X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Hughes Tele: Positive numbers - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 24, 2002

    Hughes Tele: Positive numbers

    Hughes Tele announced its second quarter results recently. After having extended its service to nine more cities in Maharashtra, the company's revenues and operating profits have been consistently improving each quarter that is reflected in its financials. However, subscriber addition per quarter even on a smaller base seems to have slowed down off late.

    (Rs m) 2QFY02 2QFY03 Change 1HFY02 1HFY03 Change
    Sales 615 864 40.5% 1,160 1,643 41.6%
    Other Income 72 18 -75.0% 156 46 -70.5%
    Expenditure 597 693 16.1% 1,122 1,339 19.3%
    Operating Profit (EBDIT) 18 171 850.0% 38 304 700.0%
    Operating Profit Margin (%) 2.9% 19.8%   3.3% 18.5%  
    Interest 195 164 -15.9% 360 320 -11.1%
    Depreciation 247 298 20.6% 475 585 23.2%
    Profit before Tax (352) (273) - (641) (555) -
    Extraordinary items (15) (15) - (30) (30) -
    Tax 0 - - 0 - -
    Profit after Tax/(Loss) (367) (288) - (671) (585) -
    Net profit margin (%) -59.7% -33.3%   -57.8% -35.6%  

    Telecom revenues in 2QFY03 and 1HFY03 have increased by 41% and 42% respectively on the back of incremental addition in subscriber base. Till 1HFY03, Hughes Tele's basic subscriber base has touched 185,000, which is 7% higher when compared with 1QFY03. When compared with last six quarter average, per quarter addition in subscriber base seem to have slowed down in 1HFY03. But the company's concentrated effort in targeting high usage customers that are typically corporates and SSIs is reflected in higher average revenue per user (ARPU) of Rs 18,681 per annum. Just to put things in perspective, MTNL's ARPU is in the range of Rs 11,500-Rs 12,250 per annum. The encouraging aspect of the 2QFY03 performance is the rise in ARPU.

    Key indicators…
    Particulars 1QFY03 2QFY03
    No. of subscribers (nos) 172,108 185,000
    Per quarter addition in subscribers (nos) 12,108 12,892
    Revenues per quarter (Rs m) 779 864
    Revenue/subscriber (Rs)* 18,105 18,681
    Market cap/subscriber (Rs)** 47,358 44,058
    Market cap/sales (Rs)** 2.6 2.4
    (*on annualised revenues, **on current price)

    Like any commodity sector, as capacity utilisation increases, fixed costs are spread over a wider volume base and as a result operating margins tend to increase. The 2QFY03 and 1HFY03 performance of Hughes Tele also has to be viewed in this context. After a period of stable growth in subscriber base on account of the roll out of its network in Mumbai and nine other cities, we expect growth in number of subscribers to increase at a faster rate in the future. Players like Hughes Tele, due to their technological advantage, are also in a position to gain market share in the corporate segment, that adds significantly to the bottomline. A combination of both the aforesaid factors will drive profitability at the operating level for the company in the long run.

    Increased cash flow from operations and a lower interest regime could have enabled the company to retire part of its debt and refinance some high cost funds in 1HFY03. As a result, interest outgo has also declined. As far as the stock price is concerned, even after this continuation in operating margin improvement in the last three quarters, loss at the net level is affecting sentiment. The open offer date for Tata's raising the stake in Hughes Tele expired on September 24, 2002. If media reports are to be believed, the Tata's have received good response for the same. In the long run, synergies between Hughes Tele and the Tata's are numerous and one cannot rule out the possibility of consolidation within the group to exploit benefits.

     

     

    Equitymaster requests your view! Post a comment on "Hughes Tele: Positive numbers". Click here!

      
     

    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    TATA TELESERVICES SHARE PRICE


    Aug 23, 2017 12:22 PM

    TRACK TATA TELESERVICES

    • Track your investment in TATA TELESERVICES with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON TATA TELESERVICES

    TATA TELESERVICES 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE TATA TELESERVICES WITH

    MARKET STATS