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.
Telecom: Itís ringing! - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 30, 2004

    Telecom: Itís ringing!

    Introduction
    2004 has been a momentous year for the Indian telecom sector. Explosive growth rate in the mobile telephony segment was almost counterbalanced by rapidly falling profitability due to regulatory pressures and pressure on tariffs. Increasing consolidation activity was also prominent throughout the year. The growth in the industry was clearly reflected in the way major telecom players performed on the stock markets. Against the Sensex gains of 14%, the telecom index grew by an almost double 27% during 2004.

    What was different in 2004 as compared to 2003?
    The most important event of the year for the domestic telecom industry was the introduction of unified licensing regime (ULR). The main aim of this regime was to simply the licensing procedure and granting a unified license that enables services providers to provide all kinds of telecom services covering various geographical areas using any technology. Another big event in relation to the sector was the raising of FDI limits from 49% to 74%.

    The strong growth witnessed in the cellular industry in 2004 was a result of combination of the following key factors Ė

    1. Declining tariffs due to intensifying competition amongst existing players,

    2. Aggressive pricing strategy adopted by service providers, and

    3. Lowering of duties on handsets and equipments.

    The sector outperformer: Bharti Tele
    The growth in the industry was clearly reflected in the way major telecom players performed on the stock markets. Against the Sensex gains of 14%, the telecom index grew by an almost double 27% during 2004. The table below shows that Bharti Tele led the pack with a YoY gain of 99%. Strong performance of the stock, especially during the second-half of the year, mirrored the robust financial performance of the company. This growth was aided by a continued strong addition to the subscriber base. At the end of September 2004, Bharti had a base of 8.7m mobile subscribers, which was 20% of the Indian cellular (GSM+CDMA) market. This rapid addition to the base more than compensated for the pressure on ARPUs (average revenue per user) as the company improved upon its operating margins and profitability.

    Telecom: Key gainers in 2004
      26-Dec-03 27-Dec-04 % Change
    BHARTI TELE 106 212 99.0%
    VSNL 155 234 50.4%
    TATA TESERV (MAH) 23 34 47.2%
    MTNL 135 157 16.8%
    ITI LTD 25 28 13.1%

    The laggard: HFCL
    Apart from the gainers as mentioned above, there were just a couple of losers from the telecom sector in 2004 Ė HFCL (17%) and Krone Communications (21%).

    What to expect in 2005?
    In 2005, leading players are expected to make large-scale investments in technology and infrastructure (network expansion). This would be in line with their initiatives of tapping a wider customer base. A hike in the FDI limit has also increased the attractiveness of the sector for foreign telecom majors and consequently, there could be a large flow of capital into the sector. This will go a long way in improving the growth prospects of this sector. However, while the overall sector may paint a rosy picture, the story may be drastically different for individual players as they continue to grapple with falling ARPUs, regulatory pressures and defaulting customers. The ride for the telecom players may continue to be topsy-turvy in 2005. Also, since valuations of leading players seem stretched from the medium term perspective, stock prices might witness some volatility.

     

     

    Equitymaster requests your view! Post a comment on "Telecom: Itís ringing!". Click here!

      
     

    More Views on News

    Bharti Airtel: A Good Quarterly Performance (Quarterly Results Update - Detailed)

    May 6, 2016

    Bharti Airtel has reported a8.4% YoY growth in the topline and an increase of 2.8% YoY in the bottomline for the quarter ended March 2016.

    Bharti Infratel: Ends the Year Positively (Quarterly Results Update - Detailed)

    Apr 27, 2016

    Bharti Infratel has reported a 7.3% YoY growth in the topline and an increase of 18.7% YoY in the bottomline for the quarter ended March 2016.

    Bharti Infratel: A Good Quarter (Quarterly Results Update - Detailed)

    Apr 8, 2016

    Bharti Infratel has reported a 4.9% YoY growth in the topline and an increase of 11.5% YoY in the bottomline for the quarter ended December 2015.

    More Views on News

    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.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    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

    S&P BSE TECK


    Aug 24, 2017 02:43 PM

    S&P BSE TECK 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS