TELECOMMUNICATION INDUSTRY

GROUP 3

SUBMITTED BY

ATHIRA PAUL

ABIYA AMMU ELSA

JEENA JOSE

NANDANA RAJEEV

RUDRA S

MAHESH MAHADEV

VISHAL VIJAYKUMAR

Introduction
 India is currently the world’s second-largest telecommunications market with a

subscriber base of 1.20 billion and has registered strong growth in the past decade and half.

The Indian mobile economy is growing rapidly and will contribute substantially to India’s

Gross Domestic Product (GDP), according to report prepared by GSM Association (GSMA)

in collaboration with the Boston Consulting Group (BCG). As of January 2019, India has

witnessed a 165 per cent growth in app downloads in the past two years.

The liberal and reformist policies of the Government of India have been instrumental

along with strong consumer demand in the rapid growth in the Indian telecom sector. The

government has enabled easy market access to telecom equipment and a fair and proactive

regulatory framework that has ensured availability of telecom services to consumer at

affordable prices. The deregulation of Foreign Direct Investment (FDI) norms has made the

sector one of the fastest growing and a top five employment opportunity generator in the

country.

Market Size

With 604.21 million internet subscribers, as of December 2018, India ranks as the

world’s second largest market in terms of total internet users.

Further, India is also the world’s second largest telecommunications market, with total

subscriber base of 1,183.51 million at the end of March 2019

Moreover, in 2017, India surpassed USA to become the second largest market in terms of

number of app downloads. The country remained as the world’s fastest growing market for

Google Play downloads in the second and third quarter of 2018.

Over the next five years, rise in mobile-phone penetration and decline in data costs will add

500 million new internet users in India, creating opportunities for new businesses.
As on March 2019, Reliance Jio overtook rival Bharti Airtel to become the country’s

second largest operator in terms of mobile phone subscribers. Jio had 322.98 million users

and 27.8% subscriber market share, against Airtel’s 320.38 million users and 27.6% market

share as of end-May, according to data from Telecom Regulatory Authority of India.

COMPARISON AND ANALYSIS

 Accounts Receivable Days

Accounts receivable days is the number of days that a customer invoice is outstanding before

it is collected. The point of the measurement is to determine the effectiveness of a company's

credit and collection efforts in allowing credit to reputable customers, as well as its ability to

collect cash from them in a timely manner. The measurement is usually applied to the entire

set of invoices that a company has outstanding at any point in time, rather than to a single

invoice. When measured at the individual customer level, the measurement can indicate when

a customer is having cash flow troubles, since it will attempt to stretch out the amount of time

before it pays invoices.

Overall Company Analysis

 2018

Jio and Airtel showed comparatively less accounts payable days by having less than 40 days

and 12 days, while Telenor had more than 100 days, Aircel had 92 days and Docomo having

less than 46 days. BSNL took more time and they are also planning to reduce their debt

obligation as they are not able to get their money back.

 2017
Telenor had 84 days to recover their money, Jio took less than 25 days whereas Docomo took

30 days.

 2016

Docomo took 31 days to recover their debt whereas Jio took less than 30 days and Telenor 45

days

Comparatively Jio showed efficient working capital management than other companies in

these three years.

 Accounts Payable Days

The accounts payable days formula measures the number of days that a company takes to

pay its suppliers. If the number of days increases from one period to the next, this indicates

that the company is paying its suppliers more slowly, and may be an indicator of worsening

financial condition. A change in the number of payable days can also indicate altered

payment terms with suppliers, though this rarely has more than a slight impact on the total

number of days, since the terms must be altered for many suppliers to alter the ratio to a

meaningful extent.

If a company is paying its suppliers very quickly, it may mean that the suppliers are

demanding fast payment terms, either because short terms are part of their business models or

because they feel the company is too high a credit risk to allow longer payment terms.

Overall Company Analysis

 2018

Aircel took 25 days and Airtel took 45 days to pay off its creditors but Telenor and Jio took

only 4 and 3 days to payoff its creditors which is good for their working capital management.
When considering the case of Docomo and BSNL, Docomo took more than 1 lakh days to

payoff its creditors and BSNL also was facing trouble to payoff its debts.

