many awards during the year 2006-07, such as Best Indian Carrier Award in the Telecom Asia Awards 2006, Wireless Service Provider of the year and the competitive Service Provider of the year award in the Telecom Asia Awards 2006, Most Preferred Cellular Service Provider Award in the telecom category for the year 2006 at the Awaaz Consumer Awards 2006, MIS Asia II Excellence Award 2006 for Best Knowledge Management, Most Customer Responsive Telecom Company in India by the AvayaEconomic Times Global Connect Awards and Nasscom IT Innovation Award for the Business Model Innovation for the year 2006. The company received a letter of offer from Telecommunications Regulatory Commission of Sri Lanka to provide 2G and 3G mobile services in Sri Lanka on January 2007. This was the first international operation of the company. Bharti Airtel introduced the Blackberry 8800 business phone in March 2007. Bharti Airtel and GSM Association launched the Global money transfer pilot project in India. This initiative enable 25 million of NRI's to remit their money to India through mobile phones. During the year 2007, the company also incorporated Bharti Airtel (USA) Ltd, Bharti Airtel (UK) Ltd, Bharti Airtel (Canada) Ltd, Bharti Airtel (Hongkong) Ltd as a wholly owned subsidiary of the company for providing international calling services and wholesale voice Page 9 of 42

switching and data products in the respective countries. Bharti Infratel Ltd has been incorporated as a wholly owned subsidiary with an initial investment of Rs.500000 and also acquired the Submarine Network Cable System from Network i2i by way of purchase of all the assets or equity for an overall consideration of US$110 million. In August of the same year Wal-mart formally marked its entry into India by signing two agreements with Bharti Enterprises. During January 2008, the company has signed a MoU with VeriSign, Inc agreed to form a strategic market partnership for jointly launch best-in-class security services, to deliver VeriSign's identity protection, managed security and fraud detection services, and to support the development of the next-generation Internet infrastructure in the Indian market. The company has achieved the 60 million-customer marks on February 2008. This landmark has catapulted Bharti Airtel into the club of top mobile operators in the world in terms of subscriber base. The 60 million-customer base covers mobile as well as fixed line and broadband customers. Bharti Airtel has overtaken State-run Bharat Sanchar Nigam Ltd as the largest National Long Distance (NLD) service provider in terms of revenue, amount of Rs 709 crore. The company has joined hands with five international companies including Internet giant Google, Global Transit, KDDI Corporation, Pacnet and SingTel have formed the Unity Bandwidth Consortium which will together invest about $300 million to construct the new high-bandwidth, sub-sea cable system linking the US and Japan. As on March 2008, Bharti Airtel and Micro Technologies India have tied up to offer micro lost mobile tracking system to secure the mobile handsets of Airtel subscribers. As on May 2008, in a bid to gain quicker foothold into the rural areas, Bharti Airtel has formed a joint venture with IFFCO, which will offer customized mobile services to a target base of 55 million farmers across the country. Bharti Airtel Ltd is amongst the fastest growing telecom companies in the world and its moving to attain the position of most admired brand in India with the three domains as loved by more customers, targeted by top talent and benchmarked by more business.

 IDEA CELLULAR LIMITED

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IDEA Cellular Limited, a part of the Aditya Birla Group and an India's leading Global System for Mobile communication (GSM) Mobile Services operator was began its journey in the year 1995 as in the name of Birla Communications Limited for providing GSM-based services in the Gujarat and Maharashtra Circles. Later the company has licenses to operate in all 22 Service Areas. Presently, operations exist in 11 Service Areas covering Delhi, Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chattisgarh, Uttaranchal, Haryana, UP-West, Himachal Pradesh, UP-East, Rajasthan and Kerala. With a customer base of over 24 million, IDEA Cellular's footprint currently covers approximately 60% of India's telecom population. The company's operational 11 Service Areas are broken up into Established and New Service Areas. The established service areas are Delhi, Andhra Pradesh, Gujarat and Maharashtra, Haryana, Kerala, Madhya Pradesh and Uttar Pradesh (West) and the New Service Areas are Uttar Pradesh (East), Rajasthan and Himachal Pradesh. Changed its name to Birla AT&T Communications Limited followed by joint venture between Grasim Industries and AT&T Corporation in the year 1996. After a year, in 1997, commenced its operations in the Gujarat and Maharashtra. Migrated to revenues share license fee regime under New Telecommunications Policy ('NTP') Circles in the year 1999. During the year 2000, the company merged with Tata Cellular Limited, thereby acquired original license for the Andhra Pradesh Circle. IDEA acquired RPG Cellular Limited and consequently the license for the Madhya Pradesh (including Chattisgarh) Circle in the year 2001, and in the same year changed its name from Birla AT&T Communications Limited to Birla Tata AT&T Limited. Obtained license for providing GSM-based services in the Delhi Circle. Again in year later, in 2002, the company altered its name to Idea Cellular Limited and launched 'Idea' brand name and commenced its commercial operations in Delhi Circle. During the year, the company reached one million subscriber mark consecutively in the year 2003, reached two million subscriber mark. During the year 2004, the company acquired Escotel Mobile Communications Limited (subsequently renamed as Idea Mobile Communications Limited), reached the four million subscriber mark and the first operator in India to commercially launched EDGE services 2005. Reached the five million subscriber mark in the year 2005 and IDEA won an Award for the 'Bill Flash' service at GSM Association Awards in Barcelona, Spain. The Company became a part of the Aditya Birla Group in the year 2006, subsequent to the TATA Group transferred its entire shareholding in the Company to the Aditya Birla Group. In the same

