telecommunication[1]

8/8/2019 telecommunication[1]

1/41

T r e n d s o f Y o u r B u s i n e s s

E x c l u s i v e l y d i s t r i b u t e d b y

I n d i a , 2 0 0 7

Telecommunications

Please address all comments and enquiries to: [email protected]


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Telecommunications

Contents Page

1. Macroeconomic Scenario - 4

2. Analysis of Investment Attractiveness - 5

- Attract iveness Indicators - 5

- Driving Forces of Attractiveness - 5

- Risk-Profitability Maps - 7

3. Concentration in the Sector - 9

4. Analysis of Financial Ratios - 10

- Distributions of Financials - 10

- General Indicators - 11

- Profitability Ratios - 15

- Liquidity Ratios - 18

- Financial Cycles - 19

- Financial Leverage Ratios - 20

- Production Factors - 22

- Investment Outlays - 24

- Costs - 26

- Structure of Fixed Assets - 30

- Structure of Current Assets - 31

- Structure of Current Liabilities - 32

- DuPonts Pyramid - 34

5. Companies from the Sector - 35

- Top Players from the Sector - 35

- Listed Companies from the Sector - 36

- Mergers and Acquisitions - 37

6. Key Concepts - 38

- Definitions of Indices - 38

- Definitions of Selected Concepts - 40

! This report has been compiled to the best of the authors knowledge, using information originating from verified

sources. The authors of the report take no responsibility for the consequences of any decisions and actions taken as a

result of the use of this report. This report refers to the Indian economy.


3/41-3-

Telecommunications

EconTrends for India is the unique tool for analyzing various Indian industries. It contains description of

macroeconomic environment, analysis of investment attractiveness, detailed analysis of revenue as well as in-depth

analysis of a wide scope of financial ratios. The report covers not the full sector but only its major part, since it is build

on the bottom-up aggregated financial data from the Accord Fintech database.

Profitability of a given industry is evaluated on the basis of average forecasted dynamics of EBITDA in two following

years. Every industry has a granted profitability mark that ranges from 1 up to 5, which reflects its profitability versus

other industries. Higher mark indicates higher profitability. Risk of an industry in turn is measured by the standard

deviation of forecasted Profitability Index. Every industry has also an assigned risk mark that ranges from 1 up to 5,

which reflects its risk versus other industries. Higher mark means here lower risk. Each industry is at the end

characterized by the following two parameters its profitability and risk. They are used for evaluation of the short term

investment attractiveness, that reflects preferences of investors seeking to maximize their rates of return and to

minimize the risk they face.

The final Short-Term Investment Attractiveness Ranking of an analyzed industry explains its relative attractiveness

comparing to other sectors. The lower a position within the ranking the higher is attractiveness on an industry.

Changes in this position replicate either changes in profitability or in risk. Additionally like in the case or profitability

and risk measurement the final attractiveness is graded from 1 to 5, where the highest grade means the highest

attractiveness. Lower grade means worse investment-weather conditions, so either lower profitability or higher risk.The Short-Term Investment Attractiveness Ranking is presented according to the structure of the North American

Industry Classification System (NAICS). However the used system of industry classification is not fully compatible with

the National C lassification of Activities in India due to Indian statistics - specific factors.

The Short-Term Investment Attractiveness Ranking developed for India under the EconTrends methodology is based

on the so called Profitability Index, that shows forecasted dynamics of EBITDA. It serves as a proxy for dynamics of

dirty cash flows in enterprises from a given industry. Fundamental components of the Profitability Index like net sales

and EBITDA margin, are forecasted using econometric models. The behavior over time of all these categories is

illustrated using appropriate pictograms in the Map of Forces.

Analysed sector:

Group Telecommunications

Group is the most narrow

aggregation and does not contain any

subsectors


4/41-4-

Telecommunications

-> expected fall of

GDP nominal growth

in 2009

-> expected fall of

GDP real growth in

2009

-> expected fall of

CPI inflation in 2009

-> expected

weakening of

USD/INR exchange

rate in 2009

Macroeconomic ScenarioPeriod 2005 2006 2007 2008 2009

Nominal GDP Growth 113.8 115.7 113.6 113.6 111.2

Real GDP Growth 109.2 109.7 109.0 107.0 106.0

Inflation (CPI) 105.3 106.7 105.5 106.5 104.5

USD/INR exchange rate 44.13 45.30 41.20 43.40 45.00

Datasource: ISI, EMIS, CEIC

Nominal GDP Growth

102

104

106

108

110

112

114

116

118

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

Period

Growth

Forecast

Inflation (CPI)

