India Capital Market

Sector
Telecommunication

Submitted by: Aakanksha Prasad

Soni Jadon
Rachna Yadav
Deepika Bora
Manveer Singh
Sagar Raha
INDUSTRY ANALYSIS
Telecommunications has emerged as one of the key sectors responsible for India's resurgent
economic growth. The sector was relatively untouched by the economic slump that beleaguered
India in the FY09 and the early part of FY10.
The telecom policy objectives focus on network expansion, rural telephony, roll-out of 3-G
services, enhanced broadband coverage, R&D, domestic manufacturing of telecom equipment
and a supportive environment for the competitive growth of the sector.
Rural and Semi-urban India are the next target for most telecom companies since urban India has
been largely tapped. ARPUs are expected to decrease further as rural subscriber base increases
but volumes are expected to slightly compensate for the fall in ARPUs.
FY10 witnessed the launching of services by the new operators in collaboration with their
foreign partners who have technical expertise as well as financial strength. The sector has seen a
fall in margins for most of the existing players due to intense competition. The success of these
operators would be determined by the spectrum allocation policy of the Government of India
(GoI).
The outstanding issues before the GoI include additional spectrum allocation for 2G, fresh
spectrum allocation for 3G and WiMax, multiple levies on the sector, increase in rural
connectivity and mobile number portability.
this industry has a huge business potentiality and is going to be a booming
industry. Telecom industry analysis also reveals that this it will provide an
immense employment opportunity in the coming years.

Statistical report
Phoenix Center research revealed that in the coming years, there will be a healthy
competition among the providers of telecommunication services. At the same time,
the price will be lower and quality will be higher. The new telecommunications
technologies will replace the traditional telecom services. Statistical data also
reveals that the telecommunications industry is going to be a dynamic and
booming industry in the near future.
Telecom industry trends
Throughout the world, telecom industry are being controlled by private companies
instead of government monopolies. Traditional telecom technologies are also being
replaced by modern wireless technologies, specifically in case of mobile
services. One of the major objectives of telecom industry is to enhance the quality
and speed of Internet technology.

Budget Proposals

1.Full exemption from basic customs duty and CVD to components for manufacture of battery
chargers.
2.Components of Hands-free headphones of mobile handsets including cellular phones are also
fully exempt from customs duty and CVD.
3.The validity of the exemption from special additional duty on mobile phones is being extended
till March 31, 2011.
4.The Minimum Alternate Tax (MAT) has been increased from 15% in 2009-10 to 18% in 2010-
11.
5. Service Tax Rate has been remained unchanged at 10%.
Additional Duty (Countervailing Duty) (CVD):
This additional duty is levied under section 3 (1) of the Custom Tariff Act and is equal to excise duty levied on a like
product manufactured or produced in India. If a like producujhjt is not manufactured or produced in India, the excise
duty that would be leviable on that product had it been manufactured or produced in India is the duty payable.

Budget Impact – Industry

1.The exemption from basic customs duty and CVD to components for manufacture of battery
chargers and hands-free headphones of mobile handsets will make the mobile phones cheaper
which in turn will have a positive impact on their demand.

2.The increase in MAT from 15% in 2009-10 to 18% in 2010-11 may adversely impact the
telecom service providers as they may have to pay higher taxes. would mean higher cash outflow
for the companies like Bharti Airtel
The proposal for extension of full exemption from Additional Duty of Customs of 4% presently
available up to 06.07.2010 on parts, components and accessories for manufacture of mobile
handsets including cellular phones up to 31.03.2011, is positive for the telecom services industry
as it will help in achieving the key objective of the government to ensure fast spread of
affordable connectivity to the rural areas due to lower cost of mobile handsets.