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year 2006, IDEA acquired Escorts Telecommunications Limited (subsequently renamed as Idea Telecommunications Limited). The Company reached the 10 million subscriber mark and also launched New Circles for obtain more and more customers. IDEA has extended its reach to 500 towns in Andhra Pradesh in August of the year 2006. Received Letter of Intent from the DoT for a new UAS License for both Mumbai and Bihar Circles. ABNL, the parent of Aditya Birla Telecom Limited, agreed to transfer its entire shareholding in Aditya Birla Telecom Limited to the Company for the consideration of Rs. 100 million. In 2007, the company won an award for the 'CARE' service in the 'Best Billing or Customer Care Solution' at the GSM Association Awards in Barcelona, Spain. The Initial Public Offering aggregating to Rs. 28,187 million and the company listed in both Bombay Stock Exchange and the National Stock Exchange during the year 2007. IDEA merged seven of its subsidiaries and reached the twenty million subscriber mark in the same year 2007. As on February 2008, IDEA Cellular Ltd tied up with Southern Biotechnologies Ltd to bio-diesel for operating IDEA's gensets at all towers in the Andhra Pradesh region. The Company with Geodesic, an innovator in communication, collaboration and entertainment applications on mobile and Internet platforms jointly announced the launch of 'Idea Radio', a truly differentiated mobile music service for IDEA customers in the same year 2008. Customer Service and Innovation are the drivers of this Cellular Brand. A brand known for their many firsts, IDEA is only the operator to launch General Packet Radio Service (GPRS) and EDGE in the country. IDEA has seen phenomenal growth since its inception, the company's footprint idea is to first achieve critical mass, then drill deep instead of spreading thin, however, does not increasing geographic footprint only, it also drills deep and successfully attempts to provide excellent network coverage in all its circles of operations.

 RELIANCE COMMUNICATIONS LIMITED Reliance Communications Limited (RCL) is the flagship company of the Anil Dhirubhai Ambani Group (ADAG), is India's largest private sector information and communications

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company with over 48 million subscribers. It was established in the year 2004 as Reliance Infrastructure Developers Private Limited, Reliance Communications started laying 60,000 route kilometres of a pan-India fibre optic backbone with high capacity, integrated (wireless and wireline), convergent (voice, data and video) digital network and to offer services spanning the entire infocomm value chain. It is capable of delivering a range of services spanning the entire infocomm (information and communication) value chain, including infrastructure and services for enterprises as well as individuals, applications, and consulting. The Company's business encompasses a complete range of telecom services covering mobile and fixed line telephony. It includes broadband, national and international long distance services and data services along with an exhaustive range of value-added services and applications. During the year 2004, International wholesale telecommunications service provider, FLAG Telecom amalgamates with Reliance Gateway, a wholly owned subsidiary of Reliance Infocomm, the company launched RIM Prepaid with attractive offer, Reliance Infocomm introduced World Card - a Prepaid International calling card for affordable and convenient ISD calls from India, the first regional Customer Contact Centre was launched in Chennai. In the same year the company made partnership with MCI to offer India's First MPLS Global VPN Solution. Introduced Railway Ticket booking from R World data applications suite of Reliance India Mobile. In 2005, RCL only the company introduced, first e-recharge facility in CDMA in India, the company has had joins hands with Air Deccan to offer air ticket booking facility at Reliance WebWorld. Reliance Infocomm rolls out international roaming facility across several countries to become the first Indian CDMA operator to offer its customers such a service. The company tied-up with the Bombay Stock Exchange to make available livestock quotes on its mobile phones during the same year 2005. The status of the company was changed to Public Limited in July 2005. Name of the company was changed from Reliance Infrastructure Developers Private Limited to Reliance Communication Ventures Limited in August 2005. RCL, UK launched Reliance IndiaCall service in England and Wales enabling callers to make high-quality calls to India from any landline or mobile phone at economical rates. Reliance Infocomm and China Telecom signed agreement for telecom services to provide direct telecommunication service, including a global hubbing service, to subscribers in the both two countries.

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India's first Talking Message Service (TMS) enabling the mobile users to send voice messages to not only other mobiles but also fixed wireless phones (FWP) and landlines in Reliance communications network were launched during the year 2006. In the same year 2006, RCL listed on the Bombay Stock Exchange and National Stock Exchange, the company ties up with Disney to offer on Reliance Mobile World India's first 3D animation on mobile, launched 'Hello Capital Plan' to enable its subscribers in 19 state capitals to call each other at the local call rate of 40 paise per minute, T-Com signs contract with FLAG Telecom for Europe-US bandwidth, Reliance Communications' FALCON Cable System was initiated in the same year. RCL launched Free Group Term Life Cover for its CDMA subscribers. RCL and Nokia have joined hands to market the Nokia 1255 mobile handset in India at a price of Rs 1,999 during the period of 2006. Reliance Infocomm Limited, Ambani Enterprises Private Limited, Reliance Business Management

