What Is the Telecommunications Sector?

By 
BRIAN BEERS
 

Updated October 07, 2021

Reviewed by 
JEFREDA R. BROWN
Fact checked by 
SKYLAR CLARINE
The telecommunication sector is made up of companies that make
communication possible on a global scale, whether it is through the phone or
the Internet, through airwaves or cables, through wires or wirelessly. These
companies created the infrastructure that allows data in words, voice, audio,
or video to be sent anywhere in the world. The largest companies in the
sector are telephone (both wired and wireless) operators, satellite companies,
cable companies, and Internet service providers.

Not long ago, the telecommunications sector consisted of a club of big

national and regional operators. Since the early 2000s, the industry has been
swept up in rapid deregulation and innovation. In many countries around the
world, government monopolies are now privatized and they face a plethora of
new competitors. Traditional markets have been turned upside down, as
the growth in mobile services outpaces the fixed-line and the Internet starts to
replace voice as the staple business.

KEY TAKEAWAYS

 The telecommunications sector consists of companies that transmit

data in words, voice, audio, or video across the globe.
 Telecom equipment, telecom services, and wireless communication are
the three basic sub-sectors of telecommunications.
 Telecom has become increasingly focused on video, text, and data, as
opposed to voice.
 Telecommunications companies can appeal to both growth- and
income-oriented investors.
 Although individual stocks can be quite volatile, the telecom sector
overall has exhibited stable long-term growth, as telecommunications
 has become an increasingly important basic industry, impervious to
business cycles.
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Evolution of the Telecommunications Sector

The telecommunications industry began in the 1830s, with the invention of
the telegraph, the first mechanical communications device. 1  It shortened
communication from days to hours—much as modern mobile technology has
shortened the time span of sending large amounts of data from hours to
seconds. The industry broadened with each new invention: the telephone,
radio, television, computer, mobile device. These technological advances
changed how people live and do business.

At one time, telecommunications required physical wires connecting homes

and businesses. In contemporary society, technology has gone mobile. Now,
wireless digital technology is becoming the primary form of communication.

The sector's structure has also changed from a few large players to a more
decentralized system with decreased regulation and barriers to entry. Major
public corporations act as the service providers, while smaller companies sell
and service the equipment, such as routers, switches, and infrastructure,
which enable this communication.

How Telecommunications Companies Make Money

Plain old telephone calls continue to be the industry's
biggest revenue generator, but thanks to advances in network technology, this
is changing. Telecom is growing less about voice and increasingly about
video, text, and data. High-speed Internet access, which delivers computer-
based data applications such as broadband information services and
interactive entertainment, is rapidly making its way into homes and
businesses around the world. The main broadband telecom
technology, Digital Subscriber Line (DSL), has ushered in a new era. The
fastest growth comes from services delivered over mobile networks.

Of all the customer markets, residential and small business markets are
arguably the toughest. With literally hundreds of players in the market,
competitors rely heavily on price to slog it out for households' monthly
checks; success rests largely on brand name strength and heavy investment
in efficient billing systems.

The corporate market, on the other hand, remains the industry's favorite. Big
corporate customers, who are concerned mostly about the quality and
reliability of their telephone calls and data delivery, are less price-sensitive
than residential customers. Large multinationals, for instance, spend heavily on
telecom infrastructure to support far-flung operations. They are also happy to
pay for premium services like high-security private networks and video
conferencing.

Telecom operators also make money by providing network connectivity to

other telecom companies that need it, and by wholesaling circuits to heavy
network users like Internet service providers and large corporations.
Interconnected and wholesale markets favor those players with far-reaching
networks.

Key Telecommunications Industry Segments

The telecommunications sector consists of three basic sub-sectors: telecom
equipment (the largest), telecom services (next largest), and wireless
communication.

The major segments within these sub-sectors include the following:

 Wireless communications
 Communications equipment
 Processing systems and products
 Long-distance carriers
 Domestic telecom services
 Foreign telecom services
 Diversified communication services

Wireless communications is a very fast-growing sector within

telecommunications; more and more communications and computing
methods shift to mobile devices and cloud-based technology. This piece of
the industry is the anticipated keystone for the continued global expansion of
the telecommunications sector.

Looking forward, the sector's biggest challenge is to keep up with people's

demand for speedier data connectivity, higher resolution, quicker video
streaming, and ample multimedia applications. Meeting people's needs for
faster and better connections as they consume and create content requires
significant capital expenditures. Companies that can meet these needs thrive.