100

101

102

103

104

105

106

107

108

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

Period

Growth

Forecast


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Telecommunications

Analysis of Investment Attractiveness

Attractiveness Indicators

expected

stabilisation of

attractiveness in the

sector

-> expected

stabilisation ofprofitability

-> expected

stabilisation of risk

5 1

4 1

3 1

2 1

1 1

5 0

4 0

3 0

2 0

1 1

CurrentAttractivene

ss

Pro

fitability

Risk

0

1

2

3

4

5

Current Attractiveness5 1

4 1

3 1

2 1

1 1

5 0

4 0

3 0

2 0

1 1

ForecastedAttractiven

ess

Pro

fitability

Risk

0

1

2

3

4

5

Forecasted Attractiveness

Driving Forces of Attractiveness

- Profitability Index - y/y dynamics

- Net Revenue per Company - y/y dynamics

- EBITDA Margin - y/y dynamics

Current situation e b eForecasted situation b b b

Map of forces for the sectorNet revenue per company -

Y/Y dynamics

EBITDA margin - Y/Y

dynamics

Profitability index - Y/Y

dynamics

"+"

"-"

"o"

Positive dynamics of "dr iving force"

Negative dynamics of "driving force"

Close to zero dynamics of "driving force"

Fall of dynamics comparing to previous year

Stabilisation of dynamics comparing to prev ious year

Symbols orientationRise of dynamics comparing to previous year

Neutral impact on profits dynamics

Symbols sign

Symbol's colourDynamics of profit

Positive impact on profits dynamics

Negative impact on profits dynamics

expected fall in

dynamics of net

revenue in 2008

expected rise in

dynamics of net

revenue in 2009

Net revenue per company - Y/Y dynamics

0%

10%

20%

30%

40%

50%

60%

70%

80%

200

4

200

5

200

6

200

7

200

8

200

9

Period

N

etrevenuepercompany

Y/Ydynamics

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Profitabilityindex-Y/Y

dynamics

Net revenue per company - Y/Y dynamics Profitability index - Y/Y dynamics

Forecast


6/41-6-

Telecommunications

expected fall in

dynamics of EBITDA

margin in 2008

expected rise in

dynamics of EBITDA

margin in 2009

EBITDA Margin - Y/Y dynamics

-2 %

0%

2%

4%

6%

8%

10%

200

4

200

5

200

6

200

7

200

8

200

9

Period

EBITDAMargin

-Y/Y

dynamics

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Profitabilityindex-Y/Y

dynamics

EBITDA Margin - Y/Y dynamics Profitability index - Y/Y dynamics

Forecast


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Telecommunications

Risk-Profitability Maps

Risk - Profitability Map (current situation)

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

Risk

Profitability

All sectors Most efficient sectors

Selected sector (Group): Telecommunications

Investors' utility function

Risk - Profitability Map (current situation)

Zoom

0.0

0.1

0.1

0.2

0.2

0.3

0.3

0.4

0.4

0.5

0.5

0.0 0.1 0.1 0.2 0.2 0.3 0.3 0.4 0.4 0.5 0.5

Risk

Profitability




risk - profitability

map (current

situation)


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Telecommunications

risk - profitability

map (forecasted

situation)

Risk - Profitability Map (forecasted situation)

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Risk

Profitability




Risk - Profitability Map (forecasted situation)

Zoom

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.0 0.1 0.1 0.2 0.2 0.3 0.3 0.4 0.4 0.5

Risk

Profit

ability





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Telecommunications

Concentration in the Sector

Distribution of net revenues in the sector (2007)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cumulative share of companies from lower market share

Cu

mulativemarketshare

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Gini Coefficient

78.94%

Lorenz Curve

Perfect Inequality Line

Perfect Equality Line

Market power

concentration

measured by

Herfindahl-

Hirschman Index

was strong in 2007

Net sales of top fivecompanies in the

sector reached the

market share of

92.14% in 2007

Market share of top companies in the sector

Year 2007

The Herfindahl-Hirschman Index 2393

Top 1 company 38.27%

Top 2 companies 63.49%




Number of analysed companies in the sector 16


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Telecommunications

Analysis of Financial Ratios

Distributions of Financials

20% 40% 60% 80%

2006 2007 I II III IVGeneral Indicators

Number of companies 15 16

Y/Y dynamic s of net revenue per company [%] 9.39% 74.65% -17.32% 13.02% 61.27% 123.33%

Y/Y dynamic s of total operating cost per company [%] 15.95% 61.23% -16.03% 5.99% 53.97% 93.66%

Y/Y dynamic s of operating profit per company [%] -3.39% 116.78% -55.18% 8.45% 101.83% 321.00%

Y/Y dynamics of operating profit per profit-making company [%] 19.05% 85.02% 8.45% 84.39% 103.72% 227.91%

Y/Y dynamic s of gross profit per company [%] -22.21% 172.55% -76.80% 12.35% 87.40% 113.94%

Y/Y dynamic s of gross profit per profit-making company [%] -0.19% 98.99% 12.35% 89.49% 105.68% 204.04%

Y/Y dynamic s of net profit per company [%] -11.49% 191.16% -141.93% -9.48% 60.69% 110.78%

Y/Y dynamics of net profit per profit-making company [%] 11.18% 105.85% -9.10% 89.85% 99.95% 211.16%