 2017

In 2017 also Telenor and Jio maintained the same number of accounts payable days it shows

their efficiency in working capital management. Aircel also continues to be in the same

position. Comparatively Docomo was having higher accounts payable days by having more

than 70000 days.

 2016

In 2016 Telenor had 7 days to payoff its creditors Jio 5 days, Aircel 26 days and Docomo

20000 days. Docomo’s accounts payable days increased year after year whereas other

companies reduced their accounts payable days and that showed the inefficiency of working

capital management in Docomo.

 Cash conversion cycle

The Cash Conversion Cycle (CCC) is a metric that shows the amount of time it takes a

company to convert its investments in inventory to cash. The conversion cycle formula

measures the amount of time, in days, it takes for a company to turn its resource inputs into

cash. . However, shortening the CCC creates its own risks: while a firm could even achieve a

negative CCC by collecting from customers before paying suppliers, a policy of strict

collections and tax payments is not always sustainable. CCC is one of several quantitative

measures that helps evaluate the efficiency of a company's operations and management. A

trend of decreasing or steady CCC values over multiple periods is a good sign, while rising

ones should lead to more investigation and analysis based on other factors. One should bear
in mind that CCC applies only to select sectors dependent on inventory management and

related operations

Overall Company Analysis

 2018

Aircel took 34days for the cash conversion cycle while tatadocomo is showing a

negative value which tells that the company have a large value on liability side. In the

case of Telenor the CCC for 2018 is also a negative value due to the lager liability

side. Even in the case of BSNL conversion cycle shows a huge negative value

 2017

In the case of Tata docomo is showing a negative value of (-76159.3) and in aircel,

Telenor, BSNL are also showing a negative value the only company that is showing

positive is jio and airtel.

 2016

For tatadocomo the conversion value has lowered to (-25771.9) comparing to the

2017 while in the case of aircel and BSNL the cash conversion days is not varying

that much. In the case of Telenor CCC was showing some good result of comparing

other two years

Jio and airtel is showing good performance comparing with all other companies in

various years. Though BSNL is in loss they show a progress in their profitability.
  Inventory Turnover

Inventory turnover is a ratio showing how many times a company has sold and replaced

inventory during a given period. A company can then divide the days in the period by the

inventory turnover formula to calculate the days it takes to sell the inventory on hand.

Calculating inventory turnover can help businesses make better decisions on pricing,

manufacturing, marketing and purchasing new inventory.

Inventory Turnover = Sales/Average Inventory

where:

Average Inventory = (BI−Ending Inventory) ÷ 2

BI=Beginning Inventory

Overall Company Analysis

 2018

In the year 2018 Tata docomo has the highest Inventory turnover ration which is

14,447.08 and Reliance Communication has the lowest Inventory turnover which is

34.86.

 2017

In the year 2018 Airtel has the highest Inventory turnover ratio which is 15,968.28

and Reliance Communication has the lowest Inventory turnover which is 32.75.

 2016

In the year 2018 Airtel has the highest Inventory turnover ratio which is 15,968.28

and Reliance Communication has the lowest Inventory turnover which is 83.97.
 CONCLUSION

Indian telecom market is one of the fastest growing markets in the world as a result of

its high population and development potential. Some of the telecommunication companies in

India are Bharti Airtel, Reliance Communication, Vodafone- Idea, TataDocomo, Telenor,

BSNL and other major operators in India. In is the backbone of industrial and economic

development. The industry has been aiding delivery of voice and data services at rapidly

increasing speeds, and thus has been revolutionizing human communication.

Reliance Jio is the leading company in the telecommunication industry. Bharati Airtel

was profitable till last year but now there is a decline in its profitability. Though BSNL had

loss for the past years, its performance is getting improved. The acquisitions and merging in

the industry has witnessed a tremendous change in the telecommunication sector.

Telecommunication is played a vital role in our economy. The booming telecom industry

has been attracting large amount of investments in the country. Private telecommunication is

more telecom operator sector in India. Reliance Jio emerges as India's top mobile phone

operator in 2016-18. Other operator is important place of telecommunication in India.