CHAPTER 1

INTRODUCTION TO THE
INDIAN
TELECOM INDUSTRY

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HISTORY

The history of telecommunication industry started with the first public demonstration of
Morse’s electric telegraph, Baltimore to Washington in 1844. In 1876 Alexander Graham
Bell filed his patent application and the first telephone patent was issued to him on 7th of
March. In 1913, telegraph was popular way of communication. AT&T commits to dispose its
telegraph stocks and agreed to provide long distance connection to independence telephone
system. In 1956, the final judgment limited the Bell System to Common Carrier
Communications and Government projects but preserving the long-standing relationships
between the manufacturing, researches and operating arms of the Bell System. In this
judgment AT&T retained bell laboratories and Western Electric Company. This final
judgment brought to a close the justice departments seven –year-old antitrust suit against
AT&T and Western Electric which sought separation of the Bell Systems Manufacturing
from its operating and research functions. AT&T was still controlling the telecommunication
industry.

In 1982 , AT&T was requested to divestiture its stock ownership in Western Electric;
termination of exclusive relationship between AT&T and Western Electric; divestiture by
Western Electric of its fifty percent interest in Bell Telephone Laboratories, AT&T ‘s
telecommunication research and development facility, is a jointly owned subsidiary in which
AT&T and Western Electric each own 50% of the stock; separation of telephone
manufacturing from provision of telephone service and the compulsory licensing of patents
owned by AT&T on a non-discriminatory basis. It was telecommunication act of 1996 that
true competition was allowed. The act of 1996 opened the market to all competitors. AT&T
being the first telecommunication company paved the road for the telecommunication
industry as well as set the policy and standards for others to follow.

1.1 Beginning of telecommunication in India

The era of telecommunication in India started from the year of 1851 with the initiative from
govt. of India near the city of Calcutta now known as Kolkatta. However the rapid growth in
telecom industry came into picture after the year of 2002-03 onwards as the more number of
service providers came into existence. Since 2002-03 there is rapid change in the technology
and increase in numbers of subscribers in the Indian telecom industry till now. The following
are the milestones in the Indian telecom industry.

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  1851 First operational land lines were laid by the government near Calcutta.
 1881 Telephone services introduced in India.
 1883 Merger with postal system.
 1923 Formation of Indian radio Telegraph Company.
 1932 Merger of ETC and IRT into Indian Radio and Cable Communication Company.
 1947 Nationalization of all foreign telecommunication companies to form the posts,
telephone and telegraph, a monopoly run by the government’s ministry of
communications.
 1985 Department of telecommunication established , an exclusive provider of
domestic and long-distance services that would be its own regulator.
 1986 Conversion of dot into two wholly government – owned companies the VSNL
for international telecommunication and MTNL for services in metropolitan areas.
 1997 Telecom regulatory authority created.

Telecommunication is important not only because of its role in bringing the benefits of
communication to every corner of India but also in serving the new policy objectives of
improving the global competitiveness of the Indian economy and stimulating and attracting
foreign direct investment. Indian Telecom industry is one of the fastest growing telecom
markets in the world. In telecom industry, service providers are the main drivers; whereas
equipment manufacturers are witnessing growth and decline in successive quarters as sales is
dependent on order undertaken by the companies.

Today the Indian telecommunications network with over 375 Million subscribers is second
largest network in the world after China. India is also the fastest growing telecom market in
the world with an addition of 9- 10 million monthly subscribers. The teledensity of the
Country has increased from 18% in 2006 to 33% in December 2008, showing a stupendous
annual growth of about 50%, one of the highest in any sector of the Indian Economy. The
Department of Telecommunications has been able to provide state of the art world-class
infrastructure at globally competitive tariffs and reduce the digital divide by extending
connectivity to the unconnected areas.

India has emerged as a major base for the telecom industry worldwide. Thus Indian telecom
sector has come a long way in achieving its dream of providing affordable and effective
communication facilities to Indian citizens. As a result common man today has access to this

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most needed facility. The reform measures coupled with the proactive policies of the
Department of Telecommunications have resulted in an unprecedented growth of the telecom
sector.

There is a cut-throat competition in the Telecom industry as more and more advanced
technology is developed in very short time. Once the people get addicted to 2G technology by
the time new players come up with latest technology called 3G and EDGE. The thrust areas
presently are:

1. Building a modern and efficient infrastructure ensuring greater competitive environment

2. With equal opportunities and level playing field for all stakeholders.

3. Strengthening research and development for manufacturing, value added services.

4. Efficient and transparent spectrum management

5. To accelerate broadband penetration

6. Universal service to all uncovered areas including rural areas.

7. Enabling Indian telecom companies to become global players.

Recent things to watch in Indian telecom sector are:

1. 3G and BWA auctions

2. MVNO

3. Mobile Number Portability

4. New Policy for Value Added Services

5. Market dynamics once the recently licensed new telecom operators start rolling out

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6. Services.

7. Increased thrust on telecom equipment manufacturing and exports.

8. Reduction in Mobile Termination Charges as the cost per line has substantially reduced

9. Due to technological advancement and increase in traffic.

India's telecom sector has shown massive upsurge in the recent years in all respects of
industrial growth. From the status of state monopoly with very limited growth, it has grown
in to the level of an industry. Telephone, whether fixed landline or mobile, is an essential
necessity for the people of India. This changing phase was possible with the economic
development that followed the process of structuring the economy in the capitalistic pattern.
Removal of restrictions on foreign capital investment and industrial de-licensing resulted in
fast growth of this sector. At present the country's telecom industry has achieved a growth
rate of 14 per cent. Till 2000, though cellular phone companies were present, fixed landlines
were popular in most parts of the country, with government of India setting up the Telecom
Regulatory Authority of India, and measures to allow new players country, the featured
products in the segment came in to prominence.

Today the industry offers services such as fixed landlines, WLL, GSM mobiles, CDMA and
IP services to customers. Increasing competition among players allowed the prices drastically
down by making the mobile facility accessible to the urban middle class population, and to a
great extend in the rural areas. Even for small shopkeepers and factory workers a phone
connection is not an unreachable luxury. Major players in the sector are BSNL, MTNL,
Reliance, Bharti Teleservices, Vodafone Essar, BPL, Tata, Idea, etc. With the growth of
telecom services, telecom equipment and accessories manufacturing has also grown in a big
way.

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Indian Telecom sector, like any other industrial sector in the country, has gone through many
phases of growth and diversification. Starting from telegraphic and telephonic systems in the
19th century, the field of telephonic communication has now expanded to make use of
advanced technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile
phones. Day by day, both the Public Players and the Private Players are putting in their
resources and efforts to improve the telecommunication technology so as to give the
maximum to their customers.

The wireless subscriber crossed the 261 million subscriber mark at the end of the financial
year in comparison to the subscriber base of 165.11 million at the end of March, 2009. It
added 95.9 million subscribers in the financial year 2008-09 registering an annual growth rate
of about 58.12%. The total subscriber base of wireless services has grown from 33.69 million
in March, 05 to 261.07 million in March, 09 which is shown in fig. 1.