Y/Y dynamic s of cas h flow per company [%] -206.91% 2283.70% -127.50% 105.28% 248.18% 981.18%

Y/Y dynamic s of cas h flow per profit-making company [%] -230.79% 1904.44% -45.82% 74.22% 185.99% 1974.46%

Profitability Ratios

Operating Sales M argin [%] 29.51% 36.63% 0.15% 12.57% 30.10% 38.29%

Net Sales Margin [%] 10.23% 17.05% -42.16% 0.01% 11.50% 20.54%

Return on Equity [%] 9.88% 14.82% -1.36% 7.37% 23.04% 35.25%

Return on Ass ets [%] 6.68% 9.59% -2.23% 0.01% 7.10% 17.73%

Effective tax rate [%] 18.73% 13.18% 1.82% 9.45% 15.77% 37.03%

Equity dividend ratio [%] 11.79% 5.85% 0.00% 0.00% 4.94% 13.32%

Share of profit-making c ompanies [%] 53.33% 62.50%

Liquidity Ratios

Current ratio [%] 149.10% 177.45% 77.44% 146.10% 327.57% 1037.32%

Quick ratio [%] 147.52% 175.64% 77.44% 145.80% 322.46% 460.60%

Super quick ratio [%] 21.28% 19.38% 6.83% 10.10% 31.09% 86.73%

Sundry debtors to sundry creditors ratio [%] 46.95% 33.38% 17.55% 23.19% 111.58% 178.37%

Financial Cycles

Days of coverage for Cas h & Equivalent [days] -232 -240 -250 -163 -80 125

Days of coverage for receivables [days] 54 38 25 44 71 85

Days of coverage for inventories [days] 3 4 0 1 2 16

Days of coverage for short term liabilities [days] 290 281 126 177 282 530

Financial Leverage Ratios

Debt to Equity ratio [%] 47.88% 54.64% 0.00% 3.11% 9.68% 70.97%

Equity to total assets ratio [%] 67.62% 64.67% 33.89% 66.37% 93.88% 97.11%

Share of loans from banks in total debt [%] 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Secured to unsec ured loans ratio [%] 165.02% 84.22% 3.17% 142.88% 507.60% 2079.12%

Ope rating profit coverage [years] 1.68 1.72 0.3 1.0 2.0 10.2

Production Factors

Labour intensity of production [%] 12.57% 9.33% 5.05% 5.97% 7.28% 13.41%

Energy intensity of production [%] 2.17% 2.39% 0.00% 0.12% 1.63% 2.51%

Material intens ity of production [%] 2.06% 1.51% 0.00% 0.00% 0.12% 1.14%

Total ass ets turover [%] 65.34% 56.22% 12.45% 44.17% 67.91% 93.42%

Net fixed assets productivity [%] 84.26% 80.43% 41.18% 63.19% 78.08% 192.61%

Investments

Investment outlays per company [mn INR] 2750.52 5998.39 0.21 59.38 808.17 4414.03

Share of quoted equity investments [%] 1.27% 0.02% 0.00% 0.00% 0.00% 0.00%

Investment outlays as share in net revenue [%] 16.53% 20.64% 0.00% 3.97% 10.22% 66.15%

Inves tment outlays to depretiation ratio [%] 114.85% 140.21% 0.13% 28.33% 93.05% 390.44%

Investment outlays index [%] 1.80% 4.76% -11.77% -5.41% -0.90% 22.54%

Costs

Share of labor costs in total operating costs [% ] 14.23% 11.44% 4.10% 6.89% 7.51% 11.25%

Share of stock increase c osts in total operating costs [%] 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Share of energy costs in total operating costs [%] 2.46% 2.93% 0.00% 0.11% 1.67% 2.93%

Share of raw material cost in total operating cos ts [%] 2.33% 1.85% 0.00% 0.00% 0.14% 1.18%

Share of other manufacturing expens es in total operating cos ts [%] 13.92% 18.49% 0.14% 3.03% 14.75% 33.94%

Share of selling and administration expenses in total operating costs [%] 41.17% 40.19% 8.36% 17.78% 29.66% 45.19%

Share of miscellaneous expenses in total operating costs [%] 4.10% 2.39% 0.08% 0.35% 2.36% 5.39%

Share of depreciation in total operating costs [%] 16.30% 18.06% 7.54% 11.07% 19.12% 25.77%

D I S T R I B U T I O N O F P A R A M E T E R S

(The distribution of financial indicators in the sector)

Average value for the

sector in

Source: ISI, EM IS, Ac cord Fintech


11/41-11-

Telecommunications


General Indicators

Number of companiesPeriod 2004 2005 2006 2007

Value 9 12 15 16

Y/Y inc rease n/a 3 3 1

Net revenue per company [mn INR]

