Indian Telecom Industry

FINANCIAL STRATEGY OF INDIAN TELECOM INDUSTRY SFM

INDIAN TELECOM INDUSTRY

The Indian telecommunication industry is the world's fastest growing industry with 826.93 million mobile phone subscribers as of April 2011. It is also the second largest telecommunication network in the world in terms of number of wireless connections after China.

As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013. Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China by 2013.

The industry is expected to reach a size of 344,921 crore (US$76.92 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period.

According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. In 2008-09 the overall telecom equipments revenue in India stood at 136,833 crore (US$30.51 billion) during the fiscal, as against 115,382 crore (US$25.73 billion) a year before.

The total number of telephones in the country stands at 861.48 million, while the overall tele-density has increased to 72.08% as of April 30th, 2011.Mobile telephony experiences growths at rates such as 15.34 million subscribers a month, which were added in April 2011.

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http://en.wikipedia.org/wiki/Telephones

http://en.wikipedia.org/wiki/United_States_dollar

http://en.wikipedia.org/wiki/Crore





http://en.wikipedia.org/wiki/People's_Republic_of_China

http://en.wikipedia.org/wiki/People's_Republic_of_China


RATIO ANALYSIS OF INDUSTRY

Ratio Analysis is an approach in understanding the strength and weakness of a business. Ratio analysis is a very powerful analytical tool useful for measuring performance of an organization. It is also a yardstick to set goals for improvement. Ratio analysis allows various interested parties to make evaluation of certain aspects of the firm’s performance.

Liquidity Ratios:

Current Ratio-

This ratio measures the solvency of the company in the short term. This ratio indicates that how much current asset is available for each rupee of current liabilities. So, higher the ratio more will be the margin of safety for short-term creditors.

Current ratio for telecom service provider industry for 2009-2010 – 1.22

Current ratio of 1.22 means that the industry can successfully pay off its debt while at the same time still have cash left over to continue operating.

Debt-to-Equity Ratio-

Debt equity ratio is long term debt divided by share holder’s fund. Long term consists of secured and unsecured debt while share holders fund consists of share capital and reserve & surplus. If the ratio is 1:1, it indicates that the company is having equal fund from the shareholders and also the debt instruments. While the increasing ratio indicates the company has to pay more interest on the borrowed debt.

Debt-to-equity ratio for telecom service provider industry for 2009-2010 – 0.35

Debt to equity ratio of 0.35 means that industry is not using debt instruments while it is relying more on the shareholders capital. This indicates that the assets are primarily supplied with equity. Now as debt is the cheapest source of fund, so telecom service providers industry is not using the cheapest source of fund.

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Turnover Ratios:

These ratios measure how effectively the firm utilizes its resources. These ratios are also called Activity Ratio, it involves comparison between the level of sales and investment in various accounts – inventories, debtors, fixed assets etc.

Fixed Assets Turnover Ratio-

Fixed Assets Turnover Ratios is net sales divided by net fixed assets. So fixed assets turnover ratios show how efficiently the assets of the firm are utilized. Therefore, the higher the ratio, the more efficient the company is with its assets.

Fixed Assets Turnover Ratios for telecom service provider industry for 2009-2010 – 0.43

Fixed assets in telecom service provider industry are various transmission equipments like towers, transmitters, optical fibers etc. This fixed assets turnover ratio of 0.43 is very low

Inventory Turnover Ratio-

Inventory turnover ratio is cost of goods sold divided by average stock. So inventory turnover ratio leads to stock velocity, which is an indication of the rotation of the current stock. So less rotation time is good for the company.

Inventory Turnover Ratio for telecom service provider industry for 2009-2010 – 25.65

Stock Velocity – 365/25.65 comes as 14.23 days means the telecom service providers industry takes 14.23 days to rotate the stock which is again a low stock velocity.

Debtor Turnover Ratio-

It is credit sales divided by average accounts receivables (Debtor + Bills receivables). So debtor turnover ratio leads to debtor velocity which is an indication that how much time an organization takes to collect its receivables. Hence, lower the debtor velocity, the good for the organization.

Debtor Turnover Ratio for telecom service provider industry for 2009-2010 – 6.44

Debtor Velocity – 365/6.44 comes as 56.68 days which means telecom service provider industry takes on an average 57 days to collect its money back from its debtors.

Interest Cover Ratio-

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Interest Coverage Ratio is profit before interest, depreciation and tax divided by interest on long term debt. So the high ratio indicates the low proportion of the debt in the sector and the industry is using a very conservative policy of using the debt component in the capital structure.

Interest Cover Ratio for telecom service provider industry for 2009-2010 – 4.52

Interest cover ratio of 4.52 means that the telecom service industry has 4.52 times more income to pay interest on their debts. This indicates the industry can cover its interest payments well.

Profitability Ratios:

The purpose of study and analysis of profitability ratios are to help assessing the adequacy of profits earned by the company and also to discover whether the profitability is increasing or decreasing.

Gross Profit Margin Ratio-

The Gross Profit Margin Ratio is gross profit divided by sales and by multiplying it to 100. This assists in helping us understand the financial health of the company in terms of knowing whether or not the company’s profit is enough to pay off its other expenses.

Gross Profit Margin Ratio for telecom service provider industry for 2009-2010 – 39.53

Gross Profit Ratio of 39.53% means that the industry is making 39.53 % on the sales.

Net Profit Ratio-

This ratio is calculated by diving net profit after tax with net sales and multiplying with 100. This ratio reflects net profit margin on the total sales after deducting all expenses, but before deducting interest and taxation. The comparison of this ratio, with that of the previous year, will give a correct trend of the performance of the sector.

Net Profit Ratio for telecom service provider industry for 2009-2010 – 15.41

Return on Capital Employed Ratio-

It is calculated by dividing operation profit before interest and tax by capital employed and multiplying it to 100.

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This ratio indicates that how much profit is earned on the total capital employed that consists of equity, reserve & surplus and long-term debt.

Return on Capital Employed Ratio for telecom service provider industry for 2009-2010 – 9.72

Return on Net Worth

Return on Net Worth is profit after tax divided by net worth which consists of equity share capital and reserve and surplus and multiplying with 100. This ratio is an important yardstick of performance for equity share holder since it indicates the returns on the funds employed by them.

Return on Net Worth for telecom service provider industry for 2009-2010 – 10.11

Vodafone

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Nestled in the town of Newbury in Berkshire, some two hours’ drive from London, lies the sprawling 129 million

pound headquarters of 29.4 billion pound Vodafone Group plc. Its chief executive, the 51-year-old Arun Sarin,

has been making headlines in India, thanks to a high-pitched $11.1 billion takeover of Indian telecom major

Hutch Essar earlier this year.

Sarin met a select group of Indian journalists for a freewheeling chat over lunch on Vodafone’s plans for the

Indian market, its relationship with new Indian partners Essar Group, brand strategy and much more. Excerpts:

On future plans in India

The new things will be that you’ll see some interesting, low-cost handsets. Our basic thesis is we want to make

mobile telephony more affordable to more Indian consumers. You need to be a large company to be able to do

that. We’re going to put in several billion dollars’ investment into rural India on the back of some network

sharing with Bharti or anybody else. If others want to join the network sharing, they can.

The public policy thing we’re trying to do is to have more Indian consumers covered. But the thing that’ll be

different is the whole handset strategy. I don’t want to say much more than that. We’re bringing into India a

handset that looks like a very cool high-end handset which is actually low-cost. There is further to go on

handsets, and we’ll take it there. So, we come into India with network, handsets, new services—entertainment,

information services—and we’ll mix it all up and then have our brand come into India. In about six to eight

months, you’ll feel that Vodafone has arrived.

On the FIPB’s questions

Today, they’ve asked us 13 questions, tomorrow there may be more. But whatever they want to know, we’ll tell

them. Vodafone operates in 25 countries around the world; we’ve got 200 million customers. We’re a highly

transparent, highly ethical company… we have to be. I can’t sit in my office and control 60,000 people who work

around the world. All I can do is make sure that everybody understands the priority of the firm and everybody

executes in an ethical, transparent way.

Equally, we’re getting into a structure that has been around for the last year or so, and we’re simply walking into

Hutchison’s shoes. I am personally very happy that the Essar Group has joined our group. Together, we will be a

formidable force in India, with their local knowledge and our global presence. We always expected regulatory

approvals, the FIPB’s looking at the case and they’ll decide and we’ll move on from there.

On the issues raised by FIPB

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Frankly, it’s not disappointing. We just announced the main transaction a month ago, and with Essar a week ago

or so. The regulator has to be given time. This is a big global company coming to India and it is times when there

is a big change that causes people to focus. At the end of the day, I want the FIPB, the ministry of finance, the

communications minister, the minister of industry, the Prime Minister, everybody to say you are welcome here.

We’re here because we think we can do something for the Indian population. The kind of products and services

and rural coverage that we can bring is something more than Hutchison could have brought. Why are we coming

in and why is Hutchison going out? Because there is a changing of gears.

We are going to accelerate mobility in India, the kind of prices of handsets, the services. It’s a change.

On the problems Hutchison faced with Essar

People have suggested that Essar are difficult folks to deal with. A company’s or group’s reputation is built

through action. We’re new players. They have a new history with us. I am not going to sit and judge something

that may have happened in the past. Frankly, their relationship with Hutchison is their relationship with

Hutchison. Our relationship is starting afresh. What we think of each other will be determined by the actions we

take together from here on. It’s a clean slate.

On whether Vodafone overpaid for Hutch

It’s like me telling you should have bought stocks at 5,000 Sensex. The point is, we’re a large company and we

are looking at a large play in markets that are growing. India is clearly one of them. We arm-wrestled a bit with

Sunil Mittal to get 10% since less than that wasn’t material to our company. When we looked at this a couple of

years ago, that was all that was available. If we hadn’t invested in Bharti a year-and-a-half ago, we wouldn’t have

made this investment of $11 billion. That investment a year-and-a-half ago has given us the courage to do what

we’re doing today. Indian consumers and Vodafone shareholders are going to be better off.

On when India will see the Vodafone brand

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There are two levels: one, the corporate brand. The name of the company today is Hutchison Essar. In the future

it will be called Vodafone Essar. The product brand will go from Hutch to Vodafone. Exactly how–whether it is

Hutch Vodafone, or something in the middle—and in what time frame are issues we are looking at carefully. The

Hutch brand is a good one in India. It’s easy for our brand people to say let’s paint the town red and just put

Vodafone everywhere. For the ego that’s pleasing, but for business it may not be

We know why people come to Vodafone. It’s big, it’s red, it’s very clear. We know who we are, but we want to

better understand who Hutch is, so that we can take all the brand attributes and transport them into the

Vodafone brand. Is it going to happen overnight? No. It will take months. What I’ve told my brand guys is

understand what the Indian market is, and what Hutch is before you make a recommendation to me to change

the brand. It’s a question of how and when we change. Hutch has given us five years anyway. The product brand

will be Vodafone. That’s very clear.

On the Indian market

We had a terrific partnership with Bharti. We liked India so much that we decided that a 10% share in Bharti

would not fulfil our long-term aspirations. And when the Hutch Essar asset became available, we decided to take

a good, hard look. I’ve said to my colleagues here that if you look at the progress India has made and then take

our own investment, there’s a pretty high correlation there.

We first came to India through Vodafone and another company Vodafone bought called Airtouch, where I came

from originally.