Fig 1

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 CHAPTER 2

INTRODUCTION TO THE
SAMPLE COMPANIES

2.1 INTRODUCTION

 BHARTI AIRTEL LIMITED

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Bharti Airtel Limited, the company's existence was marked in the year 1995. It is a leading
Indian telecommunication service provider through three strategic business units namely
Mobile Services, Broadband & Telephone Services and Enterprise Services. The company
has started with providing mobile service to single circle entity and now it grown to offer
services to all 23 telecom circles of India. One of the largest integrated private telecom
service providers with an all India mobile footprint, through a combination of organic and
inorganic growth.

During the year 1997-98 Bharti Airtel Ltd becomes the first private telecom operator to
obtain a license to provide basic telephone services in the state of Madhya Pradesh and in the
same period the company forms Bharti BT VSAT Ltd., focused on providing VAST solutions
across India and Bharti BT Internet Ltd. The company acquired JT Mobiles, cellular services
operator in Punjab, Karnataka and Andhra Pradesh and becomes the largest private telecom
operator in India during the period of 1999-2000. Also expands its South Indian footprint by
acquiring Skycell, Chennai.

The company acquired a 30.20% equity interest of Telecom Italia in Bharti Telenet and
18.8% from Bharti Telecom thereby making Bharti Telenet a 100% subsidiary of Bharti Tele-
Ventures. BTVL also holds an effective 74% equity in Bharti Mobile and 100% equity in
Bharti Cellular. Bharti Telenet has entered into license agreements to provide fixed-line
services in the Haryana, Delhi, Tamil Nadu and Karnataka Circles. Airtel launched IndiaOne,
India's first private sector national and international long distance service in the year of 2001-
02.

The company incorporated India's first private submarine cable landing station with joint
venture from SingTel in the same year. In 2002-03 the company made a brief corporate
restructuring by merging all the mobile operations into Bharti Cellular Limited and all fixed
line, long distance and data services into Bharat Infotel Limited. Bharti Airtel made a historic
strategic partnership with IBM and Ericsson for outsourcing the company's core IT and
network activities and also launched Blackberry wireless solution India, as a result of an
exclusive tie-up with Research in Motion (RIM). BTVL's two subsidiaries Bharti Cellular Ltd
and Bharti Infotel Ltd have been merged with the company in the year of 2004. Subsequently
Bharti Broadband Ltd and Satcom Broadband Equipment Ltd has become the subsidiaries of
the company after the above said merger. During the year 2005 Bharti Airtel Ltd expand its

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wing to Rajasthan and North East Circles also by the acquisition of Bharti Hexacom, which
owns Licenses to operate cellular services in the Rajasthan and North East Circles.

Bharti Airtel Ltd noted as 'Indian Mobile Operator of the Year 2005' by Asian Mobile News,
became the top-most Telecom Company and was featured amongst the top three companies
across the sectors in the ET 500 published in June 2005 and the company Introduced Stock
and Portfolio Tracker on the mobile in association with the Bombay Stock Exchange, it was
the first of its kind. The agreement was emerged with Ericsson and the company in 2005-06
to provide managed services and expands its GSM/GPRS network into rural India in 15
circles under managed capacity expansion. During the year 2006-07 Bharti Airtel has entered
into agreement with Microsoft to offer software and services for the Small and Medium
business market in India. The company also has an agreement with Google to offer services
on Airtel Mobile. Also an agreement with Adani Group to connect Mundra Port and special
Economic Zone. A Three year contract with Nokia at an estimated value of US$400 million
to expand its managed GSM/GPRS/EDGE networks in eight Airtel circles and deploy a pan
India WAP solution across its networks.

The company was conferred many awards during the year 2006-07, such as Best Indian
Carrier Award in the Telecom Asia Awards 2006, Wireless Service Provider of the year and
the competitive Service Provider of the year award in the Telecom Asia Awards 2006, Most
Preferred Cellular Service Provider Award in the telecom category for the year 2006 at the
Awaaz Consumer Awards 2006, MIS Asia II Excellence Award 2006 for Best Knowledge
Management, Most Customer Responsive Telecom Company in India by the Avaya-
Economic Times Global Connect Awards and Nasscom IT Innovation Award for the
Business Model Innovation for the year 2006. The company received a letter of offer from
Telecommunications Regulatory Commission of Sri Lanka to provide 2G and 3G mobile
services in Sri Lanka on January 2007. This was the first international operation of the
company. Bharti Airtel introduced the Blackberry 8800 business phone in March 2007.
Bharti Airtel and GSM Association launched the Global money transfer pilot project in India.
This initiative enable 25 million of NRI's to remit their money to India through mobile
phones.

During the year 2007, the company also incorporated Bharti Airtel (USA) Ltd, Bharti Airtel
(UK) Ltd, Bharti Airtel (Canada) Ltd, Bharti Airtel (Hongkong) Ltd as a wholly owned
subsidiary of the company for providing international calling services and wholesale voice

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switching and data products in the respective countries. Bharti Infratel Ltd has been
incorporated as a wholly owned subsidiary with an initial investment of Rs.500000 and also
acquired the Submarine Network Cable System from Network i2i by way of purchase of all
the assets or equity for an overall consideration of US$110 million. In August of the same
year Wal-mart formally marked its entry into India by signing two agreements with Bharti
Enterprises.

During January 2008, the company has signed a MoU with VeriSign, Inc agreed to form a
strategic market partnership for jointly launch best-in-class security services, to deliver
VeriSign's identity protection, managed security and fraud detection services, and to support
the development of the next-generation Internet infrastructure in the Indian market. The
company has achieved the 60 million-customer marks on February 2008. This landmark has
catapulted Bharti Airtel into the club of top mobile operators in the world in terms of
subscriber base. The 60 million-customer base covers mobile as well as fixed line and
broadband customers. Bharti Airtel has overtaken State-run Bharat Sanchar Nigam Ltd as the
largest National Long Distance (NLD) service provider in terms of revenue, amount of Rs
709 crore. The company has joined hands with five international companies including
Internet giant Google, Global Transit, KDDI Corporation, Pacnet and SingTel have formed
the Unity Bandwidth Consortium which will together invest about $300 million to construct
the new high-bandwidth, sub-sea cable system linking the US and Japan. As on March 2008,
Bharti Airtel and Micro Technologies India have tied up to offer micro lost mobile tracking
system to secure the mobile handsets of Airtel subscribers. As on May 2008, in a bid to gain
quicker foothold into the rural areas, Bharti Airtel has formed a joint venture with IFFCO,
which will offer customized mobile services to a target base of 55 million farmers across the
country.

Bharti Airtel Ltd is amongst the fastest growing telecom companies in the world and its
moving to attain the position of most admired brand in India with the three domains as loved
by more customers, targeted by top talent and benchmarked by more business.