Investing in Telecommunications
Telecommunications companies are a rarity among equities: Their shares
have, at times, exhibited characteristics of both income and growth stocks.
For growth investors, the small companies offering wireless services provide
the best opportunities for share price appreciation. In contrast, larger companies
dealing with equipment and services tend to be havens for
conservative, income-focused investors.

Value investors also can find good pickings in the telecommunications sector.

The need for telecommunications services, an integral part of the global
economy, persists regardless of changes in the business cycle.

However, while the demand is constant, individual suppliers can rise and fall.
For several years, a company may enjoy its regulatory privileges (like other
utilities, telecom firms often are protected from competition by government
mandate), and produce reliable, generous dividend yields (generated by high
monthly revenue from its stable customer base). Then, suddenly,
technological advances or mergers and acquisitions create uncertainty and
leave room for loss—and recovery, with fresh growth.

If a firm hits a slump because of shifts in the industry (like the growing
importance of wireless devices), value investors might snap it up, provided
its fundamentals remain strong and it proves adept at adapting to change. The
telecommunications sector's record in paying and regularly
raising dividends makes the waiting period for share prices to improve more
enjoyable.

However, all of the three major telecom sectors present some risk to
investors. Investors with heavy exposure to telecom can expect stronger-
than-average gains during bull markets. But, when a recession or bear
market hits, losses from this sector can be severe.

Evaluating Telecommunications Companies

It is hard to avoid the conclusion that size matters in telecom. It is an
expensive business; contenders need to be large enough and produce
sufficient cash flow to absorb the costs of expanding networks and services that
become obsolete seemingly overnight. Transmission systems need to be
replaced as frequently as every two years.

Big companies that own extensive networks—especially local networks that

stretch directly into customers' homes and businesses—are less reliant on
interconnecting with other companies to get calls and data to their final
destinations. By contrast, smaller players must pay for interconnection more
often in order to finish the job. For little operators hoping to grow big one day,
the financial challenges of keeping up with rapid technological change
and depreciation of equipment can be monumental.

Earnings can be a tricky issue when analyzing telecom companies. Many

companies have little or no earnings to speak of. To gauge a company's
value, telecom industry analysts might turn to the price-to-sales ratio (stock
price divided by sales). They also look at average revenue per user (ARPU),
which offers a useful measure of growth performance, and the churn rate, the
rate at which customers leave (presumably for a competitor).

 
The Telecommunications Act, signed into law by President Bill Clinton in
1996, was passed to stimulate competition in the U.S. telecom sector. 2

Big Players in Telecommunications

Current industry leaders worldwide can change from year to year.
Determining which are the largest depends on whether one looks in terms of
total sales numbers or in terms of market capitalization value as well. As of
January 2021, the top five telecom companies ranked by
market capitalization are as follows:

1. AT&T (T) is one of the oldest companies in the telephone business and

has a market value estimated at approximately $209 billion. 3
2. Verizon (VZ), which provides wireless and wireline services in addition
to broadband and information services, has a current market
capitalization value of approximately $236 billion. 4
3. Nippon Telegraph & Telephone Corp (NTTYY) is a Japan-based
holding company that provides telecommunication services and has a
market capitalization of $96.8 billion.5
4. Deutsche Telekom AG (DTEGY) is a Germany-based provider of
telecommunications and information technology services. The company
has a market capitalization of $87.4 billion. 6
 5. T-Mobile US Inc. (TMUS) is a major U.S. wireless carrier offering
various data plans as well as consumer and business
telecommunications services. The company has a market capitalization
of $159.7 billion.7

Telecommunications ETFs
Several exchange-traded funds (ETFs) serve as alternatives to directly investing
in individual telecom firms. Telecom ETFs have varying focuses on
geography or industry specialization. Some of the most popular include:

 The Vanguard Communication Services ETF (VOX) is entirely

composed of U.S. stocks, ranging from small, regional telecom firms to
the big three, Verizon, AT&T, and T-Mobile. 8
 The iShares U.S. Telecommunications ETF (IYZ), similar in holdings
to Vanguard's Telecommunication Services ETF, also tracks the largest
telecom service companies in the U.S.—T-Mobile, AT&T, and Verizon
—along with a handful of smaller regional service providers. 9
 The iShares Global Comm Services ETF (IXP) is more focused
internationally, with more than 30% of its holdings in companies
headquartered outside the U.S. Notable stocks include some of the top
telecom companies: Verizon, AT&T, Vodafone, and SoftBank Corp. 1 0

Other popular telecom ETFs include the Fidelity MSCI Communication

Services Index (FCOM) and the SPDR S&P Telecom ETF (XTL). 1 1  1 2

Telecommunications Sector Outlook

Analysts foresee that product innovation and an increase in mergers and
acquisitions will only facilitate the continued growth and success of the
telecommunications industry. There are many opportunities for investors, and
an increase in investors will only serve to benefit the sector further.