Both of us invested in India in 1996 and we were in the Madras circle. Then we got Madhya Pradesh etc., and we

were there until 2002. But the mobile scene wasn’t making too much progress then.

India has really made progress in the last three years. We then came into Bharti a year-and-a-half ago. Our

interest in India started ten years ago, and all we’ve done is we’ve kept adding more and more chips on the

table. Small chips, a billion and a half chip when we came to Bharti, and now an $11-billion chip as we come into

Hutch Essar. If you look at India from outside, it’s making very good progress.

Now India has 8-9% rates of growth. Telecom is opening up further, retail is opening up a bit and banking will

open up a bit.

Vivendi to buy Vodafone's SFR stake

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The €7.95bn (£7bn) deal would give Vivendi, which already owned 56 percent of SFR shares, complete control of

SFR. It is France's second largest carrier, with nearly 21 million customers.

"We are very pleased to reach our strategic objective to own 100 percent of SFR, which will help Vivendi to focus

further on profitable growth and innovation," Vivendi chief executive Jean-Bernard Levy said in a statement. "I

am very confident that this will greatly benefit both the group's industrial development and our millions of

subscribers and consumers globally. The transaction will create a significant increase in Vivendi's adjusted net

income, enabling us to raise the dividend to our shareholders."

Vodafone may Beat Airtel with Pricing Strategy on iPhone Launch in India

Vodafone is planning to beat Airtel on the official launch ofiPhone in India, this time around it would not hinder

around the launch date, but the potential pricingstrategy, though this is not a fully confirmed news as of yet (due

to the number of days to launch), we are pretty much sure that it’s going to be final.

Vodafone had been the pitching high and low to be the provider to launch across Europe and Asia, but lost it to

Airtel who will be officially releasing iPhone 3G with Apple’s support in India on 22nd August, Vodafone too will

be releasing on the same date. Please note prices may change until the launch, so don’t pre-book the phone as

of now.

Vodafone is still the third largest cellular provider in India, and they have been the market for almost a year after

taking over Hutch (also known as Orange in several countries), according to our source, Vodafone has almost

finalized a plan to take a price cut with iPhone, which, they will simultaneouslyrelease with Airtel, to gain profit

with quantities, though we still say this news is (un)confirmed, iPhone’s sold through Vodafone will cost at least

Rs500-Rs2000 lesser than what Airtel will pitch, which again thru our source is going to be roughly Rs 22000 for

the iPhones sold through Airtel with taxes.

The price cuts would eventually increase the demand for iPhone through Vodafone since a savings of

approximately Rs500-2000 is welcomed across most of the population in India, and that would definitely gain

more consumers for the Vodafone brand, with the rage iPhone has already been creating with people in India, it

will definitely be big.

Vodafone Pricing and Strategy

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So, Vodafone finally got round to launching their pricing strategy late last week. And very aggressive it is too. Oh,

not in the sense of undercutting the competition of other 3G operators (limited at the moment anyway) – in fact,

they’re being pretty gentlemanly all round in the apparent desire not to rock the boat.

But, very aggressive if your company has any designs to be player in the 3G world of mobile content or services.

Why? By allowing free browsing of their portal (sometimes called “walled garden”) they’ve basically made it

almost impossible for off-portal products to be sold. So, you need to partner with Vodafone (ie pay them) or

wither on the vine.

As an example, if you’re a Vodafone user and you’d like some current event news or sports results or on your 3G

phone, you can get it free on the Vodafone portal or for a feeoutside the portal. So not only do you have to go

through the rather clumsy off-portal navigation, you have to pay for the privilege.

Or if you want a ringtone, you can get it for the price Vodafone charge or pay to browsewhat the competition has

in-store on the off-chance that it might be better or cheaper.

How much better must the off-portal content be – or how bloody minded must users be? – to chose the off-

portal option?

What Vodafone have effectively done is found a way to charge Vodafone customers to look in competitor’s

shops, while alowing them to look in theirs free.

Of course, we’ve seen walled gardens before and they’ve never worked in the past. But this approach just might,

especially if Vodafone do a half decent job of providing content that people want – to the point that they simply

can’t be arsed to go outside.

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AIRTEL

Company Profile

Bharti Airtel limited is a leading global telecommunications company with operations in 19 countries across Asia and Africa. The company offers mobile voice & data services, fixed line, high speed broadband, IPTV, DTH, turnkey telecom solutions for enterprises and national & international long distance services to carriers. bharti airtel has been ranked among the six best performing technology companies in the world by business week. bharti airtel had 200 million customers across its operations.

SHARE HOLDERS VALUE

Over the years the shareholders’ value has increased dramatically for Bharti Airtel. by almost 190% in 2011. This means that the company has been doing extremely well in in the Indian market; we must also note that this is a phenomena after Bharti bought over Zain Africa stake from Zain Kuwait.

We now have a look on Bharti Airtel has no long term debt. Below is the Capital Structure of Bharti Airtel for the 3 years. (Equity, Debt and Equity to Debt Ratio)

CAPITAL STRUCTURE

Year Equity Debt Debt: Equity (app)

2008 21.7045210 8.2501256 0.3:0.7

2009 30.3944983 6.4807794 0.17:0.8

2010 41.3698593 1.7165724 0.03:0.9

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Sr. No. Year Amount in Crores of Rupees

1. 2008-09 21,70,45,210

2. 2009-10 30,39,44,983

3. 2010-11 41,36,98,593


Airtel-Zain 2nd largest M&A ever in India!

Kuwait’s Zain Telecom board has approved $10.7 bn takeover by India’s Bharti Airtel.This would place Bharti strategically above many of its peers in India and abroad. This deal at $10.7bn is the second largest acquisition ever by an Indian company. Tata Steel’s takeover of Corus was at $12.2 billion.