Period 2004 2005 2006 2007

Value [mn INR] 11 879.57 15 210.15 16 637.95 29 057.46

Y/Y dynamics [%] n/a 28.04% 9.39% 74.65%

Total operating cost per company [mn INR]Period 2004 2005 2006 2007

Value [mn INR] 10 198.21 12 670.24 14 690.56 23 686.27

Y/Y dynamics [%] n/a 24.24% 15.95% 61.23%

rise of number of

companies covered

by the database in

2007 comparing to

the value in 2006

rise of Y/Y dynamics

of net revenue per

company in 2007

comparing to the

value in 2006


of total operating

cost per company in

2007 comparing to

the value in 2006

Net revenue & total operating costs per company

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

200

4

200

5

200

6

200

7

[mnINR]

N et revenue per c ompany [mn I NR] T otal operating c os t per c ompany [mn I NR]

Operating profit per company [mn INR]Period 2004 2005 2006 2007

Value [mn INR] 3 417.10 5 082.50 4 910.26 10 644.31

Y/Y dynamics [%] n/a 48.74% -3.39% 116.78%

Operating profit per company [mn INR]

0

2 000

4 000

6 000

8 000

10 000

12 000

200

4

200

5

200

6

200

7

Period

[mnINR]

-20%

0%

20%

40%

60%

80%

100%

120%

140%

Y/Ydynamicsofoperating

profitpercompany[%]

Operating profit per company [mn INR] Y/Y dynamics of operat ing profit per company [%]


of operating profit

per company in

2007 comparing to

the value in 2006


12/41-12-

Telecommunications


Operating profit per profit-making company [mn INR]Period 2004 2005 2006 2007

Value [mn INR] 6 006.27 7 635.66 9 090.14 16 818.55

Y/Y dynamics [%] n/a 27.13% 19.05% 85.02%

Gross profit per company [mn INR]Period 2004 2005 2006 2007

Value [mn INR] 2 068.96 2 691.27 2 093.61 5 706.08

Y/Y dynamics [%] n/a 30.08% -22.21% 172.55%

Operating profit per profit-making company [mn INR]

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

200

4

200

5

200

6

200

7

Period

[mnINR]

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Y/Ydynamicsofoperatingprofit

p

erprofit-makingcompany[%]

O perating profit per profit-making c ompany [mn IN R]

Y/Y dynamics of operating profit per profit-making company [%]

Gross profit per company [mn INR]

0

1 000

2 000

3 000

4 000

5 000

6 000

200

4

200

5

200

6

200

7

Period

[mnINR]

-50%

0%

50%

100%

150%

200%

Y/Ydynam

icsofgrossprofit

percompany[%]

Gross pro fi t per company [mn INR] Y/Y dynamics of g ross pro fi t per company [%]


of operating profit

per profit-making

company in 2007

comparing to the

value in 2006


of gross profit per

company in 2007

comparing to the

value in 2006


13/41-13-

Telecommunications



of gross profit per

profit-making

company in 2007

comparing to the

value in 2006


of net profit per

company in 2007

comparing to the

value in 2006

Gross profit per profit-making company [mn INR]Period 2004 2005 2006 2007

Value [mn INR] 4 490.58 4 813.72 4 804.81 9 560.95

Y/Y dynamics [%] n/a 7.20% -0.19% 98.99%

Net profit per company [mn INR]Period 2004 2005 2006 2007

Value [mn INR] 1 377.55 1 922.34 1 701.51 4 954.04

Y/Y dynamics [%] n/a 39.55% -11.49% 191.16%

Gross profit per profit-making company [mn INR]

0

2 000

4 000

6 000

8 000

10 000

12 000

200

4

200

5

200

6

200

7

Period

[mnINR]

-20%

0%

20%

40%

60%

80%

100%

120%

Y/Ydynamicsofgrossprofit

perprofit-makingcompany

[%]

Gross profit per profit-making company [mn INR] Y/Y dynamics of gross profit per profit-making company [%]

Net profit per company [mn INR]

0

1 000

2 000

3 000

4 000

5 000

6 000

200

4

200

5

200

6

200

7

Period

[mnINR]

-50%

0%

50%

100%

150%

200%

250%

Y/Ydynam

icsofnetprofit

perco

mpany[%]

N et profit per c ompany [mn IN R] Y /Y dynamic s of net profit per company [% ]


14/41-14-

Telecommunications


Net profit per profit-making company [mn INR]

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

200

4

200

5

200

6

200

7

Period

[mnINR]

0%

20%

40%

60%

80%

100%

120%

Y/Ydynamicsofnetprofitper

profit-makingcompany[%]

Net profit per profit-making company [mn INR] Y/Y dynamics of net profit per profit-making company [%]

Cash flow per company [mn INR]

-1 000

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

200

4

200

5

200

6

200

7

Period

[mnINR]

-500%

0%

500%

1000%

1500%

2000%

2500%

Y/Ydynam

icsofcashflow

perco

mpany[%]