Bharti Airtel
Return at the
Today's Today's Today's Today's end of the
Date Volume
Open High Low Close day( in
%age)

NSE

2/3/2010 280 292.8 280 290.2 6263842

3/3/2010 293 294.9 290.3 291.95 5097870 0.603

4/3/2010 290 294.9 290 293.6 3301735 0.565

5/3/2010 294 303.75 293 298.45 8167892 1.652

8/3/2010 298.15 302.8 291 292.7 6256751 -1.927
9/3/2010 292 294.15 287.05 291.3 3785607 -0.478

10/3/2010 292 294.5 284 288 5385114 -1.133

11/3/2010 288.9 295.55 288.35 293.95 4030086 2.066

12/3/2010 293 300.35 293 299.1 4044755 1.752
15/03/201
0 290 301.3 290 299.5 3134357 0.134
16/03/201
0 298.5 299 292.55 294.8 2742226 -1.569

17/03/201
0 296 301.5 295.65 298.05 3330971 1.102

18/03/201
0 299.95 303.5 297.1 300.1 4489695 0.688

19/03/201
0 300 312.85 300 311.9 7665763 3.932
22/03/201
0 307.5 319.8 307 316.35 6679874 1.427
23/03/201
0 317.2 321 305.55 307.65 5619158 -2.750
25/03/201
0 310 316 303 314.4 10257603 2.194
26/03/201
0 314.85 315.9 305 310.15 7188335 -1.352
29/03/201
0 311 314.9 310.2 312.2 2796536 0.661
30/03/201
0 311.5 316 309.75 310.85 3334807 -0.432
31/03/201
0 308.7 319.7 307 312.55 6789112 0.547

Bharti Airtel
Bharti Airtel retained its leadership position with a market share of 31.88 percent

Vodafone-Essar, with a market share of 23.28 percent, was in the second position

The state-owned telecom major Bharat Sanchar Nigam (BSNL) is the third biggest GSM operator
with a market share of 19.43 percent.

Average revenue per user (ARPU) per month is computed by dividing the company's total revenues (excluding
equipment sales) during a certain period by its average customers in the same period and then dividing this result by
the number of months in the period. A higher ARPU is better for the company.

Subscriber base refers to the number of individuals that use or subscribe to Bharti Airtel's services. A larger
subscriber base is better for the company.

the company's ARPU and net profit margin have been decreasing, its total revenues and net profit have been
increasing due to its growing subscriber base

Bharti Airtel (BOM:532454) is India's largest telecommunications company by subscriber base, which stood at 85.7
million in December 2008, and total revenues, which were Rs. 270 billion in 2007/08.[1][2] The company reported a net
profit of Rs. 64.0 billion in 2007/08, up 57.4% from Rs. 40.6 billion in 2006/07.[2

http://www.wikinvest.com/stock/Bh
arti_Airtel_(BOM:532454)
http://economictimes.indiatimes.co
m/

Analysis of the news

• Monthly subscriber addition (Bharti added 2.8 million

subscribers in feb) data issued by (department of
telecom)DOT showing good numbers for Bharti.
• Bharti has over 125 million subscriber in India and it would have a major footprint in the
African market and would get access to over 40 million customers of Zain in the
continent.
•
• Sanjay Kapoor takes over as CEO/ Bharti Airtel Limited has
informed the Exchange regarding a press release dated
March 03, 2010, titled " Bharti Airtel Organisation
Announcement"
• Zain deal: Bharti executives to visit Africa this week : Market
News
• The deal shows the way for one of the largest telecom cross-border
deals, giving Bharti access to 15 African countries at one go.
 • Selloff in stock because market is concerned on
ARPU(Average revenue per user) erosion(low) every quarter
• NIfty continued to trade higher with around 30 points gains
• Bharti Airtel - Makes its Media & Entertainment debut-
launches Digital Media Business . This significant step
takes Brand Airtel ahead from being just a telecom brand to
a lifestyle enabler.” and DoT analysing special audit
finding on Bharti
• Nigeria dispute unlikely to thwart Bharti-Zain deal.
• Bharti Airtel has applied for third-generation mobile
spectrum bid in all of the country's 22 telecom zones.
• Market exited about the stock because Bharti managed to
arrange 8.5 billion $ Loan from Foreign banks.
• Zain and bharti issued a joint statement that they will clear
most of the regulatory issues in next quarter giving boost to
stock price.
• Stock movement volatility high bothways because of Expiry
date is near in sensex and nifty.(last Thursday of every
month)
• Bharti paying 10 times EV/EBIDTA for Zain.