Zain deal also gives Bharti access to 15 African countries. It will be competing with South Africa’s MTN – Bharti’s earlier failed takeover.

Bharti-Zain will have a combined subscriber base of 171 million making it the 7th largest telecom company in the world.

Bharti will be taking over Zain’s $9bn assets and $1.7bn debt. The money has been arranged by a consortium of banks.

1. $1.3 bn was provided by Standard Chartered

2. $1.5 bn was provided by State Bank of India

3. The rest is provided by the consortium of banks – BNP Paribas, Bank of America, Credit Agricole CIB, DBS, HSBC, Bank of Tokyo Mitsubishi UFJ, Barclays ANZ, and Sumitomo Mitsui Banking Corporation (source)

At $10.7 bn Airtel-Zain deal will be the second largest deal ever.

Airtel and MTN merger :

The discussions between Bharti Airtel and MTN, the largest telecom service providers in India and Africa have been renewed. The two companies are in exclusive discussions till July 31st, 2009 about a full merger in which Bharti Airtel will acquire a 49 percent stake in MTN whereas MTN and its shareholders would take a 36 percent stake in the Indian company.

If this deal is successful, this joint venture would have the third-largest number of subscribers in the world (about 200 million), after Vodafone and China Mobile, with annual revenues in excess of $20 billion. Presently, MTN stands on the 10th position globally in terms of the number of subscribers while Bharti Airtel follows at the 11th. China Mobile leads the ranking followed by Vodafone.

The introduction of new schemes in the market is also likely and the prices might fall since it’ll be a virgin market for such a huge merger and acquisition.

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http://theviewspaper.net/bigpage/merger/

http://timesofindia.indiatimes.com/biz/india-business/-Bharti-ready-with-war-chest/articleshow/5720413.cms

http://www.2point6billion.com/news/2010/03/25/india%E2%80%99s-bharti-airtel-set-to-complete-zain-acquisition-4777.html


Pricing Strategy :

Airtel makes BlackBerry Services More Affordable with New Airtel Bundle for BlackBerry

Leading Telecommunications Services provider, Airtel Nigeria is reshaping the highly competitive mobile telephony landscape as it announces the introduction of a new Bundle of services for its BlackBerry subscribers in line with its commitment to create innovative and affordable data offerings for telecoms consumers across the country.

According to the company, the new Airtel Bundle for Blackberry services will enable customers enjoy affordable internet service, strengthen friendship bonds and create an exciting platforms for customers to build social networks and improve on their financial profiles.

The Airtel Bundle for BlackBerry is available on monthly, weekly and daily subscription plans. Monthly subscription for the service is offered at N1, 580.00 (One Thousand Five Hundred and Eighty Naira). The daily and weekly subscription rates are N120 (One Hundred and Twenty Naira) and N475 (Four Hundred and Seventy-Five Naira) respectively.

The Airtel Bundle for BlackBerry services come with two separate offerings catering for either Social Networking enthusiasts or heavy Email messaging users.

SingTel increases stake in Bharti Airtel to 32.15%

Singapore Telecommunications (SingTel), has increased its stake in the country's largest telecoms company by both revenues and customers Bharti Airtel by an additional 0.11% after it acquired shares worth 136 crore from the open market.

As a result, SingTel's interest in Airtel has increased to 32.15% from 32.04%.

SingTel is the largest shareholder in Bharti Airtel, which offers mobile services in India, Sri Lanka, Bangladesh and several countries in Africa.

SingTel through its wholly-owned subsidiary, Viridian, has purchased 40.75 lakh shares of Bharti Airtel for 136 crore (S$39 million), SingTel said in a regulatory filing to the Singapore Stock Exchange. "The purchase consideration was determined by the prevailing market price of Airtel on the relevant stock exchange," the company added.

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http://economictimes.indiatimes.com/bharti-airtel-ltd/stocks/companyid-2718.cms


Airtel - Warid Telecom Deal

Airtel buys Warid Telecom for $300 mn

Sunil Mittal-owned Bharti Airtel said it will acquire 70 per cent stake in Warid Telecom of Bangladesh for USD 300 mn (about Rs 1,363 crore).

Warid Telecom, a wholly-owned subsidiary of the Dhabi Group, offers mobile telecom services with a user base of over 2.9 million in Bangladesh.

This is Bharti's first international buyout after it failed to clinch multi-billion dollar deal with South Africa's MTN last year."This landmark deal underlines our intent to further expand our operations to international markets ... we would like to thank the Government of India and Bangladesh for their support and encouragement," Mittal said shortly after announcing the deal.

This will be Bharti Airtel's second operation outside India. The company had launched mobile services in Sri Lanka in January last year.

The company said in a statement that the acquisition would be partly by purchase of existing shares held in Warid Telecom International by Dhabi Group for a nominal consideration and balance by way of issue of fresh shares at par.

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IDEA CELLULAR PVT LTD

1. Debt – Equity Analysis :

Debt

2010-65147.59 ,2009-42505.04 , 2008-29156.07

Shareholder’s Equity

2010-49525.20 , 2009-46300.09 , 2008-28423.68

Total Capital

2010-114672.79 , 2009-88805.13 , 2008-57579.75

Observations :

o The debt of the company has been steadily rising by around 50%

o Increase in equity has solely been on account of the change in retained earnings

o Equity Share Capital almost constant, preferential shares marginally increased

o Total capital has been significantly increasing, owing to increase in both – debt and shareholder earnings

2. Dividend Policy Analysis :

No dividend declared so far Not uncommon in telecom sector It shouldn’t be long before it starts rolling out dividends Dividend-per-share, Dividend Payout ratio, Growth in dividend and dividend yield is 0 Conversely, Retention Ratio is 100% .

Comments :

o Company has a low cost of capital and a higher return on equity This means that the firm can turn around capital really well.

o The zero-dividend rate does not reflect company’s policy but rather the company’s inability – since full costs haven’t been recovered yet.