Private

Limited,

Formax

Commercial

Private

Limited,

Reliance

Communications Technologies Limited, Reliance Software Solutions Private Limited, Reliance Communications Solutions Private Limited and Panther Consultants Private Limited was amalgamated and the Network division of the Reliance Communications Infrastructure Limited was demerged with the Company during the year 2006. The name of the Company was changed from Reliance Communication Ventures Limited to Reliance Communications Limited with effect from 7th June 2006. The Company joined Lenovo and Intel for 'Internet on the Move' in the year 2007. Also in the same year, RCL ties up with Naukri.com for Search Jobs & Classified Ads from Reliance Mobile World. The demerger of Passive Infrastructure division Reliance Communications & Reliance was approved in March of the year 2007. Sunny Days And Nights For Reliance Mobile Subscribers as Reliance Communications ties up with SUN TV to offer video streaming of all SUN TV programs online 24x7. In May of the year 2007, the company bagged West Bengal E-Governance Project. RCL slashed its call rate to US and Canada. It's now just Rs 1.99 per minute and also launched Lifetime Validity Recharge @ Just Rs.499. The tie up was made with Cisco to launch Business Internet Services for SMEs in Pune in the year. After, in July of the same year 2007, the company and QUALCOMM was made collaboration on CDMA2000 Expansion. The biggest acquisition deal so far, the company bought US data Communication Company Yipes Holdings' in an allcash deal for 4300 million (Rs 1200 crore) in July 2007. RCL came forwarded to sale of

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equity stake in its Tower Company-Reliance Telecom Infrastructure Limited in July of the year. For air and hotel bookings, the company has had joins hands with Yatra.com. The money transfer also available in the RCL, such facility was started in September of the year 2007. The company made strategic partnership with Vanco. As on April 2008, RCL launched Exam Guru, the educational portal, which provides information on exam result, college admissions, exam schedules, admission deadlines, mock tests and also tips for bettering performance. RCL made ties up with International Cricket Council for rankings in the next eight years. During the same month and same year, the company has acquired UK based eWave World, which offers wireless telephony services using WIMAX technology. In May 2008, Reliance Globalcom, a subsidiary of the company, has acquired London based managed network services provider, Vanco Group, for about $77 million (Rs 324 crore).

 TATA COMMUNICATIONS LIMITED Tata Communications Limited, formerly known as Videsh Sanchar Nigam Limited or VSNL, is India's largest telecommunication company in international long distance, enterprise data and internet services. Part of the Tata Group, Tata Communications is based in Mumbai and has operations in over 80 cities spread across 40 countries. Through its subsidiary Tyco Global Network, it is also one of the world's largest submarine cable bandwidth providers and has the world's largest network of submarine cables. Other subsidiaries of Tata Communications include VSNL International Canada, formerly known as Teleglobe while it is the majority share-holder of Neotel, South Africa's second national operator (SNO) for fixed line telecommunication services. In 1986, VSNL was formed as a Government of India-owned company. In 2000, Tata Group acquired controlling stake in VSNL which was later expanded to 46%. In February 2008, VSNL was renamed as Tata Communications Limited. In February 2008, Tata Communications announced US$2 billion global expansion plan. In September 2008, Tata Communications was directed by the International Chamber of Commerce to pay US$19 million to Flag Telecom as damages over a cable dispute. On January 15 2009,

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Tata Communications agreed on an out of court settlement in the case, since it had already pain $19 million in damages, ending the five year legal battle. Tata Communications is a leading global provider of telecommunications solutions serving the voice, data and next-generation service needs of carriers, enterprises and consumers in over 30 countries. As discussed above, earlier known as Videsh Sanchar Nigam, the company became a part of the Tata Group in 2002. In 2008, VSNL, VSNL International, Teleglobe, Tata Indicom Enterprise Business Unit, VGSL and CIPRIS were brought under one global brand name – Tata Communications. The company is now the number one global international wholesale voice operator and India's largest provider of international long distance, enterprise data and internet services in India. Tata’s global network spans five continents and comprises major ownership in over 200,000 km of territorial network fibre and subsea cable capacity. The company has a trans-Atlantic and trans-Pacific data transfer capacity of 1 trillion bits per second, a global MPLS network and the world’s largest VoIP network. Tata Communications was named "Best Wholesale Carrier" at the World Communications Awards in 2006 and "Best Pan-Asian Wholesale Provider" at the 2006 and 2007 Global Wholesale Telecommunications Awards. It is listed on the Bombay Stock Exchange and the National Stock Exchange of India and its ADRs are listed on the New York Stock Exchange (NYSE: TCL). Tata Communications is a partner of the Metro Ethernet Forum (MEF), the pre-eminent industry organization dedicated to facilitating the adoption of Ethernet networks and services. Areas of business The company extends its global reach to over 200 countries and territories with more than 300 PoPs and more than one million square feet data centre space worldwide.Its portfolio covers: Global voice solutions Carrying over 20 bn minutes of traffic annually, the company's customer base includes over 1500 carriers, mobile operators and ISPs. It provides value-added services such as international toll free calls and account calling in addition to domestic and international long distance calls. Services include:

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•

Voice termination services

•

Mobile Direct

•

VoIPLinkTM

•

Global calling cards

•

truerootsTM

Global data solutions The company serves the connectivity needs of global enterprises and service providers with solutions such as virtual private networks, global ethernet, managed data network services, leased lines, etc. The company also offers customised industry specific solutions and is the leading provider of bandwidth and IP connectivity. Services include: •

Global transmission services

•

Global IP and VPN services

•

Managed services

•

Mobility services

•

Transformation services

Joint ventures, subsidiaries, associates •

Tata Communications Lanka offers wholesale, enterprise and retail solutions which

include international voice services, international IP bandwidth for internet service providers, international private lease circuit, MPLS-based global VPN services, corporate voice services and their global calling card. •

Tata Communications Banking InfraSolutions (TCBIL) offers solutions that cater

to the banking industry which include ATM services, card issuance and management, end-to-end point of sale acquiring and hosted core banking. •

Tata Communications Transformations Services delivers end-to-end outsourcing

services for global carrier and telecommunications customers. •

Neotel (South Africa) provides a range of value-added voice and data services for

businesses, wholesale network operators, providers and consumers using its pure-IP next generation network.

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•

Tata Communications Internet Services serves over 4,50,000 customers offering

services like broadband, Wi-Fi, dial up and a bouquet of value-added services such as entertainment-on-demand, interactive education, net telephony, PC security and website hosting.

2.2PROBLEM OT THE STUDY “COMPARATIVE

FINANCIAL

(FUNDAMENTAL)

ANALYSIS

OF

MAJOR

TELECOMMUNICATION COMPANIES IN INDIA”

2.3OBJECTIVE OF THE STUDY An investor who would like to be rational and scientific in his investment activity has to evaluate a lot of information about past performance and the expected future performance of the companies, industries and the economy as a whole before taking the investment decision and hence, the present study attempts to analyse the profitability position of the sample companies.

Some of the objectives of conduction the study are as follows:  To take investment decisions cautiously after studying risks involved in the same.  To gain knowledge of evaluating intrinsic value of a firm.  To acquire practical exposure of financial analysis of an enterprise.  To get familiarity of scheming comparative efficiency of different firms.  To analyse the profitability position of the sample telecom companies.

2.4REVIEW OF LITRATURE Page 18 of 42

 Girija, ‘Socioeconomic Implications of Telecommunications Liberalization: India in

the International Context’, New Delhi, 1998.  T.H. Chowdary, ‘Why did India get it so wrong? and What India should do now?,

1999.  Anand, ‘India's economic policy reforms’, 1999.  Bhattacharya, ‘isolating agents of change in India categorized into economic

structure, competition policy and technology’, 2000. 

Das, ‘Liberalisation of the Indian telecommunications services’, 2000.

 Rao, ‘Internet service providers in India’, 2000.  Vrmani, ‘The contribution of telecommunication (or telecom) services to aggregate

economic growth in India’, 2000.  Narinder, ‘Enhancing Developmental Opportunities by Promoting ICT Use: Vision

for Rural India’, 2004.  Nikam, Ganesh, Tamizhchelvan, ‘changing face of India in bridging the digital

device’, 2004. 

Dey, ‘discussions between the Federal Communications Commission (FCC) and communications policy makers and regulators in other countries’, 2004.

 Singh, ‘The role of technology in the emergence of the information society in India’,

2005.  Mr. Banka, ‘An overview of the mergers and acquisitions in the telecommunication

industry’, 2006.  Thomas, ‘the contribution made by telecommunications in India by the state and civil

society to public service’, 2007. 

Cygnus Business Consulting & Research Pvt. Ltd., ‘Quarterly Performance Analysis of Companies (April-June 2008)’, 2008.



Maheshwari, ‘Analysis of the Indian telecom industry and ascertain that Indian telecommunications has been zooming up the growth curve at an mounting pace’, July-Sept, 2008.

 Anderson, ‘Developing a route to market strategy for mobile communications in rural

India’, An interview with Gurdeep Singh, Operations Director, Uttar Pradesh, Hutch India, 2008. 

Mani, ‘The growth of telecom services in India since the mid-1990s’, 2008.

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 Narayana, ‘The contribution of telecommunication (or telecom) services to aggregate

economic growth in India’, 2008.  Sharma, ‘The major challenges faced by India’s telecom equipment manufacturing

sector’, 2009. 

Shah, ‘analysis of Indian telecom industry and study of the sector with three companies namely Bharti Airtel, R.Comm and IDEA in the background of recent global meltdown’, Feb, 2009.

2.5HYPOTHESIS STUDY The study tests whether the selected variables of sample companies vary significantly during the study period. This specific hypothesis is tested at appropriate time while analyzing and interpreting the results. The following hypotheses have been taken to put on test: H1: The Debt-Equity Ratio (DER) position of IDEA, AIRTEL, RELIANCE and TATA does not differ significantly. H2: The Long Term Debt-Equity Ratio (LTDER) position of IDEA, AIRTEL, RELIANCE and TATA does not differ significantly. H3: The Current Ratio (CR) position of IDEA, AIRTEL, RELIANCE and TATA does not differ significantly. H4: The Fixed Asset Ratio (FAR) position of IDEA, AIRTEL, RELIANCE and TATA does not differ significantly. H5: The Earning Per Share (EPS) position of IDEA, AIRTEL, RELIANCE and TATA does not differ significantly.