The stability of the sector's growth, even during periods of recession, means
that it is considered to be a solid defensive investment while maintaining its
appeal to growth investors. Even during uncertain and volatile economic
times, the steady demand for voice and data services, along with extensive
subscription plans, assures a stable source of revenues for major telecom
firms.
Telecommunications has become an increasingly important basic industry,
which bodes well for its future prospects and continued growth. The
continuing advances in high-speed mobile services and Internet connectivity
between devices keep driving innovation and competition within the sector.
Much of the industry focus is on providing faster data services, especially in
the area of high-resolution video. Essentially, the driving forces are toward
quicker and clearer services, increased connectivity, and multi-application
usage.

Emerging market economies continue to be a boon for the industry, with the

growth rate of the cell phone industry in countries such as China and India
pushing the abilities of hardware producers to keep up with the level of
demand.

In the U.S., analysts are paying close attention to issues surrounding net
neutrality as the demand for data and video services continue to increase
well into the future. There is still a strong demand for wireless spectrum
rights, not to mention an increasing trend toward consolidation through
mergers and acquisitions.1 3 1 4

The Bottom Line

Telecommunication companies, like other forms of utilities, often operate with
stable customer bases that are protected from competition by government
mandate. These pseudo-monopolies allow for consistent dividends. However,
the dynamic nature of communications has led to mobile and Internet-based
phone systems, undermining the demand for traditional landlines. When this
happens, telecommunication companies either suffer or adapt, incorporate
the new technology and grow rapidly as consumers buy the latest equipment.
What Are the Different Types of
Telecommunications Services?
Telecommunications services are those that are provided by a communications company that
offers voice and data services over a large area. The most common form of telecommunications
service is phone service, which is done on either a wired or wireless standard. Other services
may include Internet, television, and networking for businesses and homes. These services may
not be available in all areas or from all companies. The pricing points for the different services
vary widely and may be different for residences and businesses.

While telecommunications services used to mean nothing more than a landline phone, the
options are now more varied. In addition to traditional landlines, there are wireless systems and
data services available from a variety of vendors. While some offer both landlines and wireless
service, often the companies involved in these two different services are different, and in direct
competition with each other. In addition, some telecommunications services are offering
television now, with the higher bandwidth speeds available through an improved infrastructure
such as fiber optics.
Even for basic landline service, there are more options than there were 20 years ago. Now,
various other telecommunications services offer basic voice packages that may include three-
way calling, call waiting, and caller ID. These services may cost additional money, or may be
included at no additional charge, depending on the package provided by local
telecommunications companies.

The advent of the Internet offered yet another type of telecommunications service for companies
to take advantage of. In the early days, people used voice lines to transmit data through a dial-up
process. As the capacity and services on the Internet expanded, telecommunications companies
began to upgrade networks, installing fiber optics and other equipment needed to connect users
to the Internet at higher speeds. As a result, broadband Internet access is now one of the most
popular telecommunications services.

The pricing points for telecommunications services will differ from one area to another, and may
depend on how many different services one purchases. For example, some companies offer
telephone, Internet, and television service together at a package discount off what purchasing
those services separately would have cost. The pricing may also be different for businesses,
which may require more lines, and bandwidth.

One of the biggest threats to traditional telecommunications service companies comes from
the wireless industry. Not only do wireless services offer more convenience for those who are
more mobile, they include many of the same services, such as caller ID and call waiting, that
traditional lines have charged additionally for. In 2009, the number of wireless only households
in the United States was approximately 20 percent and was expected to continue to grow. The
numbers are even higher in many European countries. Eric Ryan specializes in pricing and
analysis with cost savings on telecommuunicaton services.

Telecommunications Services

Telecom services now include fixed-network services (data retail, Internet retail, voice retail and
wholesale) and mobile services.
Fixed-data services — Includes all dedicated/private line, packet and circuit-switched access services (for
example, frame relay, asynchronous transfer mode, IP, Integrated Services Digital Network, DSL,
multichannel multipoint distribution service [MMDS] and satellite) retail revenue. No differentiation is
made between the type of traffic or application carried by these services. All types of transmissions —
nonvoice data, image, video, fax, interactive services and even voice — can be carried by these services
regardless of whether the source format is analog or digital. All revenue reflects service provider
annualized retail revenue — paid for by the business and residential end user of the service; no
wholesale or carrier-to-carrier revenue is included.