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o The growth rate is not sustainable in a really long term, in the business that the company is in. The telecom service space is hugely competitive and margins cannot be forever maintained.

o Dividend policy cannot be the only factor to be looked into, while performing a valuation exercise for this company.

o Telecom sector has certain key assets like spectrum allocations, tower-infrastructure and brand values which must be looked into quite methodically, while valuing such companies.

Idea Cellular acquires Spice Comm

Consolidation is the name of the game now, and after some dilly-dallying, Idea Cellularfinally bought out promoter B.K Modi’s stake of 40.8% in Spice Communications for Rs 2,720 crore, including non-compete fees (Rs.544 crore). This values Spice at close to Rs.6,800 crore. Idea is India’s fifth largest mobile phone company, and post this deal, expects to add about 4.5 million customers and enter markets in Punjab and Karnataka.

Idea will make an open offer for an additional 20% stake in Spice at Rs.77.30 per share, the same rate at which it bought out Modi, a 42% premium to Tuesday’s closing price. Spice Comm shareholders will get 49 shares of Idea Cellular for every 100 shares held by them.

Telekom Malaysia International (TMI), which holds 39.2 % in Spice, will get 469 million shares in Idea via a preferential allotment at Rs.156.96 per share (Rs.7,200 crore), giving it a close to 15% stake in Idea. The balance from this amount (Rs.4,500 crore) will be used by Idea to become a debt-free company.

Idea Cellular Introduces VAS offers For Its Subscribers in Jammu & Kashmir

Idea has introduced a new offers for its prepaid subscribers including New Customer Recharges ranging from Rs. 35 to Rs. 73 valid up to a year in J&JK.

Through these voucher an Idea subscriber can make Local and STD calls at 40 paisa/minute.

Also, in the ‘More Than Full Talk Time Bonanza,’ a customer gets Rs. 99 talk time on a Rs. 90 recharge and Rs. 328 talk-time on Rs. 298 recharge

Idea Introduces Exclusive STD & Local calling offers for subscribers in Gujarat

IDEA Cellular today announced exclusive STD and local calling offers for its subscribers in Gujarat.

Idea’s special offers will empower its prepaid subscribers with nominal local & STD call rates.

Idea has introduced a special STD & Local calling offer to facilitate its subscribers to stay in touch with their friends and family across the country.

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http://finance.google.com/finance?q=BOM%3A532863

http://finance.google.com/finance?q=BOM%3A532822


In Idea’s, ‘One Country, One Call Rate’ offer, Idea subscribers can now enjoy benefits of making STD & Local mobile calls at a flat rate of 40 paisa per min for 30 days, with a recharge of Rs. 33 only.

IDEA Cellular Revamps GPRS Data Packs For Karnataka

In View of the competition from the other operator and in view to continue its best offers in industry, IDEA Cellular has revamped its GPRS/2G Mobile Internet offerings in Karnataka telecom circle.

IDEA Cellular has made bit changes and now its Prepaid subscribers in Karnataka circle will get more FREE Data Usage in monthly pack of Rs. 98 while no changes in other small data packs.

With GPRS Pack of Rs. 5 customer will get the benefit of 50 MB with a validity of 1 day, with Rs. 16 you can enjoy 500 MB data download with a validity of 3 days whereas with Rs. 98 GPRS pack, you can enjoy downloading for 6 GB (205 MB per day) which was previously just 3 GB.

Idea Cellular Introduces International Roaming offer

Idea Cellular today announced the launch of a special International Roaming Offer for its postpaid subscribers.

Starting April 15th, Idea postpaid subscribers can avail a flat 25% discount on their mobile phone usage while traveling to UAE, USA, Singapore, UK, Thailand, China, Germany, France, Switzerland, Sri Lanka, Hong Kong and Italy.

The offer is valid for three months till July 14th 2011.The ‘special period’ Roaming rates are available on International Roaming services

Get Ready For India’s First Mobile Based Financial Inclusion Initiative

IDEA Cellular and Axis Bank today announced the launch of India’s 1st Mobile based Financial Inclusion Initiative “Idea MyCash’, a facility aimed at providing basic banking services including money transfer, using the mobile platform.

This is a mobile based financial inclusion initiative which besides providing basic banking services like cash deposit, cash withdrawal and balance enquiry will also enable money transfer between the migrant population in urban areas to their beneficiaries back home.

Idea Cellular Woos New Customers With “Switch To Idea” Campaign

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With the roll out of ‘Switch to Idea’ campaign, IDEA Cellular, the pan-India mobile operator, has affirmed that it is ready to enable Mobile Number Portability (MNP) on its network.

Post the announcement of MNP launch on November 25th from Haryana circle, by the Government, Idea has taken the lead to make mobile consumers aware of the upcoming mobile portability service, through its latest campaign.

The new advertisement from Idea which broke on TV recently, shows Idea’s Brand Ambassador, Abhishek Bachchan proposing a new idea to unhappy mobile users to switch to a network that offers better services, better products & tariffs, and better network, through the message – ‘No Idea, Get Idea’.

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RELIANCE COMMUNICATIONS

India's Reliance Communications plans merger with MTN

Anil Ambani, India's second-richest man, is planning a secondary listing in London for a new global telecoms giant after the planned merger of his Reliance Communications with MTN, of South Africa, The Times has learnt.

Reliance, India's second-biggest mobile operator, is in talks with MTN on a deal to create one of the world's ten largest telecoms companies, worth an estimated $70 billion (£35 billion) and with 116 million subscribers worldwide.

The talks began on May 26 after Bharti Airtel, India's biggest mobile operator, dropped out of negotiations with MTN, South Africa's largest.

