Analysis of Financial Statements

-Telecom Sector
Rishabh Shah(91)
Shalin Shah(92)
Viral Shah(93)
Anam Shaikh(94)
Ashfaque Shaikh(95)
TELECOM SECTOR
India is 2nd largest market in Asia

India is 3rd largest in the world

2.1% of GDP

World’s fastest growing Telecom market(100 times since

2001)

752 million mobile subscribers in India

 Government
Investments
Initiatives

Mobile & Gradual

Connectivity Progression

High
Key Tailoring of
Disposable
Income
Growth service
packages
Drivers
TELECOM PLAYERS
Number of Subscribers
6%
7% 20%
Bharti Airtel
11% Reliance
Communications
Vodafone
BSNL
17% Tata Teleservices
11% Idea
Aircel
Others
12%
17%
CLASSIFICATION OF PLAYERS
 Market Leader:
 Airtel
 Market Challengers:
 Reliance
 Vodafone
 BSNL
 Followers:
 Idea
 Nichers:
 Aircel
 BPL
AIRTEL
Owner – Sunil Bharti Mittal

BTVL is JV between Singtel & Bharti Telecom

First cellular operator to set up cellular showrooms

“Airtel Connect”

3rd largest telecom company in the world

IDEA CELLULAR
Leading GSM mobile services operator with over 81
million subscribers

Presence in telecom infrastructure market

Winner of ‘The Emerging Company of the Year

Award' at The Economic Times Corporate Excellence
Awards 2008-09
Threats Opportunities Weaknesses Strengths
• Knowledge & • Tie-up with Google • Outsourcing of • Largest cellular
Technology moving • Strategic industry experts provider in India
to competitors partnerships • Until recently, did • Strategic alliances
• Could become the • Replacing models not own towers • Large and rising
target for take-overs successfully • Lack of real customer base
• Investing in small emerging market
villages investment
opportunity
SWOT OF AIRTEL
Threats Opportunities Weaknesses Strengths
• Competition from • Will continue to • High Debt-Equity • Market leader in 7
companies with enjoy growth Ratio of the established
pan-India footprint • Improvement of • Concentration circles
• Alternative regulatory • Strong distribution
technology environment channels
• A National Brand
SWOT OF IDEA CELLULAR
SHARE HOLDING PATTERN

Idea Cellular Bharti Airtel

Promoters(67.83
Promoters(46.9 )
9)
FII(18.03)
FII(7.4)
NRI/Foreign
NRI/Foreign VCI(0.4)
VCI(34.02)
MF/FI/Banks(7.9
MF/FI/Banks(7. 3)
52)

Bodies Bodies
Corporate(0.84) Corporate(3.49)

Others Others
Promoters
Bharti Airtel Idea Cellular
Bharti Enterprises Led by Part of the Aditya Birla
Sunil Bharti Mittal Group
Bharti Enterprises has Products  - viscose staple
businesses spanning across fibre, aluminium, cement,
telecom, retail, financial copper, carbon black,
services, manufacturing insulators, garments.
and software. The Group has also made
The company is structured
successful forays into
into four strategic business
financial services,
units - Mobile, Telemedia,
telecom, software, BPO
Enterprise and Digital TV
and retail sectors
LIABILITIES

Bharti Airtel Idea Cellular

Net
Net Worth(52.55)
Worth(67.27) Total
Total Debt(9.23) Debt(29.94)
Total CL & Total CL &
Provisions(23.51) Provisions(17.5
1)
ASSETS

Bharti Airtel Idea Cellular

Net
Block(67.77)
Net Block(51.31)
Capital Work-in-
progress(2.92) Capital Work-
Investments(28.8 in-progress(2.1)
8)
Current Assets,
Loans &
Advances(16.89) Investments(12.
51)

Current Assets,
Loans &
Advances(17.62)
 EXPENDITURE
Access Access
Bharti Airtel Charges(20.40) Idea Cellular Charges(19.91)

Network Network
Operating(34.25) Operating(34.59)

Cost of Goods Cost of Goods

Sold(0.09) Sold(0.34)

Personnel(6.61) Personnel(7.14)

Sales and Sales and

Marketing(11.06) Marketing(17.5)

Administrative & Administrative &

Other(10.30) Other(5.63)

License License
Charges(17.27) Charges(14.90)