Fixed-voice services — This reflects retail voice service revenue for all services that are sold as such to
end users and includes the provision of local and long-distance services related to voice (calling charges,
line rental/subscription and connection fees are included in this category), enhanced voice services, data
and fax transmission over the circuit-switched PSTN, and retail voice over IP revenue — paid for by the
business and residential end user of the service; no wholesale or carrier-to-carrier revenue is included.
Mobile telecom services — Income from mobile telephone calls and mobile data usage (Short Message
Service [SMS] and mobile data access) from all mobile operators in that regional market. Consumer
charges are removed. Income from mobile telephone calling charges, mobile data access, SMS charges,
line rental/subscription and connection fees are included in this category.

Wholesale/carrier services are not included as a component of business IT spending. Wholesale/carrier

services reflect carrier revenue from carrier-to-carrier service transactions.
The introduction of telecommunications services in Ethiopia dates back to 1894, when Minilik
II, the King of Ethiopia, introduced telephone technology to the country. However the first
Ethiopian pioneer of telephony was his cousin Ras Mekonnen who came back with telephone
apparatus in 1889 after his visit of Italy and established a company. The company was placed
under government control at the beginning of the twentieth century, and was later brought to
operate under the auspices of the Ministry of Post and Communications. In 1952,
telecommunications services were separated from the postal administration, and structured
under the Ministry of Transport and Communications. The Ethiopian Telecommunications
Corporation is the oldest Public Telecommunications Operator (PTO) in Africa.

Under the Dergue Regime the Ethiopian Telecommunications was reorganized as: Ethiopian
Telecommunications Service from October 1975 to February 1981; and
Ethiopian Telecommunications Authority (ETA) on January 1981. It retained this name until
November 1996. The Ethiopian Telecommunications Service as well as the Ethiopian
Telecommunications Authority (ETA) was in charge of both the operation and regulation of
telecommunications service in Ethiopia.
The Ethiopian Telecommunications Authority was replaced by the Ethiopian
Telecommunications Corporation (ETC) by regulation number 10/1996 of the Council of
Ministers to which all the rights and obligations of the former Ethiopian Telecommunication
authority were transferred to the Corporation.

There are 966 public service stations and exchanges across the country. The number of rural
kebeles - the lowest administrative unit - with telephone access increased from only 60 in
2004/05 to 8 676 in 2007/08, and the target is to provide access to telecom services to all 15
000 rural kebeles by 2010. By the end of 2007/08, the number of cellular telephone (mobile)
subscribers increased nearly five times from the 2004/05 level, reaching 1 954 527; the
number of broadband customers reached 1 496, up from only 65 in 2002/03; and the dial-up
Internet subscribers were 34 110, almost twice the number in 2004/05. Teledensity, excluding
mobile phones, has tripled since 2000/01 to reach 1.23 per 100 households in 2007/08.
Including mobile phones, teledensity reached 3.88 in 2007/08 from only 0.48 in 2000/01.

In 2005, ETC installed a national fibre optic backbone comprising 4 000 kilometres radiating
out in six major directions from the capital (to Dire Dawa, Djibouti, Dessie-Mekele, Bahir Dar-
Nekemte, Jimma and Awassa), laying a foundation for delivering current and future services
including digital radio, TV, Internet, data and other multimedia services. In order to increase
the service capacity, reliability, quality, speed and size of data transfer, ETC transferred from
narrowband to broadband service in January 2005. The introduction and installation of
broadband Internet, broadband VSAT and broadband multimedia infrastructure are among the
major achievements of the past 12 years. Currently there are 1 318 submarine gateway
circuits that connect Ethiopia with the rest of the world.

In Country Location
Ethiopian Telecommunications: Corporation Head Quarter; Churchill Road, in front of Main Post
Office Building; Tel: +251-115-510500; Fax: +251-115-515777
 Services and Products
ETC provides fixed line telephony, mobile telephone and Internet and multimedia services. ETC
uses satellites, digital radio multi access system (DRMAS), Very Small Aperture Terminal
(VSAT), Ultra High Frequency (UHF), Very High Frequency (VHF), long line and high frequency
(HF) radio networks.

ETC provides different types of Internet services including dial up, leased line and shared DSL
Internet services to government organisations, private and commercial companies,
international institutions and individuals. The broadband Internet services uses asymmetric
digital subscriber line (ADLS) and fixed wireless access (FWA) technologies. Some of the uses
of VSAT in Ethiopia includes
1. School Net services (providing high schools with standard educational programmes through
television);

2. Woreda Net services (connecting the woreda centres of the country - the administrative unit
higher than kebele - with the federal government and with each other using Internet, data,
video conferencing and voice services;

3. Agri Net services (for connection of agricultural institutions with the federal government and
with each other)

4. Health Net (for the provision of a wide range of information services that are crucial to health
care by connecting healthcare professionals throughout the country.
Ethiopia has signed dual international roaming agreements with 144 countries in order to
increase its international roaming service. ETC has also started providing roaming services to
foreigners coming from countries where the Corporation has made an international roaming
agreement.