Sources close to the Reliance-MTN deal said that the negotiations, which started in secret several months ago, were going well and were likely to be concluded before the end of a 45-day exclusivity period

Reliance Communications (.RCOM.) Completes Acquisition of US based Yipes Holdings, Inc. (.Yipes.) through FLAG Telecom

Reliance Communications Ltd. received approval from the Federal Communications Commission (FCC) for the merger of U.S.-based Yipes Holdings, Inc. The FCC is an independent United States government agency charged with regulating interstate and international communications by radio, television, wire, satellite, and cable. Reliance Communications announced the U.S. $300 million acquisition of Yipes in July 2007. The transaction, closed on December 19, 2007, is a key milestone in Reliance Communications' plan to become a global data communications leader.

Yipes has always been a leader in providing innovative technology and first-class services to its customers. Our acquisition by Reliance will enable us to extend our technology to enterprise customers around the world while maintaining our customer service commitments," said John Scanlon, CEO of Yipes. "Our rapid global expansion will allow us to secure a larger share of the business Ethernet services market, the fastest growing segment of the data services market, which is projected to climb to $30.7 billion by 2012."

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Indian giant Reliance beats rivals to buy ailing Vanco Group

A leading Indian telecoms group will announce today that it has bought Vanco Group, the financially troubled virtual telecoms operator, against competition from Cable & Wireless and BT.

Reliance Communications, controlled by Anil Ambani, the Indian tycoon, has agreed to buy the entire business except Vanco Direct USA, which is being sold separately.

The parent, Vanco Plc, goes into administration today. Trading in Vanco’s shares was suspended at the beginning of the month, when the company gave a serious profit warning. Allen Timpany, the company’s founder and chief executive, who bought the company for £1 in 1988, resigned on the same day.

Reliance Industries board approves de-merger scheme

In a major development in the Indian corporate world, the board of corporate behemoth Reliance Industries Ltd. Friday approved the de-merger of the company from power, financial services and telecom businesses.

The board had resolved in principle to consider reorganisation of the businesses of Reliance Industries at its meeting held June 18 to end a seven-month ownership row between the owner Ambani brothers.

The scheme of de-merger is subject to approvals of various regulatory agencies including Bombay High Court and stock exchanges, said a statement issued after the board meeting late Friday.

The four companies that will be formed by de-merger are Reliance Communication Ventures, Reliance Capital, Reliance Energy and Global Fuel Management Services.

The value of Reliance Industries' investments in the undertaking to be de-merged into Reliance Communication Ventures is nearly Rs.154 billion, said the company statement.

Similarly, the value of Reliance Industries' investments in the undertaking to be de-merged into Reliance Energy is nearly Rs.30 billion, while that for Reliance Capital is Rs.6 billion.

The shareholders of Reliance Industries will continue to hold the same number of shares as the currently hold.

In addition, they will receive separate shares in the four de-merged entities, which will allow them to participate in the growth areas of telecom, financial services and coal and gas-based energy businesses.

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Reliance Communications Announces Financial Results :

Reliance Communications draws second tranche of Rs. 1,780 crore (US$ 400 Million) from China Development

Bank underwritten facility of Rs. 8,700 crore (US$ 1.93 Billion) Total draw down of Rs. 4,780 crore (US$ 1.06

Billion) so far Drawn down amount to be used to refinance higher cost Short Term Rupee Debt Loan to

refinance 3G spectrum Auction Annual projected interest cost savings of over Rs. 500 crore per year RCOM to

benefit from extended Loan Maturity of 10 years and substantial interest cost savings.

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TATA COMMUNICATIONS

1.Funding

During the year, the Company continued to borrow for financing its projects and operations . The Company issued unsecured debentures amounting to Rs. 7.00 billion in 2009-10. All debentures issued by the Company have been rated ‘AAA’. The trust deeds for the debentures issued by the Company will be available for the inspection by the members at the Company’s registered office during normal working hours, 21 days before the date of the 24 th Annual General Meeting.

2.Dividend

The directors have recommended that no dividend be paid for the financial year ended 31 March 2010. This was deemed prudent in the light of several factors impacting your Company. The Company’s revenue has shown growth but profitability has come under pressure over the last couple of years primarily due to sharp drop in tariffs and the high capital expenditure to meet current and future business requirements resulting in significantly higher depreciation and additional interest costs and some large investments being still in their gestation phase and will take a few more years to be profitable.

3.Joint Ventures & Associates

Neotel (Proprietary) Ltd. Neotel was set up as South Africa’s (SA) Second National Operator (SNO) in 2005. During the year, two of the shareholders in the company, Eskom and Transnet, sold their entire 30% stake in Neotel to the Company and Tata Africa thereby increasing our combined stake to an effective 56% (earlier effective 26%). Neotel today employs around 1,100 people, and offers t e l e c ommu n i c a t i o n s e r v i c e s t o t h e Wh o l e s a l e, Enterprise and Consumer segments. Neotel runs the first Next Generation Network and the first CDMA network of SA. It has also been awarded the Level 3 cer t i f i c at ion (highes t amongs t telecom ser v i ce providers in SA) for the second year in a row with r e g a r d t o t h e B ro a d B a s e d B l a c k E c o n omi c Empowerment initiatives of the SA government. As a part of Neotel’s growth story, it had acquired Transtel, a division of the state owned transport company Transnet. This acquisition was completed and the organization has been fully integrated with Neotel. This integration has resulted in the Company achieving better scale in its operations and is now yielding some visible cost synergies.