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2.6RESEARCH DESIGN 2.6.1

Universe of the Study

The present study adopts an analytical and descriptive research design. The data of the sample companies (for a period of three years from 2007 to 2009) has been collected from the annual reports and the balance sheet published by the companies and the websites of the companies. A finite sample size of four companies listed on the National Stock Exchange (NSE) has been selected for the purpose of the study. They are IDEA CELLULAR, BHARTI AIRTEL,

TATA

COMMUNICATIONS

LIMITED

and

RELIANCE

COMMUNICATIONS LIMITED. The variables used in the analysis of the data are Debt-Equity Ratio (DER), Long Term Debt-Equity Ratio, Current Ratio, Fixed Assets and Earning Per Share (EPS). While interpreting the results, the statistical tool of one-way Analysis of Variance (ANOVA) has been used. 2.6.2

Sample of the Study

 Sampling Technique: The study is done with special reference to private sector

telecommunication companies. The reason being that the data or the financial statements are readily available for them. Apart from this, private sector companies have shown best performance in the previous year so it is interesting to know the best performing company out the selected sample companies. Thus, the technique of ‘Convenience Sampling’ is being adopted for the study. The election of sample companies is made on the basis of market capitalization.  Sample Size: Four Private Sector companies are chosen as sample size for the study

on account of having the highest market capitalization. 2.6.3

Data Collection

Financial statements are the raw data collected from various websites such as www.capitaline.com, www.kotaksecurities.com and other company websites.

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2.6.4

Time Period of the Study

The study has been conducted during Feb 2010 to Mar 2010. 2.6.5

Tools used for Analysis

 Ratio Analysis: Ratios have been calculated for the past three years for the purpose

of analysis. Ratios being designed are named as: Debt-Equity Ratio (DER), Long Term Debt-Equity Ratio, Current Ratio, Fixed Asset Ratio and Earning Per Share (EPS).  Analysis of Variance (ANOVA): The statistical tool that is used for testing

hypothesis is one-way Analysis of Variance (ANOVA). 2.6.6

Financial Analysis

The section of study embodies the calculation and analysis of selected variables taken into reflection for the study purpose. The ratios are being calculated by the aid of raw data available on the concerned website. The raw data encompasses Yearly Results and Balance Sheet of the sample companies. After calculation of ratios, analysis of individual ratio is being done. The statistical tool used for analysis is One-Way Analysis of Variance (ANOVA). Analysis is performed by using software known as Microsoft Excel. The ratios being calculated for the purpose of analysis of financial performance are:  Debt-Equity Ratio (DER).  Long Term Debt-Equity Ratio.  Current Ratio.  Fixed Asset Ratio.  Earnings Per Share (EPS).

The analysis and interpretation of the study is carried out by following the chronological order of the parameters mentioned above.

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CHAPTER 3

RESULTS AND DISCUSSIONS

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3.1 Debt-Equity Ratio This ratio is only another form of proprietary ratio and establishes relationship between the outside long-term liabilities and owners funds. It shows the proportion of long term external equities and internal equities. Debt-Equity Ratio (DER) compares the Creditor’s funds with owner’s funds. It indicates how much money is being placed by the creditors as that of equity holders. It represents the proportion of borrowed funds in the total capital of the company. This ratio is calculated by using the following formula and expressed in terms of times. Debt-Equity Ratio = Total Debt Net Worth

Debt-Equity Ratio RELIAN Company IDEA AIRTEL TATA CE 2007 2.14 0.54 0.02 0.41 2008 1.88 0.38 0.08 0.77 2009 0.95 0.3 0.23 0.67 0.616666 Average

1.656667

0.406667

0.11

7

Table 3.1

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Fig 3.1 The data in Table 3.1 reveals that IDEA has achieved the highest Debt-Equity Ratio every year for the data taken for the period of 2007 to 2009 and is followed by RELIANCE between 2008-09. TATA alone has registered the lowest ratio. Even the three year average Debt-Equity Ratio of IDEA is significantly higher (1.656667) than that of RELIANCE (0.6166667), AIRTEL (0.406667) and TATA (0.11). Thus, it is inferred that IDEA has the least proportion of debt fund in its total capital and hence is the most efficient telecommunication company among all other sample companies. IDEA has the highest portion of its self owned funds in the capital structure followed by RELIANCE, AIRTEL and TATA. The comparison of DER of the sample companies are shown in Fig 3.1. The DER position of sample companies are compared and tested using the following hypothesis. HYPOTHESIS TESTING H1 : DER position of IDEA, AIRTEL, TATA and RELIANCE does not differ significantly. Ha : DER position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

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Anova: Single Factor SUMMARY Groups Count Sum Average Variance ANOVA Source of Variation Between Groups Within Groups Total