 IDEA CELLULAR LIMITED

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IDEA Cellular Limited, a part of the Aditya Birla Group and an India's leading Global
System for Mobile communication (GSM) Mobile Services operator was began its journey in
the year 1995 as in the name of Birla Communications Limited for providing GSM-based
services in the Gujarat and Maharashtra Circles. Later the company has licenses to operate in
all 22 Service Areas. Presently, operations exist in 11 Service Areas covering Delhi,
Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chattisgarh, Uttaranchal,
Haryana, UP-West, Himachal Pradesh, UP-East, Rajasthan and Kerala. With a customer base
of over 24 million, IDEA Cellular's footprint currently covers approximately 60% of India's
telecom population. The company's operational 11 Service Areas are broken up into
Established and New Service Areas. The established service areas are Delhi, Andhra Pradesh,
Gujarat and Maharashtra, Haryana, Kerala, Madhya Pradesh and Uttar Pradesh (West) and
the New Service Areas are Uttar Pradesh (East), Rajasthan and Himachal Pradesh.

Changed its name to Birla AT&T Communications Limited followed by joint venture
between Grasim Industries and AT&T Corporation in the year 1996. After a year, in 1997,
commenced its operations in the Gujarat and Maharashtra. Migrated to revenues share license
fee regime under New Telecommunications Policy ('NTP') Circles in the year 1999. During
the year 2000, the company merged with Tata Cellular Limited, thereby acquired original
license for the Andhra Pradesh Circle. IDEA acquired RPG Cellular Limited and
consequently the license for the Madhya Pradesh (including Chattisgarh) Circle in the year
2001, and in the same year changed its name from Birla AT&T Communications Limited to
Birla Tata AT&T Limited. Obtained license for providing GSM-based services in the Delhi
Circle. Again in year later, in 2002, the company altered its name to Idea Cellular Limited
and launched 'Idea' brand name and commenced its commercial operations in Delhi Circle.
During the year, the company reached one million subscriber mark consecutively in the year
2003, reached two million subscriber mark.

During the year 2004, the company acquired Escotel Mobile Communications Limited
(subsequently renamed as Idea Mobile Communications Limited), reached the four million
subscriber mark and the first operator in India to commercially launched EDGE services
2005. Reached the five million subscriber mark in the year 2005 and IDEA won an Award
for the 'Bill Flash' service at GSM Association Awards in Barcelona, Spain. The Company
became a part of the Aditya Birla Group in the year 2006, subsequent to the TATA Group
transferred its entire shareholding in the Company to the Aditya Birla Group. In the same

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year 2006, IDEA acquired Escorts Telecommunications Limited (subsequently renamed as
Idea Telecommunications Limited).

The Company reached the 10 million subscriber mark and also launched New Circles for
obtain more and more customers. IDEA has extended its reach to 500 towns in Andhra
Pradesh in August of the year 2006. Received Letter of Intent from the DoT for a new UAS
License for both Mumbai and Bihar Circles. ABNL, the parent of Aditya Birla Telecom
Limited, agreed to transfer its entire shareholding in Aditya Birla Telecom Limited to the
Company for the consideration of Rs. 100 million. In 2007, the company won an award for
the 'CARE' service in the 'Best Billing or Customer Care Solution' at the GSM Association
Awards in Barcelona, Spain.

The Initial Public Offering aggregating to Rs. 28,187 million and the company listed in both
Bombay Stock Exchange and the National Stock Exchange during the year 2007. IDEA
merged seven of its subsidiaries and reached the twenty million subscriber mark in the same
year 2007. As on February 2008, IDEA Cellular Ltd tied up with Southern Biotechnologies
Ltd to bio-diesel for operating IDEA's gensets at all towers in the Andhra Pradesh region.
The Company with Geodesic, an innovator in communication, collaboration and
entertainment applications on mobile and Internet platforms jointly announced the launch of
'Idea Radio', a truly differentiated mobile music service for IDEA customers in the same year
2008.

Customer Service and Innovation are the drivers of this Cellular Brand. A brand known for
their many firsts, IDEA is only the operator to launch General Packet Radio Service (GPRS)
and EDGE in the country. IDEA has seen phenomenal growth since its inception, the
company's footprint idea is to first achieve critical mass, then drill deep instead of spreading
thin, however, does not increasing geographic footprint only, it also drills deep and
successfully attempts to provide excellent network coverage in all its circles of operations.

 RELIANCE COMMUNICATIONS LIMITED

Reliance Communications Limited (RCL) is the flagship company of the Anil Dhirubhai
Ambani Group (ADAG), is India's largest private sector information and communications

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company with over 48 million subscribers. It was established in the year 2004 as Reliance
Infrastructure Developers Private Limited, Reliance Communications started laying 60,000
route kilometres of a pan-India fibre optic backbone with high capacity, integrated (wireless
and wireline), convergent (voice, data and video) digital network and to offer services
spanning the entire infocomm value chain. It is capable of delivering a range of services
spanning the entire infocomm (information and communication) value chain, including
infrastructure and services for enterprises as well as individuals, applications, and consulting.

The Company's business encompasses a complete range of telecom services covering mobile
and fixed line telephony. It includes broadband, national and international long distance
services and data services along with an exhaustive range of value-added services and
applications. During the year 2004, International wholesale telecommunications service
provider, FLAG Telecom amalgamates with Reliance Gateway, a wholly owned subsidiary
of Reliance Infocomm, the company launched RIM Prepaid with attractive offer, Reliance
Infocomm introduced World Card - a Prepaid International calling card for affordable and
convenient ISD calls from India, the first regional Customer Contact Centre was launched in
Chennai. In the same year the company made partnership with MCI to offer India's First
MPLS Global VPN Solution. Introduced Railway Ticket booking from R World data
applications suite of Reliance India Mobile.

In 2005, RCL only the company introduced, first e-recharge facility in CDMA in India, the
company has had joins hands with Air Deccan to offer air ticket booking facility at Reliance
WebWorld. Reliance Infocomm rolls out international roaming facility across several
countries to become the first Indian CDMA operator to offer its customers such a service.
The company tied-up with the Bombay Stock Exchange to make available livestock quotes
on its mobile phones during the same year 2005. The status of the company was changed to
Public Limited in July 2005. Name of the company was changed from Reliance Infrastructure
Developers Private Limited to Reliance Communication Ventures Limited in August 2005.
RCL, UK launched Reliance IndiaCall service in England and Wales enabling callers to make
high-quality calls to India from any landline or mobile phone at economical rates. Reliance
Infocomm and China Telecom signed agreement for telecom services to provide direct
telecommunication service, including a global hubbing service, to subscribers in the both two
countries.