C as h flow per c ompany [mn I NR] Y /Y dynamic s of c as h flow per c ompany [% ]


of net profit per

profit-making

company in 2007

comparing to the

value in 2006


of cash flow per

company in 2007

comparing to the

value in 2006

Net profit per profit-making company [mn INR]Period 2004 2005 2006 2007

Value [mn INR] 3 251.35 3 662.04 4 071.36 8 380.75

Y/Y dynamics [%] n/a 12.63% 11.18% 105.85%

Cash flow per company [mn INR]Period 2004 2005 2006 2007

Value [mn INR] 696.50 324.01 -346.39 7 564.11

Y/Y dynamics [%] n/a -53.48% -206.91% 2283.70%


15/41-15-

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Cash flow per profit-making company [mn INR]

-2 000

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

200

4

200

5

200

6

200

7

Period

[mnINR]

-500%

0%

500%

1000%

1500%

2000%

2500%

Y/Ydynamicsofcashflowper

profit-makingcompany[%]

Cash flow per profit-making company [mn INR] Y/Y dynamics of cash flow per profit-making company [%]


of cash flow per

profit-making

company in 2007

comparing to the

value in 2006

Cash flow per profit-making company [mn INR]Period 2004 2005 2006 2007

Value [mn INR] 1 400.25 511.69 -669.25 12 076.25

Y/Y dynamics [%] n/a -63.46% -230.79% 1904.44%

Profitability Ratios

Share of profit-making companies [%]Period 2004 2005 2006 2007

Value [%] 55.56% 66.67% 53.33% 62.50%Y/Y inc rease [%] n/a 11.11% -13.33% 9.17%

rise of share of

profit-making

companies in 2007

comparing to the

value in 2006

Share of profit-making companies [%]

0%

10%

20%

30%

40%

50%

60%

70%

200

4

200

5

200

6

200

7

Period

Share of profit-making companies [%]


16/41


17/41-17-

Telecommunications


Return on Assets [%]Period 2004 2005 2006 2007

Value [%] 6.80% 7.96% 6.68% 9.59%

Y/Y inc rease [%] n/a 1.16% -1.28% 2.90%

Effective tax rate [%]Period 2004 2005 2006 2007

Value [%] 33.42% 28.57% 18.73% 13.18%

Y/Y inc rease [%] n/a -4.85% -9.84% -5.55%

Equity dividend ratio [%]Period 2004 2005 2006 2007

Value [%] 25.33% 15.51% 11.79% 5.85%

Y/Y inc rease [%] n/a -9.81% -3.72% -5.94%

rise of return on

assets in 2007

comparing to the

value in 2006

fall of effective tax

rate in 2007

comparing to the

value in 2006

fall of equitydividend ratio in

2007 comparing to

the value in 2006

Return on Assets [%]

0%

2%

4%

6%

8%

10%

12%

200

4

200

5

200

6

200

7

Period

Effective tax rate [%]

0%

5%

10%

15%

20%

25%

30%

35%

40%

200

4

200

5

200

6

200

7

Period

Equity dividend ratio [%]

0%

5%

10%

15%

20%

25%

30%

200

4

200

5

200

6

200

7

Period


18/41-18-

Telecommunications


Liquidity Ratios

Current ratio [%]Period 2004 2005 2006 2007

Value [%] 245.57% 175.41% 149.10% 177.45%

Y/Y inc rease [%] n/a -70.15% -26.31% 28.34%

Current ratio [%]

0%

50%

100%

150%

200%

250%

300%

200

4

200

5

200

6

200

7

Period

Quick ratio [%]Period 2004 2005 2006 2007

Value [%] 243.65% 173.26% 147.52% 175.64%

Y/Y inc rease [%] n/a -70.39% -25.74% 28.12%

Quick ratio [%]

0%

50%

100%

150%

200%

250%

300%

200

4

200

5

200

6

200

7

Period

Super quick ratio [%]Period 2004 2005 2006 2007

Value [%] 52.60% 36.87% 21.28% 19.38%

Y/Y inc rease [%] n/a -15.72% -15.60% -1.90%

Super quick ratio [%]

0%

10%

20%

30%

40%

50%

60%

200

4

200

5

200

6

200

7

Period

rise of current ratio

in 2007 comparing

to the value in 2006

rise of quick ratio in

2007 comparing to

the value in 2006

fall of super quickratio in 2007

comparing to the

value in 2006


19/41-19-

Telecommunications


Sundry debtors to sundry creditors ratio [%]Period 2004 2005 2006 2007

Value [%] 152.62% 64.84% 46.95% 33.38%

Y/Y inc rease [%] n/a -87.79% -17.89% -13.57%

Sundry debtors to sundry creditors ratio [%]

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200

4

200

5

200

6

200

7

Period

Financial Cycles

fall of sundry

debtors to sundry

creditors ratio in

2007 comparing to

the value in 2006

Days of coverage for Cash & Equivalent [days]Period 2004 2005 2006 2007

Value [days] -339 -285 -232 -240

Y/Y inc rease [days] n/a 54 53 -7

Days of coverage for Cash & Equivalent [days]