Number of Employees
12,288 employees

Financial Information

Net income after tax 2.4 billion Br. (2009)

Gross profit 3.5 billion Br (2009)

Gross revenue 5.7 billion Br (2009)

 Market Share
ETC a public telecom operator, has a monopoly over all telecom services

Business Objective
“Develop and maintain a modern information and communication network infrastructure
capable of supporting voice, data and video services, equitably across the country and with
high capacity digital connectivity to the rest of the world”

Business Model
“Our strategic plan:
 The network capacity of fixed telephone will be raised from 1,058 million to 4.4 million lines as
well as the network capacity of mobile telephone and internet shall also be raised from 1.5
million and 100,000 to 9.9 million and 1,000,000 respectively
 In addition to the existing 4,000 Kms optic fibre, additional 10,000 Kms fibre cable shall also be
installed for redundancy purpose and avoiding the possible prevalence of service interruption
 Fixed telephone density will grow to 4 percent mobile telephone density to 9.7 percent together
with 85 percent of geographical coverage of mobile telephone radio wave. Similarly, all rural
kebeles of the country shall have at least one telephone together will creating a fertile ground
to enable these rural kebeles beneficiaries of internet technology
 During the implementation period of the strategic plan, internet density shall be raised from
0.02 to 0.23 and the number of internet subscribers will grow to 1,000,000
 Expanding a 2.5 million network capacity of Code Dibision Multiple Access Wireless Local Loop
(CDMA-WLL) technology for both urban and rural parts of the country
 Expanding IP beared for effective utilization of data network
 Installation of 50,000 public telephones all over the country
 Establishing state-of-the art call centre
 Establishing modern customer care and billing system
 Establishing national network operation centre;
 Establishing prepaid service intelligent network.

At the end of the implementation period of the strategic plan:

 All woreda towns of the country shall become beneficiaries of digital telephone and broadband
data services as well as with the raising of mobile telephone radio wave coverage that enable
all rural kebeles of the country to be beneficiaries of mobile telephone service
 The distribution and coverage of mobile telephone shall reach all major roads of the country,
town centres, tourist centres, historical places and industrial villages
 All Schools and woredas of the country shall be beneficiaries of modern information and
communications technology through strengthening the woreda-net and school-net projects
 Upon the full realization of the aforementioned tasks, one among ten persons in the country
will get access to telecom services at the end of the strategic plan
 Expanding 14,0000Km optical fibre transmission network and creating prompt and sustainable
telecommunications as well as information and communication Technology Carbon
infrastructure in order to accelerate the local and international telecom services
 Make all 15,000 rural kebeles of the county beneficiaries of telecom services using wireless
technology coverage

In the year 2010, one person among ten people in Ethiopia is expected to get access to
telephone services thereby making Ethiopia to leap into the information Age in the shortest
possible time.”

ETC’s Growth Perspectives in network coverage

Phase II Phase II Phase III

Focal Area Current Status
(2007/8 年) (2009 年) (2010 年)

Fixed

Capacity(millions) 1058 2 3 4.4

Penetration 1.2 2 2.95 % 4.0%

Mobile

Capacity(millions) 1.5 6.54 7.5 9.9%

Penetration 1.53 6.5 7.4% 9.7%

Coverage <20 % 50% 70% 85 %

Fiber 4000km 7000km 10000km 14000km

Broadband(PoPs) 16 40 200 >500

Dial up Internet User 150,000 500,000 800,888 1,000,000

Ownership of Business
ETC is a whole owned state company

Benefits Offered and Relations with Government

The ETC finances the expansion of its telecommunication services through vendor financing
schemes. In addition, mobile phone handsets are subject to taxation when they are imported
but not taxed when sold in the domestic market. The tax rate levied on the value of mobile
handsets is 36.82 percent, including custom duty (5 percent), value added tax (15 percent),
withholding tax (3 percent) and surtax (10 percent). The black market for mobile phone
handsets is a serious concern to ETC as the government loses the revenue that ought to be
generated from the taxation of handsets. ETC charges for fixed line and mobile phone usage in
addition to the 15 percent value-added tax.