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India's first Talking Message Service (TMS) enabling the mobile users to send voice
messages to not only other mobiles but also fixed wireless phones (FWP) and landlines in
Reliance communications network were launched during the year 2006. In the same year
2006, RCL listed on the Bombay Stock Exchange and National Stock Exchange, the
company ties up with Disney to offer on Reliance Mobile World India's first 3D animation on
mobile, launched 'Hello Capital Plan' to enable its subscribers in 19 state capitals to call each
other at the local call rate of 40 paise per minute, T-Com signs contract with FLAG Telecom
for Europe-US bandwidth, Reliance Communications' FALCON Cable System was initiated
in the same year. RCL launched Free Group Term Life Cover for its CDMA subscribers.
RCL and Nokia have joined hands to market the Nokia 1255 mobile handset in India at a
price of Rs 1,999 during the period of 2006.

Reliance Infocomm Limited, Ambani Enterprises Private Limited, Reliance Business

Management Private Limited, Formax Commercial Private Limited, Reliance
Communications Technologies Limited, Reliance Software Solutions Private Limited,
Reliance Communications Solutions Private Limited and Panther Consultants Private Limited
was amalgamated and the Network division of the Reliance Communications Infrastructure
Limited was demerged with the Company during the year 2006. The name of the Company
was changed from Reliance Communication Ventures Limited to Reliance Communications
Limited with effect from 7th June 2006. The Company joined Lenovo and Intel for 'Internet
on the Move' in the year 2007. Also in the same year, RCL ties up with Naukri.com for
Search Jobs & Classified Ads from Reliance Mobile World. The demerger of Passive
Infrastructure division Reliance Communications & Reliance was approved in March of the
year 2007.

Sunny Days And Nights For Reliance Mobile Subscribers as Reliance Communications ties
up with SUN TV to offer video streaming of all SUN TV programs online 24x7. In May of
the year 2007, the company bagged West Bengal E-Governance Project. RCL slashed its call
rate to US and Canada. It's now just Rs 1.99 per minute and also launched Lifetime Validity
Recharge @ Just Rs.499. The tie up was made with Cisco to launch Business Internet
Services for SMEs in Pune in the year. After, in July of the same year 2007, the company and
QUALCOMM was made collaboration on CDMA2000 Expansion. The biggest acquisition
deal so far, the company bought US data Communication Company Yipes Holdings' in an all-
cash deal for 4300 million (Rs 1200 crore) in July 2007. RCL came forwarded to sale of

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equity stake in its Tower Company-Reliance Telecom Infrastructure Limited in July of the
year. For air and hotel bookings, the company has had joins hands with Yatra.com. The
money transfer also available in the RCL, such facility was started in September of the year
2007. The company made strategic partnership with Vanco.

As on April 2008, RCL launched Exam Guru, the educational portal, which provides
information on exam result, college admissions, exam schedules, admission deadlines, mock
tests and also tips for bettering performance. RCL made ties up with International Cricket
Council for rankings in the next eight years. During the same month and same year, the
company has acquired UK based eWave World, which offers wireless telephony services
using WIMAX technology. In May 2008, Reliance Globalcom, a subsidiary of the company,
has acquired London based managed network services provider, Vanco Group, for about $77
million (Rs 324 crore).

 TATA COMMUNICATIONS LIMITED

Tata Communications Limited, formerly known as Videsh Sanchar Nigam Limited or

VSNL, is India's largest telecommunication company in international long distance,
enterprise data and internet services. Part of the Tata Group, Tata Communications is
based in Mumbai and has operations in over 80 cities spread across 40 countries. Through
its subsidiary Tyco Global Network, it is also one of the world's largest submarine cable
bandwidth providers and has the world's largest network of submarine cables. Other
subsidiaries of Tata Communications include VSNL International Canada, formerly
known as Teleglobe while it is the majority share-holder of Neotel, South Africa's second
national operator (SNO) for fixed line telecommunication services.

In 1986, VSNL was formed as a Government of India-owned company. In 2000, Tata

Group acquired controlling stake in VSNL which was later expanded to 46%. In February
2008, VSNL was renamed as Tata Communications Limited. In February 2008, Tata
Communications announced US$2 billion global expansion plan. In September 2008,
Tata Communications was directed by the International Chamber of Commerce to pay
US$19 million to Flag Telecom as damages over a cable dispute. On January 15 2009,

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Tata Communications agreed on an out of court settlement in the case, since it had
already pain $19 million in damages, ending the five year legal battle.

Tata Communications is a leading global provider of telecommunications solutions

serving the voice, data and next-generation service needs of carriers, enterprises and
consumers in over 30 countries. As discussed above, earlier known as Videsh Sanchar
Nigam, the company became a part of the Tata Group in 2002. In 2008, VSNL, VSNL
International, Teleglobe, Tata Indicom Enterprise Business Unit, VGSL and CIPRIS were
brought under one global brand name – Tata Communications. The company is now the
number one global international wholesale voice operator and India's largest provider of
international long distance, enterprise data and internet services in India.

Tata’s global network spans five continents and comprises major ownership in over
200,000 km of territorial network fibre and subsea cable capacity. The company has a
trans-Atlantic and trans-Pacific data transfer capacity of 1 trillion bits per second, a global
MPLS network and the world’s largest VoIP network.

Tata Communications was named "Best Wholesale Carrier" at the World

Communications Awards in 2006 and "Best Pan-Asian Wholesale Provider" at the 2006
and 2007 Global Wholesale Telecommunications Awards. It is listed on the Bombay
Stock Exchange and the National Stock Exchange of India and its ADRs are listed on the
New York Stock Exchange (NYSE: TCL). Tata Communications is a partner of the
Metro Ethernet Forum (MEF), the pre-eminent industry organization dedicated to
facilitating the adoption of Ethernet networks and services.

Areas of business
The company extends its global reach to over 200 countries and territories with more than
300 PoPs and more than one million square feet data centre space worldwide.Its portfolio
covers:

Global voice solutions

Carrying over 20 bn minutes of traffic annually, the company's customer base includes
over 1500 carriers, mobile operators and ISPs. It provides value-added services such as
international toll free calls and account calling in addition to domestic and international
long distance calls. Services include:

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• Voice termination services
• Mobile Direct
• VoIPLinkTM
• Global calling cards
• truerootsTM

Global data solutions

The company serves the connectivity needs of global enterprises and service providers
with solutions such as virtual private networks, global ethernet, managed data network
services, leased lines, etc. The company also offers customised industry specific solutions
and is the leading provider of bandwidth and IP connectivity. Services include:

• Global transmission services

• Global IP and VPN services
• Managed services
• Mobility services
• Transformation services

Joint ventures, subsidiaries, associates

• Tata Communications Lanka offers wholesale, enterprise and retail solutions which
include international voice services, international IP bandwidth for internet service
providers, international private lease circuit, MPLS-based global VPN services, corporate
voice services and their global calling card.
• Tata Communications Banking InfraSolutions (TCBIL) offers solutions that cater
to the banking industry which include ATM services, card issuance and management,
end-to-end point of sale acquiring and hosted core banking.
• Tata Communications Transformations Services delivers end-to-end outsourcing
services for global carrier and telecommunications customers.
• Neotel (South Africa) provides a range of value-added voice and data services for
businesses, wholesale network operators, providers and consumers using its pure-IP next
generation network.