-400

-350

-300

-250

-200

-150

-100

-5 0

0

200

4

200

5

200

6

200

7

Period

Days of coverage for receivables [days]

Period 2004 2005 2006 2007Value [days] 81 66 54 38

Y/Y inc rease [days] n/a -15 -12 -16

Days of coverage for receivables [days]

0

10

20

30

40

50

60

70

80

90

200

4

200

5

200

6

200

7

Period

fall of days of

coverage for cash &

equivalent in 2007

comparing to the

value in 2006

fall of days ofcoverage for

receivables in 2007

comparing to the

value in 2006


20/41-20-

Telecommunications


Days of coverage for inventories [days]Period 2004 2005 2006 2007

Value [days] 5 5 3 4

Y/Y inc rease [days] n/a 1 -2 0

Days of coverage for inventories [days]

0

1

2

3

4

5

6

200

4

200

5

200

6

200

7

Period

Days of coverage for short term liabilities [days]Period 2004 2005 2006 2007

Value [days] 425 356 290 281

Y/Y inc rease [days] n/a -69 -66 -9

Days of coverage for short term liabilities [days]

0

50

100

150

200

250

300

350

400

450

200

4

200

5

200

6

200

7

Period

rise of days of

coverage for

inventories in 2007

comparing to the

value in 2006

fall of days of

coverage for short

term liabilities in

2007 comparing to

the value in 2006

Financial Leverage Ratios

rise of debt to equityratio in 2007

comparing to the

value in 2006

Debt to Equity ratio [%]

Period 2004 2005 2006 2007Value [%] 13.91% 35.45% 47.88% 54.64%

Y/Y inc rease [%] n/a 21.54% 12.43% 6.76%

Debt to Equity ratio [%]

0%

10%

20%

30%

40%

50%

60%

200

4

200

5

200

6

200

7

Period


21/41-21-

Telecommunications


Equity to total assets ratio [%]Period 2004 2005 2006 2007

Value [%] 87.79% 73.83% 67.62% 64.67%

Y/Y inc rease [%] n/a -13.96% -6.20% -2.95%

Share of loans from banks in total debt [%]Period 2004 2005 2006 2007

Value [%] 100.00% 99.96% 100.00% 100.00%

Y/Y inc rease [%] n/a -0.04% 0.04% 0.00%

Secured to unsecured loans ratio [%]Period 2004 2005 2006 2007

Value [%] 516.84% 321.40% 165.02% 84.22%Y/Y inc rease [%] n/a -195.44% -156.37% -80.80%

Equity to total assets ratio [%]

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

200

4

200

5

200

6

200

7

Period

Share of loans from banks in total debt [%]

100%

100%

100%

100%

100%

100%

100%

100%

100%

200

4

200

5

200

6

200

7

Period

Secured to unsecured loans ratio [%]

0%

100%

200%

300%

400%

500%

600%

200

4

200

5

200

6

200

7

Period

fall of equity to total

assets ratio in 2007

comparing to the

value in 2006

stabilisation of share

of loans from banks

in total debt in 2007

comparing to the

value in 2006

fall of secured to

unsecured loansratio in 2007

comparing to the

value in 2006


22/41-22-

Telecommunications


rise of operating

profit coverage in

2007 comparing to

the value in 2006

Operating profit coverage [years]

0.0

0 .2

0 .4

0 .6

0 .8

1 .0

1 .2

1 .4

1 .6

1 .8

2 .0

200

4

200

5

200

6

200

7

Period

Operating profit coverage [years]Period 2004 2005 2006 2007

Value [year] 0.72 1.24 1.68 1.72

Y/Y inc rease [year] n/a 0.52 0.44 0.04

Production Factors

Labour intensity of production [%]

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

200

4

200

5

200

6

200

7

Energy intensity of production [%]

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

200

4

200

5

200

6

200

7

Labour intensity of production [%]Period 2004 2005 2006 2007

Value [%] 17.05% 13.99% 12.57% 9.33%

Y/Y inc rease [%] n/a -17.97% -10.15% -25.79%

Energy intensity of production [%]

Period 2004 2005 2006 2007

Value [%] 1.79% 1.99% 2.17% 2.39%

Y/Y inc rease [%] n/a 11.21% 9.27% 9.85%

fall of labour

intensity of

production in 2007

comparing to the

value in 2006

rise of energyintensity of

production in 2007

comparing to the

value in 2006


23/41-23-

Telecommunications


fall of material

intensity of

production in 2007

comparing to the

value in 2006

fall of total assets

turover in 2007

comparing to the

value in 2006

fall of net fixed

assets productivity

in 2007 comparing

to the value in 2006

Material intensity of production [%]Period 2004 2005 2006 2007

Value [%] 0.23% 0.58% 2.06% 1.51%

Y/Y inc rease [%] n/a 0.35% 1.48% -0.55%

Material intensity of production [%]