IDEA 3 4.97 1.65666 7 0.39143 3

SS 4.06882 5 0.9052 4.97402 5

AIRTE L 3 1.22 0.40666 7 0.01493 3

df 3 8

3 0.33

RELIAN CE 3 1.85

0.11

0.616667

0.0117

0.034533

MS 1.35627 5 0.11315

F-Ratio 11.986522 3

TATA

F crit 4.06618 1

11

Inference : Since the calculated value of F is 11.9865223 which is greater than the table value of 4.066181 ( CV > TV at 5% significance level ), the null hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the DER position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

3.2 Long Term Debt-Equity Ratio A high long term debt to equity ratio suggests that a company has financed its growth mostly via debt. This can lead to a tricky situation and volatile earnings. Since this company will now have to bear additional interest burden of debt servicing. Debt is a form of 'external' or 'outside' financing for companies ( distinct from concept of equity ownership). If after debt financing, company earnings are greater than debt cost (interest) then share holders stand to gain. (Interest is cost of borrowing money). However if debt cost outweighs returns generated from investment (of borrowed capital) then company may head for bankruptcy in long run and shareholders’ interests will be adversely affected.

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Long Term Debt-Equity Ratio Company IDEA

AIRTEL

TATA

RELIANCE

2007

1.55

0.5

0

0.39

2008

1.63

0.35

0.03

0.57

2009

0.79

0.28

0.17

0.41

Average

1.323333

0.376667

0.066667

0.45666667

Table 3.2

Fig 3.2 The data in Table 3.2 reveals that IDEA has achieved the highest Long Term Debt-Equity Ratio every year for the data taken for the period of 2007 to 2009 and is followed by RELIANCE between 2008-09. TATA alone has registered the lowest ratio. Even the three year average Long Term Debt-Equity Ratio of IDEA is significantly higher (1.323333) than that of RELIANCE (0.45666667), AIRTEL (0.376667) and TATA (0.066667). Thus, it is inferred that IDEA has the least proportion of debt fund in its total capital and hence is the most efficient telecommunication company among all other sample companies. IDEA has the highest portion of its self owned funds in the capital structure followed by RELIANCE, AIRTEL and TATA. The comparison of Long Term Debt-Equity Ratio of the sample companies are shown in Fig 3.2.

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The Long Term Debt-Equity Ratio position of sample companies are compared and tested using the following hypothesis. HYPOTHESIS TESTING H2 : Long Term Debt-Equity Ratio position of IDEA, AIRTEL, TATA and RELIANCE does not differ significantly. Ha : Long Term Debt-Equity Ratio position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

Anova: Single Factor SUMMARY Groups Count Sum Average Variance ANOVA Source of Variation Between Groups

IDEA 3 3.97 1.323 333 0.214 933

Within Groups

SS 2.610 825 0.491 067

Total

3.101 892

AIRT EL 3 1.13 0.376 667 0.012 633

RELIA TATA NCE 3 3 0.2 1.37 0.0666 67 0.456667 0.0082 33 0.009733

df

MS F 0.8702 14.17770 75 8 0.0613 83

3 8

F crit 4.0661 81

11

Inference : Since the calculated value of F is 14.177708 which is greater than the table value of 4.066181 ( CV > TV at 5% significance level ), the null hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the Long Term

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Debt-Equity Ratio position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

3.3 Current Ratio The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt as there are many ways to access financing but it is definitely not a good sign. The current ratio can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into cash. Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they are unable to alleviate their obligations. Because business operations differ in each industry, it is always more useful to compare companies within the same industry. This ratio is similar to the acid-test ratio except that the acid-test ratio does not include inventory and prepaid as assets that can be liquidated. The components of current ratio (current assets and current liabilities) can be used to derive working capital (difference between current assets and current liabilities). Working capital is frequently used to derive the working capital ratio, which is working capital as a ratio of sales. The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. It is expressed as follows:

Current Ratio = Current Assets Current Liabilities

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Current Ratios Company

IDEA

AIRTEL

TATA

RELIANCE

2007

0.84

0.46

1.14

1.94

2008

0.66

0.49

1.28

1.25

2009

0.76

0.61

1.4

1.08

Average

0.753333

0.52

1.273333

1.42333333

Table 3.3

Fig 3.3 The data in Table 3.3 reveals that RELIANCE has achieved the highest Current Ratio every year for the data taken for the period of 2007 to 2009 and is followed by TATA, IDEA and AIRTEL.AIRTEL alone has registered the lowest ratio. Even the three year average Current Ratio of RELIANCE is significantly higher (1.423333) than that of TATA (1.273333), IDEA (0.753333) and AIRTEL (0.52). Hence we can say that RELIANCE has enough resources to pay its debts over the next 12 months as compared with the other sample companies. Current Ratio of the sample companies are compared and shown in Fig 3.3. HYPOTHESIS TESTING

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H3 : Current Ratio position of IDEA, AIRTEL, TATA and RELIANCE does not differ significantly. Ha : Current Ratio position of IDEA, AIRTEL, TATA and RELIANCE differ significantly. Anova: Single Factor SUMMARY Groups Count Sum Average Variance ANOVA Source of Variation

IDEA 3 2.26 0.7533 33 0.0081 33

Between Groups Within Groups

SS 1.6348 25 0.4776

Total

2.1124 25

AIRTE L 3 1.56 0.52 0.0063

df 3 8

TATA 3 3.82 1.2733 33 0.0169 33

MS 0.5449 42 0.0597

RELIANC E 3 4.27 1.423333 0.207433

F 9.1280011 17

F crit 4.0661 81

11

Inference : Since the calculated value of F is 9.128001117 which is greater than the table value of 4.066181 ( CV > TV at 5% significance level ), the null hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the Current Ratio position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

3.4 Fixed Asset Ratio Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed assets (on the balance sheet). It indicates how well the business is using its fixed assets to generate sales.