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 • Tata Communications Internet Services serves over 4,50,000 customers offering
services like broadband, Wi-Fi, dial up and a bouquet of value-added services such as
entertainment-on-demand, interactive education, net telephony, PC security and website
hosting.

2.2PROBLEM OT THE STUDY

“COMPARATIVE FINANCIAL (FUNDAMENTAL) ANALYSIS OF MAJOR

TELECOMMUNICATION COMPANIES IN INDIA”

2.3OBJECTIVE OF THE STUDY

An investor who would like to be rational and scientific in his investment activity has to
evaluate a lot of information about past performance and the expected future performance of
the companies, industries and the economy as a whole before taking the investment decision
and hence, the present study attempts to analyse the profitability position of the sample
companies.

Some of the objectives of conduction the study are as follows:

 To take investment decisions cautiously after studying risks involved in the same.
 To gain knowledge of evaluating intrinsic value of a firm.
 To acquire practical exposure of financial analysis of an enterprise.
 To get familiarity of scheming comparative efficiency of different firms.
 To analyse the profitability position of the sample telecom companies.

2.4REVIEW OF LITRATURE

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 Girija, ‘Socioeconomic Implications of Telecommunications Liberalization: India in
the International Context’, New Delhi, 1998.
 T.H. Chowdary, ‘Why did India get it so wrong? and What India should do now?,
1999.
 Anand, ‘India's economic policy reforms’, 1999.
 Bhattacharya, ‘isolating agents of change in India categorized into economic
structure, competition policy and technology’, 2000.
 Das, ‘Liberalisation of the Indian telecommunications services’, 2000.
 Rao, ‘Internet service providers in India’, 2000.
 Vrmani, ‘The contribution of telecommunication (or telecom) services to aggregate
economic growth in India’, 2000.
 Narinder, ‘Enhancing Developmental Opportunities by Promoting ICT Use: Vision
for Rural India’, 2004.
 Nikam, Ganesh, Tamizhchelvan, ‘changing face of India in bridging the digital
device’, 2004.
 Dey, ‘discussions between the Federal Communications Commission (FCC) and
communications policy makers and regulators in other countries’, 2004.
 Singh, ‘The role of technology in the emergence of the information society in India’,
2005.
 Mr. Banka, ‘An overview of the mergers and acquisitions in the telecommunication
industry’, 2006.
 Thomas, ‘the contribution made by telecommunications in India by the state and civil
society to public service’, 2007.
 Cygnus Business Consulting & Research Pvt. Ltd., ‘Quarterly Performance
Analysis of Companies (April-June 2008)’, 2008.
 Maheshwari, ‘Analysis of the Indian telecom industry and ascertain that Indian
telecommunications has been zooming up the growth curve at an mounting pace’,
July-Sept, 2008.
 Anderson, ‘Developing a route to market strategy for mobile communications in rural
India’, An interview with Gurdeep Singh, Operations Director, Uttar Pradesh, Hutch
India, 2008.
 Mani, ‘The growth of telecom services in India since the mid-1990s’, 2008.

Page 19 of 42
  Narayana, ‘The contribution of telecommunication (or telecom) services to aggregate
economic growth in India’, 2008.
 Sharma, ‘The major challenges faced by India’s telecom equipment manufacturing
sector’, 2009.
 Shah, ‘analysis of Indian telecom industry and study of the sector with three
companies namely Bharti Airtel, R.Comm and IDEA in the background of recent
global meltdown’, Feb, 2009.

2.5HYPOTHESIS STUDY

The study tests whether the selected variables of sample companies vary significantly during
the study period. This specific hypothesis is tested at appropriate time while analyzing and
interpreting the results.

The following hypotheses have been taken to put on test:

H1: The Debt-Equity Ratio (DER) position of IDEA, AIRTEL, RELIANCE and TATA does
not differ significantly.

H2: The Long Term Debt-Equity Ratio (LTDER) position of IDEA, AIRTEL, RELIANCE
and TATA does not differ significantly.

H3: The Current Ratio (CR) position of IDEA, AIRTEL, RELIANCE and TATA does not
differ significantly.

H4: The Fixed Asset Ratio (FAR) position of IDEA, AIRTEL, RELIANCE and TATA does
not differ significantly.

H5: The Earning Per Share (EPS) position of IDEA, AIRTEL, RELIANCE and TATA does
not differ significantly.

Page 20 of 42
2.6RESEARCH DESIGN
2.6.1 Universe of the Study

The present study adopts an analytical and descriptive research design. The data of the
sample companies (for a period of three years from 2007 to 2009) has been collected
from the annual reports and the balance sheet published by the companies and the
websites of the companies.

A finite sample size of four companies listed on the National Stock Exchange (NSE) has
been selected for the purpose of the study. They are IDEA CELLULAR, BHARTI
AIRTEL, TATA COMMUNICATIONS LIMITED and RELIANCE
COMMUNICATIONS LIMITED.

The variables used in the analysis of the data are Debt-Equity Ratio (DER), Long Term
Debt-Equity Ratio, Current Ratio, Fixed Assets and Earning Per Share (EPS). While
interpreting the results, the statistical tool of one-way Analysis of Variance (ANOVA)
has been used.

2.6.2 Sample of the Study

 Sampling Technique: The study is done with special reference to private sector
telecommunication companies. The reason being that the data or the financial
statements are readily available for them. Apart from this, private sector companies
have shown best performance in the previous year so it is interesting to know the best
performing company out the selected sample companies. Thus, the technique of
‘Convenience Sampling’ is being adopted for the study. The election of sample
companies is made on the basis of market capitalization.
 Sample Size: Four Private Sector companies are chosen as sample size for the study
on account of having the highest market capitalization.

2.6.3 Data Collection

Financial statements are the raw data collected from various websites such as
www.capitaline.com, www.kotaksecurities.com and other company websites.

Page 21 of 42
2.6.4 Time Period of the Study

The study has been conducted during Feb 2010 to Mar 2010.

2.6.5 Tools used for Analysis

 Ratio Analysis: Ratios have been calculated for the past three years for the purpose
of analysis. Ratios being designed are named as: Debt-Equity Ratio (DER), Long
Term Debt-Equity Ratio, Current Ratio, Fixed Asset Ratio and Earning Per Share
(EPS).
 Analysis of Variance (ANOVA): The statistical tool that is used for testing
hypothesis is one-way Analysis of Variance (ANOVA).

2.6.6 Financial Analysis

The section of study embodies the calculation and analysis of selected variables taken
into reflection for the study purpose. The ratios are being calculated by the aid of raw data
available on the concerned website. The raw data encompasses Yearly Results and
Balance Sheet of the sample companies. After calculation of ratios, analysis of individual
ratio is being done. The statistical tool used for analysis is One-Way Analysis of Variance
(ANOVA).

Analysis is performed by using software known as Microsoft Excel.