0%

1%

1%

2%

2%

3%

200

4

200

5

200

6

200

7

Total assets turover [%]Period 2004 2005 2006 2007

Value [%] 58.65% 62.99% 65.34% 56.22%

Y/Y inc rease [%] n/a 7.39% 3.74% -13.96%

Net fixed assets productivity [%]Period 2004 2005 2006 2007

Value [%] 101.15% 84.46% 84.26% 80.43%Y/Y inc rease [%] n/a -16.69% -0.20% -3.83%

Total assets turover [%]

50%

52%

54%

56%

58%

60%

62%

64%

66%

68%

200

4

200

5

200

6

200

7

Net fixed assets productivity [%]

0%

20%

40%

60%

80%

100%

120%

200

4

200

5

200

6

200

7


24/41


25/41-25-

Telecommunications


rise of investment

outlays to

depretiation ratio in

2007 comparing to

the value in 2006

rise of investment

outlays index in

2007 comparing to

the value in 2006

Investment outlays to depretiation ratio [%]Period 2004 2005 2006 2007

Value [%] 263.62% 110.18% 114.85% 140.21%

Y/Y inc rease [%] n/a -58.20% 4.23% 22.08%

Investment outlays index [%]Period 2004 2005 2006 2007

Value [%] 15.28% 1.12% 1.80% 4.76%

Y/Y inc rease [%] n/a -14.16% 0.68% 2.96%

Investments structure [%]

Q uoted Equity [%] 0.11% 1.27% 0.02%

Unquoted Equity [%] 53.96% 57.55% 73.42%

O ther Investments [%] 45.93% 41.17% 26.56%

Period 2005 2006 2007

Investment outlays to depretiation ratio [%]

0%

50%

100%

150%

200%

250%

300%

200

4

200

5

200

6

200

7

Investment outlays index [%]

-2 %

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

200

4

200

5

200

6

200

7


26/41-26-

Telecommunications


Investments structure [%]

0%

20 %

40 %

60 %

80 %

100%

2005 2006 2007

Period

Quoted Equity [%] Unquoted Equity [%] Other Investments [%]

Costs

Share of labor costs in total operating costs [%]Period 2004 2005 2006 2007

Value [%] 19.86% 16.79% 14.23% 11.44%

Y/Y inc rease [%] n/a -3.07% -2.56% -2.79%

Share of labor costs in total operating costs [%]

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

200

4

200

5

200

6

200

7

Period

fall of share of labor

costs in total

operating costs in

2007 comparing to

the value in 2006

Investments structure [%] (2007)

0.0%

73.4%

26.6%

Q uoted Equity [%] Unquoted Equity [%] O ther Investments [%]


27/41-27-

Telecommunications


stabilisation of share

of stock increase

costs in total

operating costs in

2007 comparing to

the value in 2006

rise of share of

energy costs in total

operating costs in

2007 comparing to

the value in 2006

fall of share of raw

material cost in total

operating costs in

2007 comparing to

the value in 2006

Period 2004 2005 2006 2007

Value [%] 0.00% 0.03% 0.00% 0.00%

Y/Y inc rease [%] n/a 0.03% -0.03% 0.00%

Share of stock increase costs in total operating costs [%]

Share of stock increase costs in total operating costs [%]

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

200

4

200

5

200

6

200

7

Period

Period 2004 2005 2006 2007

Value [%] 2.08% 2.39% 2.46% 2.93%

Y/Y inc rease [%] n/a 0.31% 0.07% 0.47%

Share of energy costs in total operating costs [%]

Share of energy costs in total operating costs [%]

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

200

4

200

5

200

6

200

7

Period

Period 2004 2005 2006 2007

Value [%] 0.27% 0.69% 2.33% 1.85%

Y/Y inc rease [%] n/a 0.43% 1.64% -0.48%

Share of raw material cost in total operating costs [%]

Share of raw material cost in total operating costs [%]

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

200

4

200

5

200

6

200

7

Period


28/41-28-

Telecommunications


rise of share of

other manufacturing

expenses in total

operating costs in

2007 comparing to

the value in 2006

fall of share of

selling and

administration

expenses in total

operating costs in

2007 comparing to

the value in 2006

fall of share ofmiscellaneous

expenses in total

operating costs in

2007 comparing to

the value in 2006

Period 2004 2005 2006 2007

Value [%] 19.81% 16.33% 13.92% 18.49%

Y/Y inc rease [%] n/a -3.48% -2.42% 4.57%

Share of other manufacturing expenses in total operating costs [%]

Period 2004 2005 2006 2007

Value [%] 40.59% 41.30% 41.17% 40.19%

Y/Y inc rease [%] n/a 0.71% -0.13% -0.98%

Share of selling and administration expenses in total operating costs [%]

Period 2004 2005 2006 2007

Value [%] 3.03% 4.59% 4.10% 2.39%

Y/Y inc rease [%] n/a 1.56% -0.50% -1.71%

Share of miscellaneous expenses in total operating costs [%]

Share of other manufacturing expenses in total operating costs [%]