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Fixed Assets Turnover Ratio =

______Sales__________

Average net fixed assets

Generally speaking, the higher the ratio, the better, because a high ratio indicates the business has less money tied up in fixed assets for each dollar of sales revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other fixed assets. However, financial analysts claim that such a ratio is inconclusive: companies do not generally cite or reference these figures. This new trend of informality in business has called for the accounting curriculum across the nation to start to refrain from teaching the fixed asset turnover ratio. Measure of the productivity of a firm, it indicates the amount of sales generated by each dollar spent on fixed assets, and the amount of fixed assets required to generate a specific level of revenue. Changes in the this ratio over time reflect whether or not the firm is becoming more efficient in the use of its fixed assets The Fixed Asset Ratio of the four sample conpanies are shown in Table 3.4. Fixed Asset Ratio AIRTEL TATA RELIANCE 0.63 0.8 0.86 0.98 0.58 0.94 0.73 0.7 0.67 1.04 0.73 0.51 0.626667 0.926667 0.773333 0.73

IDEA 2007 2008 2009 Average

Table 3.4

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Fig 3.4

The data in Table 3.4 reveals that AIRTEL has achieved the highest Average Fixed Asset Ratio for the data taken for the period of 2007 to 2009 and is followed by TATA, RELIANCE and IDEA. The three year average Fixed Asset Ratio of AIRTEL is significantly higher (0.926667) than that of TATA (0.773333), RELIANCE (0.73) and IDEA (0.626667). The Fig 3.4 shows that AIRTEL has shown increase in the Fixed Asset Ratio year by year as compared to any other sample company. Moreover RELIANCE has year by year decrease in its Fixed Asset Ratio. It means that AIRTEL has less money tied up in fixed assets and RELIANCE has over-invested in plant, equipment, or other fixed assets. However the changes in this ratio for IDEA and TATA shows that they are not efficient to use their fixed assets. HYPOTHESIS TESTING H4 : Fixed Asset Ratio position of IDEA, AIRTEL, TATA and RELIANCE does not differ significantly. Ha : Fixed Asset Ratio position of IDEA, AIRTEL, TATA and RELIANCE differ significantly Anova: Single Factor

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SUMMARY Groups Count Sum Average Variance ANOVA Source of Variation

IDEA 3 1.88 0.6266 67 0.0020 33

AIRTE L 3 2.78 0.9266 67 0.0145 33

Between Groups

SS 0.1396 92

df

Within Groups

0.1562

8

Total

0.2958 92

11

3

TATA 3 2.32 0.7733 33 0.0056 33

RELIA NCE 3 2.19 0.73 0.0559

MS F 0.0465 2.38483 64 4 0.0195 25

F crit 4.0661 81

Inference : Since the calculated value of F is 2.384834 which is less than the table value of 4.066181 ( CV < TV at 5% significance level ), the null hypothesis is accepted and the alternative hypothesis is rejected. Hence, it is concluded that the Fixed Asset Ratio position of IDEA, AIRTEL, TATA and RELIANCE does not differ significantly.

3.5 EPS (EARNINGS PER SHARE) Earnings Per Share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-toearnings valuation ratio. The EPS can be calculated as follows: Earnings Per Share (Basic formula) =

_________Profit________

Weighted Average Shares

Earnings Per Share (Net Income formula) = ____ Net Income_______

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Weighted Average Shares

An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures. The EPS of sample companies from year 2007 to 2009 are shown in Table 3.5.

EPS IDEA

AIRTEL

TATA

RELIANCE

2007

1.94

21.27

15.68

9.36

2008

3.96

32.9

9.92

12.4

2009

3.23

40.45

17.34

23.13

Average

3.04333333

31.54

14.3133333

14.9633333

Table 3.5

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Fig 3.5

The data in Table 3.5 reveals that AIRTEL has achieved the highest Average EPS for the data taken for the period of 2007 to 2009 and is followed by RELIANCE,TATA and IDEA. The three year average EPS of AIRTEL is significantly higher (31.54) than that of RELIANCE (14.963333), TATA (14.3133333) and IDEA (3.04333333). However both AIRTEL and RELIANCE has shown constant growth in EPS respectively between years 2007 to 2009 which is shown in Fig 3.5. The EPS of IDEA is the lowest in all years as well as its average is the lowest as compared with other sample companies. The higher the ratio means the better is the share price of the company and the shareholders can earn more from their shares. Hence the AIRTEL is more efficient than other sample companies.