Product Development
In 2009 ETC launched a pilot project for notifying post paid mobile phone subscribers of their
bills through text messages; and it began providing ‘General Packet Radio Service’ (GPRS) that
enables subscribers to receive as well as send text, visual, and audio-video massages from the
Internet using GPRS Enabled Mobile Apparatus. The new technology enables subscribers to
obtain e-mail service through their GPRS enabled mobile apparatus; however, access to GPRS
is limited to post-paid mobile subscribers for the time being. The corporation envisages
providing similar service to prepaid mobile subscribers in the future.

Nine projects of its Next Generation Networking (NGN) would be completed and ready for use
by January 2010. These projects began in September 2008-09 with an outlay of 1.5 billion Br
paid out of its own coffers. These projects include GSM mobile, CDMA-WLL, optical fibre
transmission, and next generation call centres, which are at various levels of completion.

Chicken Farming Business Plan Sample

Сhicken farming business plan for starting your own business

The chicken farming industry is bigger than you think. Americans consume a whopping 201 lbs. of
chicken meat per head a year. The poultry industry is a $40.4billion giant. This is a business that is not
going out of business anytime soon.

To start this business, you will be needing a business plan for poultry farming which can tell you how to
open a chicken farm. This document is a strategic business plan that can help you through all the stages
of opening and successfully operating a chicken farm. Unlike a cattle feedlots business plan or a dairy
farming business plan, this business can offer you more money.

Executive Summary
2.1 The Business

Kiley Protein farm will be a registered and licensed meat and egg producer based in Kansas City
Missouri. The business will act as a model for starting up a chicken farm.  The aim of this business will be
to provide the best products.

Start your Business Plan Now

START MY BUSINESS PLAN

2.2 Management of Chicken Farming Business

In order to make sure that the business runs smooth and without any hiccup, Kiley Lawson, the owner of
the business will hire 2 managers and a doctor. The managers will be responsible for procurement and
sales, while the doctor will be the one looking after the operations of the farm. If you need to know how
to start chicken farming, management is the first thing you need to learn. This is not like a business plan
for bank as you need to be involved at all levels to make sure that the farm operates profitably.

2.3 Customers of Chicken Farming Business

Before we can explore more aspects of how to set up a poultry farm business, we need to see what the
customers are that we are working with. The main customers of this business will be:

Chicken retailers in the area.

Hotels and restaurants.

Grocery stores that sell chicken.

End consumers.

2.4 Business Target

The target of this business is to make a name and get a considerable business share in the poultry
market of the US. Here are some objective targets that we will try to meet:

Opening three more farms within 5 years of starting.

Starting to generate at least $29,200 in revenue per month by the end of three years.

Establishing a chicken meat and eggs brand that is trusted and reputable.

Company Summary

3.1 Company Owner

Kiley Lawson will be the owner of the Kiley Protein Farm. Kiley has been a manager in a poultry farm for
the last 5 years. She has got money in inheritance and now she wants to invest it in a good business.
Having the funds and the experience in this field made her the perfect owner and chief executive of a
poultry farming business.

3.2 Why the Chicken Farming Business is being started?

Kiley has noticed that there is a gap in the market. Kansas City is a big consumer of meat in the area but
they have to import it from other cities as the production in the city cannot suffice the demand. Kiley
wants to bridge this gap. This example of business plan for poultry farming will cover all the aspects
there are about chicken farming and how Kiley will be filling the gap.

3.3 How the Chicken Farming Business will be started?

Step1: Planning

The first thing you need for starting a poultry farm business is a plan for the business. In this phase, you
need to conduct a survey to find out the demand of poultry products in the area and compare it to the
production.

This sample chicken farming business plan will cover how you can take advantage of the gap in the
demand and supply and how you can make a name in the market.

Step2: Establish a Brand

The next step in setting up a chicken farm is establishing a brand. People prefer buying from a brand
with a known name. So, as the poultry farm building starts coming out of the ground, you need to start
the marketing effort to make the brand known.

Step3: Building the Farm and Outlets

The next step is building a farm and setting up sale points. At the start, Kiley is planning to make a farm
capable of housing 5,000 chickens for meat and 2,

000 layers for eggs. 2 farm outlets will be opened, one outside the farm and one in Downtown Kansas
City.

Step4: Going Online

As people are shifting to online shopping, Kiley Protein will set up an online store for customers.

Step5: Promote and Market

Marketing effort will be started to make sure the people know there’s a new chicken producer in the
town.