The ratios being calculated for the purpose of analysis of financial performance are:

 Debt-Equity Ratio (DER).

 Long Term Debt-Equity Ratio.
 Current Ratio.
 Fixed Asset Ratio.
 Earnings Per Share (EPS).

The analysis and interpretation of the study is carried out by following the chronological
order of the parameters mentioned above.

Page 22 of 42
 CHAPTER 3

RESULTS AND
DISCUSSIONS

Page 23 of 42
3.1 Debt-Equity Ratio

This ratio is only another form of proprietary ratio and establishes relationship between
the outside long-term liabilities and owners funds. It shows the proportion of long term
external equities and internal equities. Debt-Equity Ratio (DER) compares the Creditor’s
funds with owner’s funds. It indicates how much money is being placed by the creditors
as that of equity holders. It represents the proportion of borrowed funds in the total capital
of the company. This ratio is calculated by using the following formula and expressed in
terms of times.

Debt-Equity Ratio = Total Debt

Net Worth

Debt-Equity Ratio
RELIAN
Company IDEA AIRTEL TATA CE
2007 2.14 0.54 0.02 0.41
2008 1.88 0.38 0.08 0.77
2009 0.95 0.3 0.23 0.67
0.616666
Average 1.656667 0.406667 0.11 7

Table 3.1

Page 24 of 42
 Fig 3.1

The data in Table 3.1 reveals that IDEA has achieved the highest Debt-Equity Ratio every
year for the data taken for the period of 2007 to 2009 and is followed by RELIANCE
between 2008-09. TATA alone has registered the lowest ratio. Even the three year
average Debt-Equity Ratio of IDEA is significantly higher (1.656667) than that of
RELIANCE (0.6166667), AIRTEL (0.406667) and TATA (0.11). Thus, it is inferred that
IDEA has the least proportion of debt fund in its total capital and hence is the most
efficient telecommunication company among all other sample companies. IDEA has the
highest portion of its self owned funds in the capital structure followed by RELIANCE,
AIRTEL and TATA. The comparison of DER of the sample companies are shown in Fig
3.1.

The DER position of sample companies are compared and tested using the following
hypothesis.

HYPOTHESIS TESTING

H1 : DER position of IDEA, AIRTEL, TATA and RELIANCE does not differ
significantly.

Ha : DER position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

Page 25 of 42
 Anova: Single
Factor
SUMMARY
AIRTE RELIAN
Groups IDEA L TATA CE
Count 3 3 3 3
Sum 4.97 1.22 0.33 1.85
1.65666 0.40666
Average 7 7 0.11 0.616667
0.39143 0.01493
Variance 3 3 0.0117 0.034533

ANOVA
Source of Variation SS df MS F-Ratio F crit
4.06882 1.35627 11.986522 4.06618
Between Groups 5 3 5 3 1
Within Groups 0.9052 8 0.11315
4.97402
Total 5 11

Inference : Since the calculated value of F is 11.9865223 which is greater than the table

value of 4.066181 ( CV > TV at 5% significance level ), the null hypothesis is rejected

and the alternative hypothesis is accepted. Hence, it is concluded that the DER position of
IDEA, AIRTEL, TATA and RELIANCE differ significantly.

3.2 Long Term Debt-Equity Ratio

A high long term debt to equity ratio suggests that a company has financed its growth
mostly via debt. This can lead to a tricky situation and volatile earnings. Since this
company will now have to bear additional interest burden of debt servicing. Debt is a
form of 'external' or 'outside' financing for companies ( distinct from concept of equity
ownership). If after debt financing, company earnings are greater than debt cost (interest)
then share holders stand to gain. (Interest is cost of borrowing money). However if debt
cost outweighs returns generated from investment (of borrowed capital) then company
may head for bankruptcy in long run and shareholders’ interests will be adversely
affected.

Page 26 of 42
 Long Term Debt-Equity Ratio

Company IDEA AIRTEL TATA RELIANCE

2007 1.55 0.5 0 0.39

2008 1.63 0.35 0.03 0.57

2009 0.79 0.28 0.17 0.41

Average 1.323333 0.376667 0.066667 0.45666667

Table 3.2

Fig 3.2

The data in Table 3.2 reveals that IDEA has achieved the highest Long Term Debt-Equity
Ratio every year for the data taken for the period of 2007 to 2009 and is followed by
RELIANCE between 2008-09. TATA alone has registered the lowest ratio. Even the
three year average Long Term Debt-Equity Ratio of IDEA is significantly higher
(1.323333) than that of RELIANCE (0.45666667), AIRTEL (0.376667) and TATA
(0.066667). Thus, it is inferred that IDEA has the least proportion of debt fund in its total
capital and hence is the most efficient telecommunication company among all other
sample companies. IDEA has the highest portion of its self owned funds in the capital
structure followed by RELIANCE, AIRTEL and TATA. The comparison of Long Term
Debt-Equity Ratio of the sample companies are shown in Fig 3.2.

Page 27 of 42
The Long Term Debt-Equity Ratio position of sample companies are compared and tested
using the following hypothesis.

HYPOTHESIS TESTING

H2 : Long Term Debt-Equity Ratio position of IDEA, AIRTEL, TATA and RELIANCE
does not differ significantly.

Ha : Long Term Debt-Equity Ratio position of IDEA, AIRTEL, TATA and RELIANCE
differ significantly.

Anova: Single Factor

SUMMARY
AIRT RELIA
Groups IDEA EL TATA NCE
Count 3 3 3 3
Sum 3.97 1.13 0.2 1.37
1.323 0.376 0.0666
Average 333 667 67 0.456667
0.214 0.012 0.0082
Variance 933 633 33 0.009733

ANOVA
Source of
Variation SS df MS F F crit
Between 2.610 0.8702 14.17770 4.0661
Groups 825 3 75 8 81
0.491 0.0613
Within Groups 067 8 83

3.101
Total 892 11

Inference : Since the calculated value of F is 14.177708 which is greater than the table

value of 4.066181 ( CV > TV at 5% significance level ), the null hypothesis is rejected

and the alternative hypothesis is accepted. Hence, it is concluded that the Long Term

Page 28 of 42
Debt-Equity Ratio position of IDEA, AIRTEL, TATA and RELIANCE differ
significantly.

3.3 Current Ratio

The ratio is mainly used to give an idea of the company's ability to pay back its short-term
liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The
higher the current ratio, the more capable the company is of paying its obligations. A ratio
under 1 suggests that the company would be unable to pay off its obligations if they came
due at that point. While this shows the company is not in good financial health, it does not
necessarily mean that it will go bankrupt as there are many ways to access financing but it
is definitely not a good sign.

The current ratio can give a sense of the efficiency of a company's operating cycle or its
ability to turn its product into cash. Companies that have trouble getting paid on their
receivables or have long inventory turnover can run into liquidity problems because they
are unable to alleviate their obligations. Because business operations differ in each
industry, it is always more useful to compare companies within the same industry.