IDEA CELLULAR Ltd.

A component of CNX 100 / NIFTY / CNX 500

Paidup Value Face Value : 10 Listing Date

ISIN Code

Rs. 10 Market Lot : 1 09-MAR-2007

INE669E01016

Date value volume close low

high open
25/02/10 268229061.00 4540098 59.75 57.05 61.85
58.00

26/02/10 368638799.85 6032839 61.10 58.65 61.80

60.20

02/03/10 184791967.05 3006333 61.90 60.50 62.20

61.00

03/03/10 144617709.90 2352536 61.60 61.00 62.30

61.95

04/03/10 133015908.50 2165556 61.45 60.80 61.95

61.60

05/03/10 142839096.60 2303363 61.95 61.30 62.80

61.95

08/03/10 113849555.95 1829374 62.50 61.55 62.90

62.05

09/03/10 82697459.35 1328610 61.80 61.45 63.00

62.60

10/03/10 174426170.95 2822941 61.45 60.30 62.20

61.50

11/03/10 115999495.15 1889368 60.55 59.80 62.15

61.45

12/03/10 121626611.30 2021769 60.30 59.80 60.70

60.30

15/03/10 72223382.65 1205193 59.50 59.20 60.85

60.40

16/03/10 13708593550 2225721 62.35 59.90 63.40

59.90

17/03/10 386880726.85 6026757 64.35 62.50 64.95

62.65

18/03/10 850758904.20 12772696 67.35 62.00 67.70

62.00

19/03/10 544810575.15 7965245 68.85 67.20 69.10

67.50
22/03/10 171251480.65 2534233 67.65 66.50 68.45
67.80

23/03/10 338205140.60 5116061 65.05 64.90 69.00

69.00

25/03/10 392958716.05 5927656 66.55 64.85 67.60

65.00

26/03/10 145394794.60 2180472 66.70 66.10 67.15

66.60

29/03/10 228370849.50 3392310 67.10 66.15 68.10

66.50

30/03/10 218295902.00 3275252 66.60 65.85 67.65

67.50

31/03/10 173882730.40 2644969 65.50 65.15 67.10

67.10

RETURNS
Date Previou Today Retur
s Close 's Close n
02/03/10 - 03/03/10 61.9 61.6 -0.48%

03/03/10 – 04/03/10 61.6 61.45 -0.24%

04/03/10 - 05/03/10 61.45 61.95 0.81%
05/03/10 – 08/03/10 61.95 62.5 0.89%

08/03/10 - 09/03/10 62.5 61.8 -1.12%

09/03/10 - 10/03/10 61.8 61.45 -0.57%
10/03/10 - 11/03/10 61.45 60.55 -1.46%
11/03/10 - 12/03/10 60.55 60.3 -0.41%
12/03/10 - 15/03/10 60.3 59.5 -1.33%
*15/03/10 - 59.5 62.35 4.79%
16/03/10
16/03/10 - 17/03/10 62.35 64.35 3.21%
 17/03/10 - 18/03/10 64.35 67.35 4.66%
18/03/10 - 19/03/10 67.35 68.85 2.23%
19/03/10 - 22/03/10 68.85 67.65 -1.74%
*22/03/10 - 67.65 65.05 -3.84%
23/03/10
23/03/10 - 25/03/10 65.05 66.55 2.31%
25/03/10 - 26/03/10 66.55 66.7 0.26%
26/03/10 - 29/03/10 66.7 67.1 0.60%
29/03/10 - 30/03/10 67.1 66.6 -0.75%

30/03/10 - 31/03/10 66.6 65.5 -1.65%

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Idea cellular