Start-up ExpensesLegal$240,000Consultants$0Insurance$30,000Rent$30,000Research and

Development$25,000Expensed Equipment$49,000Signs$4,100TOTAL START-UP
EXPENSES$378,100Start-up Assets$340,000Cash Required$370,000Start-up Inventory$48,000Other
Current Assets$230,000Long-term Assets$280,000TOTAL ASSETS$1,268,000Total
Requirements$1,646,100START-UP FUNDINGStart-up Expenses to Fund$378,100Start-up Assets to
Fund$1,268,000TOTAL FUNDING REQUIRED$1,646,100AssetsNon-cash Assets from Start-
up$1,656,000Cash Requirements from Start-up$372,000Additional Cash Raised$39,000Cash Balance on
Starting Date$35,000TOTAL ASSETS$2,102,000Liabilities and CapitalLiabilities$29,000Current
Borrowing$0Long-term Liabilities$0Accounts Payable (Outstanding Bills)$37,000Other Current Liabilities
(interest-free)$0TOTAL LIABILITIES$66,000CapitalPlanned Investment$1,646,100Investor 1$0Investor
2$0Other$0Additional Investment Requirement$0TOTAL PLANNED INVESTMENT$1,646,100Loss at
Start-up (Start-up Expenses)$389,900TOTAL CAPITAL$2,036,000TOTAL CAPITAL AND
LIABILITIES$2,102,000Total Funding$1,646,100

Now we can discuss the whole Commercial poultry farm project proposal according to farm operation

I. Working out of technical details and assumptions of the project.

11. Calculation of non-recurring (capital) expenditure by considering cost of

housing, equipment, store, supervisors, quarters, watering facility and land

development charges, etc.

Ill. Calculation of working capital – Capital needed to run the farm upto the

project completion period. It includes cost of chicks, feeds and miscellaneous

cost i.e., vaccination, medicine, labour, electricity etc. as applicable.

IV. Calculation of total project cost, share of promoter/farmer and bank finance

needed; usually farmer’s share will be 25% of project cost excluding cost of

land.

OTHERS CALCULATION

V. Calculation of annual recurring expenditure – It includes the cost of chicks, feed, miscellaneous
cost, etc. in each year.

VI. Calculation of annual gross return – Here total receipts from all sources of

income, viz., egg, broiler, manure, empty feed bags are calculated per year basis.

VII. Calculation of bank repayment schedule – Here yearly installment of bank

loan and interest are calculated.

VIII. THE Calculation of net return – It is arrived by subtracting the repaid annual

bank loan and annual recurring expenditure from annual gross return.

Here project reports for various categories of poultry are prepared, viz., broiler,

layer, duck (free range system), duck (intensive system), quail (broiler type),

turkey (free range system) and cockerel (all in all out system).

Project Costing

The project cost may vary depending on the prices prevailing in different Localities, but the method for
preparation of project reports is same and the following project reports may be taken as guide.

PROJECT REPORT FOR A BROILER FARM

The broiler is the fastest growing industry in the world among the other poultry. Now, we are starting to
explain, how to prepare a PROJECT REPORT FOR A BROILER FARM

PROJECT REPORT FOR A BROILER FARM

The broiler is the fastest growing industry in the world among the other poultry. Now, we are starting to
explain, how to prepare a PROJECT REPORT FOR A BROILER FARM

Technical details and assumptions

1. House: Open sided, tile roofed, deep litter house.

2. Floor space: Half square feet per bird up to 25 days of age and one square

feet per bird there after.

3. Cost of poultry house: Rs. 50/- sq. ft.

4. Other building cost: Rs. lOO/-sq. ft.

5. Equipment cost: Rs. 10/- bird.

6. Cost of Medicine, Vaccine, Insurance

Labour, Electricity, Fuel, etc.: Rs. 4/ – bird.

7. Total number of birds in the farm: 7000

8. Total number of birds per batch

(including extra 5%) : 1050

9. Batch interval: 1 week

10. Down time: 1 week

11. Saleable broilers per batch per week: 980

12. Growing period: 45 to 50 days

13. Feed efficiency: 2.22 (average body weight = 1.80 kg)

Farm buildings

It is the investment of the permanent in the poultry business for several years. the structure and
construction are more important for a poultry farm building. Some points should be ignored which is
mark out below-

(i) Orientation of poultry house

Houses are built east-west with long axis facing north and south, and short axis on east and west.
TO KNOW MORE – ESSENTIAL TYPES OF POULTRY HOUSE

(ii) Construction details

Houses are constructed with concrete pillars with brick and cement walls, and floor plastered with
cement, elevated one foot above the ground level. The inside height at eves will be about 7/; while at
ridge height will be around 121.