Total expenditure= 21739.7852 Total expenditure=9039.933

= 61% of Total income =75.77% of Total income
Total income=35609.5407 Total income=11930.387
CASH FLOWS
IDEA AIRTEL
Cash Flow 2010 2009 2010 2009
Operating 19851.35 18637.4 126926 123898
Activities
Used in
Investing -20959.4 -76553.6 -106016 -114311
Activities

From Financing -25305.7 76389.98 -25393 -6720

activities

Net
Increase/Decrea -26413.8 18473.74 -4483 2867
se in cash flow
Net Worth and PAT Comparison
400000
350000
300000
250000
200000 IDEA
150000 Airtel
100000
50000 Airtel
0
PAT IDEA
Net Worth
PAT 118536 367370

Net Worth 10536 94261

Profitability Ratios
35
ROCE
Bhart Airtel
30 Idea
Cellular
25

20

15

10

0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Operating margin
45
40
35
30
25
Bharti Airtel
20 Idea Cellular
15
10
5
0
MAR`06 MAR`07 MAR`08 MAR`09 MAR`10
30
Net Profit Margin
Bhart Airtel
Idea
25 Cellular

20

15

10

0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Liquidity and Solvency Ratios
Current Ratio
1.2
Bhart Airtel
1

0.8

0.6

0.4

0.2

0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Acid-Test Ratio
2.5
Bhart Airtel
2

1.5

0.5

0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Debt / Equity Ratio
6
Bhart Airtel
5

0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Debt Coverage Ratios
Interest Cover
100
90 Bhart Airtel
80
70
60
50
40
30
20
10
0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Total Debt to Owners Fund
6
Bhart Airtel
5

0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Management Efficiency Ratios
Assets Turnover Ratio
1.2
Bhart Airtel
1

0.8

0.6

0.4

0.2

0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Investments Turnover Ratio
1400

1200 Bhart Airtel

1000

800

600

400

200

0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Debtors Turnover Ratio
45
40 Bhart Airtel
35
30
25
20
15
10
5
0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Valuation Ratios
Book Value
160
140 Bhart Airtel

120
100
80
60
40
20
0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
EPS P/E Ratio
Bharti Airtel: 19.73
Idea Cellular: 13.34
45
40 Bhart Airtel
35
30
25
20
15
10
5
0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
 Comparison
Last Price Market Sales Net Profit Total
Cap. Assets
(Rs. cr.) Turnover
 

Bharti Airtel 330 125,318.49 35,609.54 9,426.16 41,776.12

Reliance
Comm 97.1 20,041.70 12,290.61 478.93 74,977.17
Idea
Cellular 60.5 19,978.43 11,895.77 1,053.66 17,983.66

Tata Comm 210 5,985.00 3,218.04 483.18 9,919.69

TataTeleser
vice 15.6 2,959.63 2,249.10 -298.01 2,943.10

MTNL 43.65 2,749.95 3,770.41 -2,514.87 9,448.40

Net Operating Profit / Share
200
Bhart Airtel
180 Idea
160 Cellular

140
120
100
80
60
40
20
0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
 Industry :Telecommunications - Service Provider

Year Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

Sources of funds

Cash profit 4221.14 1519.57 1655.72 2278.76 467.9

Increase in equity 199.74 464.74 42.5 333.33 0
Increase in other networth 0 6286.2 276.26 658.23 0
Increase in loan funds 0 1064.6 2264.25 1334.91 217.57
Decrease in gross block 0 0 0 0 0
Decrease in investments 2173.68 0 0 293.2 0
Decrease in working capital 1561.39 0 1438.3 546.83 0
Others 0 0 0 0 0
Total Inflow 8155.95 9335.11 5677.03 5445.26 685.47
Year Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

Application of funds

Cash loss 0 0 0 0 0

Decrease in networth 1090.59 0 0 0 0

Decrease in loan funds 1052.95 0 0 0 0

Increase in gross block 6012.41 2454.55 5120.93 4962.26 513.58

Increase in investments 0 4358.88 556.1 0 0

Increase in working capital 0 2521.68 0 0 171.89

Dividend 0 0 0 0 0

Others 0 0 0 483 0

Total Outflow 8155.95 9335.11 5677.03 5445.26 685.47

Comparision of Bharti Airtel and Idea
Cellular
The way ahead
3-G  Game Changer?
MNP-Shift in subscriber base
2G Controversy
Thank You