This ratio is similar to the acid-test ratio except that the acid-test ratio does not include
inventory and prepaid as assets that can be liquidated. The components of current ratio
(current assets and current liabilities) can be used to derive working capital (difference
between current assets and current liabilities). Working capital is frequently used to
derive the working capital ratio, which is working capital as a ratio of sales.

The current ratio is a financial ratio that measures whether or not a firm has enough
resources to pay its debts over the next 12 months. It compares a firm's current assets to
its current liabilities. It is expressed as follows:

Current Ratio = Current Assets

Current Liabilities

Page 29 of 42
 Current Ratios
Company IDEA AIRTEL TATA RELIANCE
2007 0.84 0.46 1.14 1.94
2008 0.66 0.49 1.28 1.25
2009 0.76 0.61 1.4 1.08
Average 0.753333 0.52 1.273333 1.42333333

Table 3.3

Fig 3.3

The data in Table 3.3 reveals that RELIANCE has achieved the highest Current Ratio
every year for the data taken for the period of 2007 to 2009 and is followed by TATA,
IDEA and AIRTEL.AIRTEL alone has registered the lowest ratio. Even the three year
average Current Ratio of RELIANCE is significantly higher (1.423333) than that of
TATA (1.273333), IDEA (0.753333) and AIRTEL (0.52). Hence we can say that
RELIANCE has enough resources to pay its debts over the next 12 months as compared
with the other sample companies. Current Ratio of the sample companies are compared
and shown in Fig 3.3.

HYPOTHESIS TESTING

Page 30 of 42
H3 : Current Ratio position of IDEA, AIRTEL, TATA and RELIANCE does not differ
significantly.

Ha : Current Ratio position of IDEA, AIRTEL, TATA and RELIANCE differ

significantly.

Anova: Single Factor

SUMMARY
AIRTE RELIANC
Groups IDEA L TATA E
Count 3 3 3 3
Sum 2.26 1.56 3.82 4.27
0.7533 1.2733
Average 33 0.52 33 1.423333
0.0081 0.0169
Variance 33 0.0063 33 0.207433

ANOVA
Source of
Variation SS df MS F F crit
1.6348 0.5449 9.1280011 4.0661
Between Groups 25 3 42 17 81
Within Groups 0.4776 8 0.0597

2.1124
Total 25 11

Inference : Since the calculated value of F is 9.128001117 which is greater than the table

value of 4.066181 ( CV > TV at 5% significance level ), the null hypothesis is rejected

and the alternative hypothesis is accepted. Hence, it is concluded that the Current Ratio
position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

3.4 Fixed Asset Ratio

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of
fixed assets (on the balance sheet). It indicates how well the business is using its fixed
assets to generate sales.

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 Fixed Assets Turnover Ratio = ______Sales__________

Average net fixed assets

Generally speaking, the higher the ratio, the better, because a high ratio indicates the
business has less money tied up in fixed assets for each dollar of sales revenue. A
declining ratio may indicate that the business is over-invested in plant, equipment, or
other fixed assets.

However, financial analysts claim that such a ratio is inconclusive: companies do not
generally cite or reference these figures. This new trend of informality in business has
called for the accounting curriculum across the nation to start to refrain from teaching the
fixed asset turnover ratio.

Measure of the productivity of a firm, it indicates the amount of sales generated by each
dollar spent on fixed assets, and the amount of fixed assets required to generate a specific
level of revenue. Changes in the this ratio over time reflect whether or not the firm is
becoming more efficient in the use of its fixed assets

The Fixed Asset Ratio of the four sample conpanies are shown in Table 3.4.

Fixed Asset Ratio

IDEA AIRTEL TATA RELIANCE
2007 0.63 0.8 0.86 0.98
2008 0.58 0.94 0.73 0.7
2009 0.67 1.04 0.73 0.51
Average 0.626667 0.926667 0.773333 0.73

Table 3.4

Page 32 of 42
 Fig 3.4

The data in Table 3.4 reveals that AIRTEL has achieved the highest Average Fixed Asset
Ratio for the data taken for the period of 2007 to 2009 and is followed by TATA,
RELIANCE and IDEA. The three year average Fixed Asset Ratio of AIRTEL is
significantly higher (0.926667) than that of TATA (0.773333), RELIANCE (0.73) and
IDEA (0.626667). The Fig 3.4 shows that AIRTEL has shown increase in the Fixed Asset
Ratio year by year as compared to any other sample company. Moreover RELIANCE has
year by year decrease in its Fixed Asset Ratio. It means that AIRTEL has less money tied
up in fixed assets and RELIANCE has over-invested in plant, equipment, or other fixed
assets. However the changes in this ratio for IDEA and TATA shows that they are not
efficient to use their fixed assets.

HYPOTHESIS TESTING

H4 : Fixed Asset Ratio position of IDEA, AIRTEL, TATA and RELIANCE does not
differ significantly.

Ha : Fixed Asset Ratio position of IDEA, AIRTEL, TATA and RELIANCE differ
significantly

Anova: Single Factor

Page 33 of 42
 SUMMARY
AIRTE RELIA
Groups IDEA L TATA NCE
Count 3 3 3 3
Sum 1.88 2.78 2.32 2.19
0.6266 0.9266 0.7733
Average 67 67 33 0.73
0.0020 0.0145 0.0056
Variance 33 33 33 0.0559

ANOVA
Source of
Variation SS df MS F F crit
0.1396 0.0465 2.38483 4.0661
Between Groups 92 3 64 4 81
0.0195
Within Groups 0.1562 8 25

0.2958
Total 92 11

Inference : Since the calculated value of F is 2.384834 which is less than the table value

of 4.066181 ( CV < TV at 5% significance level ), the null hypothesis is accepted and the

alternative hypothesis is rejected. Hence, it is concluded that the Fixed Asset Ratio
position of IDEA, AIRTEL, TATA and RELIANCE does not differ significantly.

3.5 EPS (EARNINGS PER SHARE)

Earnings Per Share is generally considered to be the single most important variable in
determining a share’s price. It is also a major component used to calculate the price-to-
earnings valuation ratio. The EPS can be calculated as follows:

Earnings Per Share (Basic formula) = _________Profit________

Weighted Average Shares

Earnings Per Share (Net Income formula) = ____ Net Income_______

Page 34 of 42
 Weighted Average Shares

An important aspect of EPS that's often ignored is the capital that is required to generate
the earnings (net income) in the calculation. Two companies could generate the same EPS
number, but one could do so with less equity (investment) - that company would be more
efficient at using its capital to generate income and, all other things being equal, would be
a "better" company. Investors also need to be aware of earnings manipulation that will
affect the quality of the earnings number. It is important not to rely on any one financial
measure, but to use it in conjunction with statement analysis and other measures. The EPS
of sample companies from year 2007 to 2009 are shown in Table 3.5.