LAYOUT

The two long sides are provided a one-foot high wall with a 60° inside slope at the top. The partition wall
specification is like that of sidewalls. The remaining 51 height is covered with 111 G.1. 12 gauge chain
link mesh throughout except at the doors. There will be 31 overhangs of roofs at eves. The doors are
made up of an M. S. angle frame and 111 X 31 I mesh of 10

gauge thickness, with provision to lock from both sides. The two sides are made up of solid brick wall.
Roof structure is built by seasoned wood and tiles. The house is provided with 3 phase power supply.

(iii) Other buildings

The feed room, store and workers, quarters will have brick side walls to the full height.

ALSO READ- POULTRY HOUSE DESIGNS

(iv) Specification of farm buildings for the project

(A) One shed will be 301 x 1201 size outer to outer with 4 pens each of 500

sq. ft. area to accommodate 4 batches x 1000 birds from 0 to 25 days of

age with 1/2 sq. ft. /bird.

(B) (i) One 400 sq. ft. owner/supervision quarters

(ii) 200 x2 = 400 sq. ft. for two workers quarters

(iii) 600 sq. ft. feed room

(iv) 200 sq. ft. office-cum-store room.

(C) Another shed with 301 x 133.31 outer size, partitioned into 4xl000 sq. ft.

rooms to rear 4 batches of broilers from 26th day onwards = 4000 sq. ft.

Total area required for birds = 2000+4000 = 6000 sq. ft.

Total area required for other purposes = 400+400+600+200 sq. ft.=1600 sq. ft.

STATEMENT-1

STATEMENT-1

Non-recurring ExpenditureAmount (Rs. in lakhs)Cost of 2000 sq. ft broiler brooder + 4000 sq. ft. broiler

grower houses @Rs. 50/- sq. ft.3.00Cost of 1600 sq. ft. feed store, supervisor, workers quarters1.60Land
development charges like fencing, provision of the gate,

farm roads, etc.0.3Cost of deep tube well, water pump, overhead tank and

pipeline to all shed0.7Cost of feeders, waterers, platform weighing scales, wheelbarrow, brooders, etc.
@ Rs. 10/- per bird for 7000 birds0.7

STATEMENT-1

Working CapitalAmount (Rs. in lakhs)Cost of 1000×7 batches of day-old chick @ Rs 10/0.70Feed cost for
7 batches at an average of 4 kg/bird x Rs. 8000/ tonne

2.24Medicine, Vaccine, Insurance, Labour, Electricity,

Health coverage, etc. @ Rs. 4/bird.28Total3.22

STATEMENT – III

Total capital investment, the share of the promoter (margin money), bank finance needed (amount in
lakhs of Rs.)

DescriptionTotal capitalPromotor/farmer shareBank Finance RequiredLand cost (1 acre)1.001.00

(100%)–Non-recurring expenditure

(vide Statement I)6.301.57 (25%)4.73Working capital

(vide Statement 11)3.220.80 (25%)2.42Total10.523.377.15

STATEMENT – IV

Annual Recurring ExpenditureAmount (Rs. in lakhs)Cost of 1000 day-old chicks x 52 batches/year @ Rs.

10/- each5.20Feed cost for 52,000 broilers x 4 kg/bird @ Rs. 8/kg16.64Other miscellaneous cost@Rs.
4/bird2.08Total·23.92

STATEMENT – V

Annual Gross and Net ReturnsAmount (Rs. in lakhs)By sale of 980 live broilers per batch x 52 batches

x Rs. 35/kg live weight (1.8 kg)32.10By sale of about 3500 empty gunny bags @ Rs 5/ each0.18By sale of
about 200 tonnes of manure

@ Rs. lOO/tonne0.20Total32.48

LESS: Annual expenditure (statement IV) : 23.92

NET RETURNS (before repayment of Bank loan) -32.48-23.92) : 8.56

STATEMENT – VI

YearGross

receipts (A)Expenditure (C)Net surplus

before loan

repaymentO. B. of

Bank loanInterestTotal

Bank loanLoan

RepaidC. B. of Bank loanNet profit

after

loan repaymentBenefit

cost

Ratio

A-B/
C128.3623.924.447.151.078.222.076.152.371.10232.4823.928.566.150.927.072.075.006.491.27332.482
3.928.565.000.755.752.253.506.311.26432.4823.928.563.500.453.952.201.756.361.26532.4823.928.56
1.750.262.012.01nil6.551.27632.4823.928.56nilnilnilnilnil8.561.35
The annual gross returns during the first year will be Rs. 28.36 lakhs as there will be no sales during the
first 7 weeks period; only 45 batches will be sold instead of 52 batches. Therefore, the net surplus
before repayment will be Rs. 4.44 Lakhs.