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Operating Efficieny of Telecom Sector

Essay by   •  March 15, 2016  •  Research Paper  •  5,251 Words (22 Pages)  •  760 Views

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Table of Contents

Telecom Sector – At a Glance        

GSM vs CDMA        

Bharti Airtel        

Shareholding Pattern        

Services Offered        

Recent Developments        

Balance Sheet        

P/L Statement        

Idea Cellular        

Shareholding Pattern        

Services Offered        

Recent Developments        

Balance Sheet        

P/L Statement        

Reliance Communications        

Shareholding Pattern        

Services Offered        

Fixed services        

As of July 2014, RCom had 1.2 million fixed-line subscribers, and the number has been the same since March 2013, reflecting a market share of 4.4 per cent.        

Mobile services        

Recent Developments        

Balance Sheet        

P/L Statement        

Operating Efficiency Ratios Analysis        

Asset Turnover Ratio        

Analysis        

Fixed asset turnover ratio        

Analysis        

Working Capital Turnover        

Analysis        

Equity Turnover Ratio        

Analysis        

Receivables Turnover Ratio        

Analysis        

Average Collection Period        

Analysis        

Conclusion:        

Telecom Sector – At a Glance

Mobile telecom services were introduced in India towards the end of 1995. During the initial years, mobile tariffs were high due to the large license fee commitments and capital expenditure requirements of service providers. However, over the years, tariffs have come down considerably.

The National Telecom Policy (NTP), 1999 changed the scenario, with the industry shifting from a fixed license fee regime to a revenue sharing regime, thus encouraging more players to enter the market.

In 1999-2000, the mobile services industry gathered pace, adding 0.7 million customers to its base. Growth accelerated in 2000-01 as service providers added another 1.7 million customers. In 2001-02, net additions of the industry increased to 2.9 million and further to 6.7 million in 2002-03.

In 2002-03, Bharat Sanchar Nigam Ltd (BSNL) launched its services as the third operator across many of the circles. The launch of services by the fourth operator led to a decline in tariffs, which drove growth and consequently, the total number of mobile subscribers climbed to 13.8 million in March 2003.

With over 20 million subscribers joining the rolls, 2003-04 saw growth moving into a new phase altogether. Two key events: implementation of the Calling Party Pays (CPP) regime in May 2003 (making incoming calls free) and the launch of services by Reliance Infocomm drove this stage of development. The CPP regime brought more low-usage customers into the mobile telephony fold. Reliance Infocomm, with low priced schemes like Monsoon Hungama, further lowered the entry barriers for mobile services.

The launch of the '2-year incoming free' and 'lifetime validity' schemes by Tata Teleservices led mobile net additions to exceed the 4-million mark.

The mobile subscriber base added 131 million subscribers in 2008-09, to reach 392 million at the end of 2008-09, registering a growth of 50 per cent over 2007-08. Buoyed by new player launches and expansion of existing players, monthly subscriber additions crossed the 15 million mark for the first time in January 2009.

Mobile penetration, or mobile tele-density, is the percentage of population owning a mobile phone. As of March 2015, the wireless tele-density stood at 77.3 per cent, up from 72.9 per cent in March 2014. While the urban tele-density was as high as 143.3 per cent as of March 2015, the rural tele-density stood at 47.8 per cent.

In India, the mobile tele-density varies significantly with different circles. As of March 2015, Delhi has the highest tele-density followed by Maharashtra while North East and Jammu & Kashmir circles have the lowest tele-density. Broadly, the relative tele-density in different circles corresponds to the per capita gross domestic product (GDP) in the circle. Higher per capita GDP states have a higher penetration and vice versa.

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GSM vs CDMA

As GSM was the more widespread technology worldwide, regulators decided to adopt GSM as the technology in India. Thus, all mobile licencees had to base their service on GSM technology.

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