EPS

IDEA AIRTEL TATA RELIANCE

2007 1.94 21.27 15.68 9.36

2008 3.96 32.9 9.92 12.4

2009 3.23 40.45 17.34 23.13

Average 3.04333333 31.54 14.3133333 14.9633333

Table 3.5

Page 35 of 42
 Fig 3.5

The data in Table 3.5 reveals that AIRTEL has achieved the highest Average EPS for the
data taken for the period of 2007 to 2009 and is followed by RELIANCE,TATA and
IDEA. The three year average EPS of AIRTEL is significantly higher (31.54) than that of
RELIANCE (14.963333), TATA (14.3133333) and IDEA (3.04333333). However both
AIRTEL and RELIANCE has shown constant growth in EPS respectively between years
2007 to 2009 which is shown in Fig 3.5. The EPS of IDEA is the lowest in all years as
well as its average is the lowest as compared with other sample companies. The higher
the ratio means the better is the share price of the company and the shareholders can earn
more from their shares. Hence the AIRTEL is more efficient than other sample
companies.

HYPOTHESIS TESTING

H5 : EPS position of IDEA, AIRTEL, TATA and RELIANCE does not differ
significantly.

Ha : EPS position of IDEA, AIRTEL, TATA and RELIANCE differ significantly.

Page 36 of 42
 Anova: Single Factor
SUMMARY
AIRTE RELIAN
Groups IDEA L TATA CE
Count 3 3 3 3
Sum 9.13 94.62 42.94 44.89
3.0433 14.313
Average 33 31.54 33 14.96333
1.0462 93.355 15.164
Variance 33 3 93 52.33123

ANOVA
Source of
Variation SS df MS F F crit
1239.8 413.28 10.210927 4.0661
Between Groups 44 3 14 85 81
323.79 40.474
Within Groups 54 8 43
1563.6
Total 4 11

Inference : Since the calculated value of F is 10.21092785 which is greater than the table

value of 4.066181 ( CV > TV at 5% significance level ), the null hypothesis is rejected

and the alternative hypothesis is accepted. Hence, it is concluded that the EPS position of
IDEA, AIRTEL, TATA and RELIANCE differ significantly.

3.6 MAJOR FINDINGS

 The average Debt-Equity Ratio of IDEA is significantly higher (1.656667) than

that of RELIANCE (0.6166667), AIRTEL (0.406667) and TATA (0.11).
 average Long Term Debt-Equity Ratio of IDEA is significantly higher (1.323333)
than that of RELIANCE (0.45666667), AIRTEL (0.376667) and TATA
(0.066667).

Page 37 of 42
  The average Current Ratio of RELIANCE is significantly higher (1.423333) than
that of TATA (1.273333), IDEA (0.753333) and AIRTEL (0.52).
 The average Fixed Asset Ratio of AIRTEL is significantly higher (0.926667) than
that of TATA (0.773333), RELIANCE (0.73) and IDEA (0.626667).
 The average EPS of AIRTEL is significantly higher (31.54) than that of
RELIANCE (14.963333), TATA (14.3133333) and IDEA (3.04333333). Hence
making AIRTEL one of the most efficient company in the terms of generating
earnings.

3.7 LIMITATIOINS OF THE STUDY

The study has following limitations:

 The study has lack of contact with company personnel acted as hindrance
in the study.
 The study is based on the limited knowledge & information provided by
the websites and software available on internet.
 The size of the sample is too small looking to the nature of the study and
due to tome and money constraints relatively smaller sample was chosen.
 The basis of selection of sample for the study was vague. Randomly
individuals were picked up to provide their responses .
 There are only five parameters taken for study however there are certain
other parameters on the basis of which accurate inference can be drawn.
 The ratings given are on the basis of data available on internet however the
future efficiency of the low performing company can be better.
 The data taken for the comparison of the sample companies are of last
three years from 2007 to 2009. However the accurate result can be drawn
if the data taken ranges from last ten years.

3.8 BIBLIOGRAPHY

Information has been sourced from namely, books, newspapers, journals, industry portals,
government agencies, industry news, developments and through access to database. The

Page 38 of 42
following are the list of websites that were being used for the data collection during
research study.

 http://www.capitaline.com/
 http://www.wikipedia.org/
 http://www.oecd.org/
 http://www.legalserviceindia.com/
 http://www.dot.gov.in/
 http://www.economictimes.indiatimes.com/
 http://www.ibef.org/
 http://www.domain-b.com/
 http://www.trai.gov.in/
 http://www.perry4law.wordpress.com/
 http://www.indianembassy.org/
 http://www.financialexpress.com
 http://www.pib.nic.in/
 http://www.emeraldinsight.com/
 http://www.search.epnet.com/
 http://www.scribd.com/
 http://www.tatacommunications.com/about/
 http://www.ideacellular.com/
 http://www.airtel.in/
 http://www.rcom.co.in/
 http://kotaksecurities.com/

The Following are the books as well as articles that were referred during the research
study.

 Frost & Sullivan (2007), “Telecom – Catalyzing India’s New Economy”

 Banka Sanjoy (2006), “Mergers and Acquisitions in Indian Telecom
Industry-A Study”
 Jain Rekha (2001), “A review of The Indian Telecom Sector”
 Fortis Investments (2006),”Global Telecom Sector”

Page 39 of 42
 Sharma Seema and Lokesh Singla (2009), “Telecom equipment Industry:
Challenges and Prospects”
 Bhattacharya Manas (2000), “Telecom Sector in India: Vision 2020”.

 Cellular Statistics – Cellular Operator Association of India.

 Tiwari, Verma – “A Fundamental Analysis of Public Sector Banks In
India”, Indian Journal of Finance, Nov 2009.

CHAPTER 4

CONCLUSION AND
SUGGESTIONS

Page 40 of 42
4.1 CONCLUSION

The present study is the fundamental analysis of the telecom companies in India. From
the interest of investors the study gives good analysis on the basis of which the individual
investor can get idea on which company to invest more or rather rely on it in future to get
maximum returns. The parameters selected for the analysis proves to be useful for the
investor to draw some conclusion out of the sample companies. However all the four
sample companies are having some unique strengths on the basis of which they can
expand their business in future and hence we cannot say that a particular company is best
in the industry. Moreover the parameters taken are limited for the analysis while the
actual information of the company comes out when the whole set of parameters are taken
for analysis purpose. Hence we can say that the present study gives the overview of the
standings of the major telecom companies in India on the basis of certain predetermined
parameters.

4.2 SUGGESTIONS

 The parameters taken were only five in the present study which could be increased
to more than five for better analysis.

Page 41 of 42
 The time duration for the analysis should be at least 5-10 years for the sake of
better picture of analysis but due to the data availability issues the present study is
restricted up to last three years.
 The size of the sample can be increased as there are some more major companies
which could be included in the study.
 The present study suggests the companies where they are lacking in their financial
growth. Also it gives knowledge to a company how to increase its efficiency in
comparison with other competitive companies.
 Along with the present findings of the study, the investors also has to keep in
mind about the future contracts of the companies and their future plans so as to get
maximum profit out of them.

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