HYPOTHESIS TESTING H5 : EPS position of IDEA, AIRTEL, TATA and RELIANCE does not differ significantly. Ha : EPS position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

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Anova: Single Factor SUMMARY Groups Count Sum Average Variance ANOVA Source of Variation Between Groups Within Groups Total

AIRTE IDEA L 3 3 9.13 94.62 3.0433 33 31.54 1.0462 93.355 33 3

SS 1239.8 44 323.79 54 1563.6 4

df 3 8

TATA 3 42.94 14.313 33 15.164 93

RELIAN CE 3 44.89 14.96333 52.33123

MS F 413.28 10.210927 14 85 40.474 43

F crit 4.0661 81

11

Inference : Since the calculated value of F is 10.21092785 which is greater than the table value of 4.066181 ( CV > TV at 5% significance level ), the null hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the EPS position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

3.6 MAJOR FINDINGS  The average Debt-Equity Ratio of IDEA is significantly higher (1.656667) than

that of RELIANCE (0.6166667), AIRTEL (0.406667) and TATA (0.11).  average Long Term Debt-Equity Ratio of IDEA is significantly higher (1.323333) than that of RELIANCE (0.45666667), AIRTEL (0.376667) and TATA (0.066667).

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 The average Current Ratio of RELIANCE is significantly higher (1.423333) than

that of TATA (1.273333), IDEA (0.753333) and AIRTEL (0.52).  The average Fixed Asset Ratio of AIRTEL is significantly higher (0.926667) than that of TATA (0.773333), RELIANCE (0.73) and IDEA (0.626667).  The average EPS of AIRTEL is significantly higher (31.54) than that of RELIANCE (14.963333), TATA (14.3133333) and IDEA (3.04333333). Hence making AIRTEL one of the most efficient company in the terms of generating earnings.

3.7 LIMITATIOINS OF THE STUDY The study has following limitations:  The study has lack of contact with company personnel acted as hindrance in the study.  The study is based on the limited knowledge & information provided by the websites and software available on internet.  The size of the sample is too small looking to the nature of the study and due to tome and money constraints relatively smaller sample was chosen.  The basis of selection of sample for the study was vague. Randomly individuals were picked up to provide their responses .  There are only five parameters taken for study however there are certain other parameters on the basis of which accurate inference can be drawn.  The ratings given are on the basis of data available on internet however the

future efficiency of the low performing company can be better.  The data taken for the comparison of the sample companies are of last

three years from 2007 to 2009. However the accurate result can be drawn if the data taken ranges from last ten years.

3.8 BIBLIOGRAPHY Information has been sourced from namely, books, newspapers, journals, industry portals, government agencies, industry news, developments and through access to database. The

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following are the list of websites that were being used for the data collection during research study.  http://www.capitaline.com/  http://www.wikipedia.org/  http://www.oecd.org/  http://www.legalserviceindia.com/  http://www.dot.gov.in/  http://www.economictimes.indiatimes.com/  http://www.ibef.org/  http://www.domain-b.com/  http://www.trai.gov.in/  http://www.perry4law.wordpress.com/  http://www.indianembassy.org/  http://www.financialexpress.com  http://www.pib.nic.in/  http://www.emeraldinsight.com/  http://www.search.epnet.com/  http://www.scribd.com/

 http://www.tatacommunications.com/about/  http://www.ideacellular.com/  http://www.airtel.in/  http://www.rcom.co.in/  http://kotaksecurities.com/

The Following are the books as well as articles that were referred during the research study.  Frost & Sullivan (2007), “Telecom – Catalyzing India’s New Economy”  Banka Sanjoy (2006), “Mergers and Acquisitions in Indian Telecom

Industry-A Study”  Jain Rekha (2001), “A review of The Indian Telecom Sector”  Fortis Investments (2006),”Global Telecom Sector”

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 Sharma Seema and Lokesh Singla (2009), “Telecom equipment Industry:

Challenges and Prospects”  Bhattacharya Manas (2000), “Telecom Sector in India: Vision 2020”.

 Cellular Statistics – Cellular Operator Association of India.  Tiwari, Verma – “A Fundamental Analysis of Public Sector Banks In India”, Indian Journal of Finance, Nov 2009.

CHAPTER 4

CONCLUSION AND SUGGESTIONS

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4.1 CONCLUSION The present study is the fundamental analysis of the telecom companies in India. From the interest of investors the study gives good analysis on the basis of which the individual investor can get idea on which company to invest more or rather rely on it in future to get maximum returns. The parameters selected for the analysis proves to be useful for the investor to draw some conclusion out of the sample companies. However all the four sample companies are having some unique strengths on the basis of which they can expand their business in future and hence we cannot say that a particular company is best in the industry. Moreover the parameters taken are limited for the analysis while the actual information of the company comes out when the whole set of parameters are taken for analysis purpose. Hence we can say that the present study gives the overview of the standings of the major telecom companies in India on the basis of certain predetermined parameters.

4.2 SUGGESTIONS  The parameters taken were only five in the present study which could be increased to more than five for better analysis.

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 The time duration for the analysis should be at least 5-10 years for the sake of better picture of analysis but due to the data availability issues the present study is restricted up to last three years.  The size of the sample can be increased as there are some more major companies which could be included in the study.  The present study suggests the companies where they are lacking in their financial growth. Also it gives knowledge to a company how to increase its efficiency in comparison with other competitive companies.  Along with the present findings of the study, the investors also has to keep in

mind about the future contracts of the companies and their future plans so as to get maximum profit out of them.

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