JV with CEC

It was reported last year that your Company had entered into an equity joint venture agreement (EJV) wi t h t h e s h a r e h o l d e r s o f C h i n a E n t e r p r i s e Communications Limited (CEC). On 10 June 2010, Tata

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Communications (Hong Kong) Ltd, a wholly-owned indirect subsidiary of Tata Communications Ltd and the shareholders of CEC jointly withdrew their equity j o i n t v en t u r e a p p l i c a t i o n wi t h t h e C h i n e s e Government and mutually agreed to terminate the various agreements regarding Tata Communications’proposed equity investment in CEC. CEC and Tata Communications will continue with their existing network services co-operation relationship and have also entered into a new co-operation agreement whereby Tata Communications and CEC will work together on a commercial basis to allow Tata Communications to benefit from access to CEC’s network and assets in China, as Tata Communications continues to focus on this key market.

ORGANISATIONAL RESTRUCTURING

Consolidating Subsidiaries

Your Company had seven direct and 37 indirect subsidiaries as on 31 March 2010. As reported earlier, a process had been initiated to reduce this number t o a t o t a l o f a b o u t 3 0 , t h r o u g h a p p r o p r i a t e restructuring. The aim is to have no more than one entity in each country to the extent possible and necessary. Wi t h t h e l a u n c h o f t h e n ew b r a n d ‘ Ta t a Communications’, the name of the parent and the names of the first level of subsidiaries have been changed to reflect this new global brand. Appropriate Brand Equity and Brand Promotion Agreements willbe signed with Tata Sons Ltd. by those subsidiaries whose names have been changed.

4. Fixed assets

a) Fixed assets are stated at cost less accumulated depreciation. Cost includes freight, duties, taxes, salaries and employee benefits directly related to the construction or development of the asset and all incidental expenses incurred to bring the assets to their present location and condition.

b) Fixed assets received as gifts from other Foreign Telecom Carriers / vendors are capitalised and credited to Capital Reserve on the basis of notional cost (cost assessed by customs authorities). Cost includes freight, insurance and customs duty.

c) Int angible a s set s in the nature of Indefea s ible R ight s of Use ( IRU’s ) for inter n a t iona l and domes t i c telecommunication circuits are recorded as fixed assets. IRU agreements transfer substantially all the risks and rewards of ownership.

d) Jointly owned assets are capitalised in proportion to the Company’s ownership interest in such assets.

e) Costs of borrowing related to the acquisition or construction of fixed assets that are attributable to the qualifying assets are capitalized as part of the cost of such asset. A qualifying asset is one which necessarily takes a substantial period to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred in accordance with the Accounting Standard 16 on ‘Borrowing Costs’ notified by the Companies (Accounting Standards) Rules, 2006.

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f) Consideration for purchase of business in excess of the value of net assets acquired is recognised as goodwill.

g) Internally developed computer software, and licence fees have been classified as intangible assets.

h) Assets acquired pursuant to an agreement for exchange of similar assets are recorded at the net book value of the asset given up, with an adjustment for any balancing receipt or payment of cash or any other form of consideration.

5. Depreciation

Depreciation other than on freehold land and capital work-in-progress is charged over the periods set out below so as to write-off the cost of the asset on a straight line basis over the estimate useful lives, at the following rates:

a) Leasehold land Lease period

b) Leasehold improvements Lease period

c) Buildings 1.64% to 6.67%

d) Plant and Machinery

(i) Indefeasible Rights of Use (IRU’s) Life of IRU or period of agreement, whichever is lower

(ii) Other plant and machinery 4.75% to 33.33%

e) Furniture and fixtures 6.33% to 33.33%

f) Office equipment 4.75% to 33.33%

g) Computers 10.00% to 33.33%

h) Motor vehicles 9.50%

i) Goodwill on purchase of business 60/120 months

j) Intangibles

(i) Internally developed computer software 20.00% to 33.33%

(ii) License fees 4.00%111

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6. Leases

Lease arrangements where the risk and rewards incidental to ownership of an asset substantially vests with the lessor are classified as operating lease. Rental income and rental expenses on assets given or obtained under operating lease arrangements are recognised on a straight - line basis over the term of the relevant lease.

The initial direct costs relating to operating leases are recorded as expenses as they are incurred. Assets given under finance lease are recognised at an amount equal to the net investment in the lease and the finance income is based on a constant rate of return on the outstanding net investment. Assets acquired under lease where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

7. Impairment

At each balance sheet date, the Company reviews the carrying amounts of its fixed assets and goodwill included in each cash generating unit to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Recoverable amount is the higher of an asset’s net selling price and value in use. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other asset of the unit pro-rata on the basis of the carrying value of each asset in the unit. An impairment loss recognised for goodwill is not reversed in the subsequent period unless there are changes in external events.

8. Asset Retirement Obligation (“ARO”)

The Company’s ARO relate to the removal of cable systems and switches when they will be retired. Provision is recognised based on management’s best estimate of the eventual costs that relate to such obligation and is adjusted to the cost of such assets. The estimated costs are based on historical cost information, industry factors and technical estimates received from consortium members of the cable systems.

9. Investments

Long-term investments are valued at cost less provision other than temporary diminution in value. Current investments comprising investments in mutual funds are stated at the lower of cost or fair value, determined on an individual investment basis. The acquisition cost of an investment acquired in exchange, or part exchange, for another asset is determined based on the fair value of the asset given up.

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10. Inventories

Inventories are valued at the lower of cost and net realisable value. Cost is determined on a weighted average basis.

Tata Communication and Docomo

Tata Teleservices has sold a stake of 26% to Japan’s NTT DoCoMo. The deal value is $2.7 bn. Tata Tele has 30 million CDMA subscribers and is rolling out its GSM services. Some say the deal is over-valued and some say its not easy to put value on the fastest growing mobile market in the world. India is the fastest growing market second only to China. It adds 10mn subscribers every month. The current subscriber base stands at 300+million and is expected to be 700 million in 2012. That is almost double to today’s numbers.

We have 9 players (Airtel, Reliance, Vodafone, BSNL, Idea, Spice, BPL, Aircel, MTNL) in the circuit. 6 more players are ready to join the market. What this means is India will be having 15 players operating by 2010. If 9 players have fought for 300 million subscribers, then its 15 players fighting for 400 million subscribers. This would mean heavy competition and severe cost-cutting. Though, this is good for the subscriber the companies operating would face serious challenges. Network roll-out and gaining subscribers are the biggest challenges.

New entrants cannot roll their networks as aggressively as the big boys. For example Reliance after acquiring its GSM license has rolled out its network very aggressively and ready to eat some of the Airtel’s GSM pie. It has built 1600 towersÂ by spending 300 crores. It added 1.76 million subscribers and some of them might be GSM subscribers. Now, does the new operators have this kind of cash to roll out a network? I guess not.

Without even rolling out a network, let alone having a subscriber Unitech sold 60% stake to Telenor. Which means it either does not have the money or the technology to roll out services. Swan telecom and Shyam Telelink have followed the similar route. What this means is, consolidation is already happening in the form of stake sales. The next wave is mergers and acquisitions.

Airtel and Reliance had bid unsuccessfully for South Africa’s MTN. This does not mean that they have stopped looking. They will look for acquisitions. Be it local or global. They do realize thatIndia is still unfinished business.

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http://trak.in/tags/business/2008/10/29/unitech-sells-60-stake-to-telenor-and-makes-profit-without-a-subscriber/

http://www.thehindubusinessline.com/blnus/02141936.htm

http://trak.in/tags/business/2008/09/28/indian-telecommunication-market-larger-consolidation/

http://trak.in/tags/business/2008/09/28/indian-telecommunication-market-larger-consolidation/

http://in.reuters.com/article/topNews/idINIndia-36465720081112?feedType=RSS&feedName=topNews&pageNumber=3&virtualBrandChannel=0


VSNL(now tata telecom) Completes Acquisition of Teleglobe

Next-Generation Global Communications Provider Expands Reach and Service Portfolio

Acquisition Details

Teleglobe was acquired for about $239 million, comprising payment of $4.50 per share to Teleglobe shareholders and assumption of net debt. At Teleglobe's current revenue levels, the acquisition could increase VSNL's annual revenues by up to 200% in 2006-07.

Shares of Teleglobe common stock, which prior to the merger traded on the Nasdaq National Market under the symbol "TLGB", were delisted from trading as of the close of the market on February 13, 2006.

Complementary Networks, Product Suites, Legacy, and Shared Culture of Quality

"Our decision to pursue the Teleglobe acquisition was based on several key areas of synergy, including complementary global infrastructure and product offerings, as well as a shared culture dedicated to quality performance and committed to long-term industry growth," adds Mr. N. Srinath.

The combined company represents:

People

Representation in more than 35 countries

Relationship Assets

Global Customer base of 1,400 wholesale customers and more than 650 enterprise customers

Global Infrastructure

Global, robust and scalable network capacity and seamless connectivity, that includes 206,356 km of terrestrial network fiber and subsea cable

275 PoPs in 25 Countries and access to 5 geo-stationary satellites through more than 30 dedicated earth stations

Ownership in 100+ sub sea and terrestrial cable systems

Full ownership of Tata Indicom Cable (Chennai - Singapore)

Network Administrator role and partial ownership in SEA-ME-WE4 (South East Asia-Middle East -Western Europe)

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Voice

World's largest international wholesale carrier with more than 415 combined direct and bilateral relationships with leading international voice telecommunications providers and more than 17 billion minutes annually of international wholesale voice traffic

Principal provider of public international telecommunications services in India, linking the domestic network to over 240 territories worldwide

Data

Legacy-free, global MPLS network with reach throughout India

Global, India and India Metros Ethernet over MPLS and SONET capabilities

Tier One IP service provider

International IPv6 connectivity leader

Principal provider of International data services in India

Mobile

Connection to over 400 mobile operators worldwide

Principal provider of signaling conversion services to enable GSM roaming to and from North America

Content delivery services

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CONCLUSION

With government increasing the FDI gap to 74%, more foreign companies would be entering the Indian market and there will be stiff competition among the Indian players with the international players and hence the Indian players have to sustain growth and make profits. Hence, the few companies that do not meet the industry standard ratios need to work towards attaining the same.

SUGGESTIONS

Opportunity in rural areas: When compared to Indian metros, there is a large gap in tele-density; - 62 percent in the metros, nearly eight times higher than 8 percent in rural areas. To capitalize on the growing population and disposable income in rural India, telecom operators will have to explore and expand into ‘uncovered' geographies.

Re-examining high levies: The Indian telecom sector is one of the highest taxed sectors in the developing world, through levies, which comprise service tax, revenue share, spectrum cess, and value added tax.

Bringing down operators' capex: To expand the telecom services, there will be greater investment needs in the future. Telco’s will have to engage on active and passive infrastructure sharing.

Rational policy for spectrum allocation: The allocation of adequate spectrum is an urgent requirement for new and existing operators. A clear roadmap for future spectrum allocation has to be drawn, whether it is a 2G or a 3G platform. Operators need to be cautious in ‘bidding' and should not overpay for spectrum as that could disturb project economics.

Data revenues to provide ‘buffer': India's data revolution is going to be fuelled by 3G and WiMAX. For the data revolution to reach villages, low-cost access devices, vernacular content, and community initiatives such as e-governance need to be in place.

Enhancing skill sets: The sector will require specialist resources to support and sustain growth over the next four to five years. And pressure on talent is expected to increase with the deployment of 3G and WiMAX services. The private sector will need to reorient its focus on talent development through training schools and facilitation programs that cater to the needs of the telecom industry.

Impact of global economic downturn: The current financial crisis could have a low-to-medium impact on the telecom sector in terms of rising costs of capital and reduction in discretionary spending on the part of customers, among other determinants.

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