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

200

4

200

5

200

6

200

7

Period

Share of selling and administration expenses in total operating

costs [%]

39.6%

39.8%

40.0%

40.2%

40.4%

40.6%

40.8%

41.0%

41.2%

41.4%

200

4

200

5

200

6

200

7

Period

Share of miscellaneous expenses in total operating costs [%]

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

200

4

200

5

200

6

200

7

Period


29/41


30/41-30-

Telecommunications

Structure of Fixed Assets

Costs structure [%] (2007)

0.0%1.9%

18.5%

11.4%

40.2%

2.4%

4.6%

18.1%

2.9%

Increase in Stock [%] Raw Materials C os ts [%]

P ower G eneration & Dis tribution C os t [% ] O ther M anufac turing E xpens es [% ]

Employee C os t [%] Selling and A dministration Expenses [%]

M iscellaneous Expenses [%] Depreciation [%]

O ther operational costs [%]

Fixed assets structure [%]

Goodwill [%] 0.28% 0.24% 0.13%

Freehold Land [%] 0.29% 0.29% 0.51%

Land Improvements [%] 0.02% 0.26% 0.23%

Buildings [%] 3.37% 3.05% 0.90%

P lant& Machinery [%] 31.51% 56.38% 56.61%

Furniture & Fixtures & O ffice A ppliances [%] 3.06% 1.24% 0.59%

V ehic les [%] 0.12% 0.11% 0.08%

Railway T racks & Sidings [%] 0.00% 0.00% 0.00%

A ircrafts & Helicopters [%] 0.00% 0.00% 0.00%

Leasehold Land [%] 0.64% 0.54% 0.06%

C omputer Software [%] 1.17% 4.69% 2.21%

Technical know-how [%] 0.00% 0.00% 0.00%

O ther Fixed A ssets [%] 59.54% 33.19% 38.67%

Period 2005 2006 2007

Fixed assets structure [%]

0%

20 %

40 %

60 %

80 %

100%

2005 2006 2007

PeriodGoodwill [%] Freehold Land [%]Land Improvements [%] Buildings [%]Plant& Machinery [%] Furniture & Fixtures & Office Appliances [%]Vehicles [%] Railway Tracks & Sidings [%]Aircrafts & Helicopters [%] Leasehold Land [%]Computer Software [%] Technical know-how [%]Other Fixed Assets [%]

plant& machinery

dominate in the

fixed assets

structure



31/41-31-

Telecommunications

Fixed assets structure [%] (2007)

0.1%0.5%0.9%

56.6%

0.6%0.1%0.1%2.2%

38.7%

0.0%

0.2%

0.0%0.0%

Goodwill [%] Freehold Land [%]Land Improvements [%] Buildings [%]P lant& Machinery [%] Furniture & Fixtures & O ffice A ppliances [%]V ehic les [%] Railway Tracks & Sidings [%]A irc rafts & Helicopters [%] Leasehold Land [%]C omputer Software [%] Technical know-how [%]O ther Fixed Ass ets [%]

Structure of Current Assets

Current assets structure [%]

Inventories [%] 1.23% 1.06% 1.02%

Sundry Debtors [%] 15.86% 17.46% 10.82%

C ash & Bank [%] 21.02% 14.27% 10.92%

Loans and A dvances [%] 61.89% 67.21% 77.24%

O ther current assets [%] 0.00% 0.00% 0.00%

Period 2005 2006 2007loans and advances

dominate in the

current assets

structure

Current assets structure [%]

0%

20 %

40 %

60 %

80 %

100%

2005 2006 2007

Period

Invento rie s [%] Sundry Debto rs [%] Cash & Bank [%] Loans and Advances [%] Other current a ssets [%]



32/41-32-

Telecommunications

Current assets structure [%] (2007)

1.0%10.8%

77.2%

0.0%

10.9%

Inventori es [%] Sund ry Debt ors [%] Cash & Bank [%] Loans and Advances [%] Ot he r c urrent as s ets [%]

Structure of Current LiabilitiesShort-term liabilities structure [%]

Sundry C reditors [%] 28 .47% 39.68% 40.52%

Unc laimed Dividend [%] 0 .12% 0.00% 0.00%

Interes t A c c rued But Not Due [%] 0.32% 0.46% 0.58%

P rovis ions [%] 33 .64% 28.42% 29.56%

O ther Short-term Liabilities [%] 37.45% 31.43% 29.35%

Period 2005 2006 2007 sundry creditorsdominate in the

short-term liabilities

structure

Short-term liabilities structure [%]

0%

20 %

40 %

60 %

80 %

100%

2005 2006 2007

Period

Sundry Creditors [%] Unclaimed Dividend [%] Interest Accrued But Not Due [%]

Provisions [%] Other Short-term Liabilities [%]



33/41-33-

Telecommunications

Short-term liabilities structure [%] (2007)

40.5%

0.0%29.6%

29.3%

0.6%

Sundry C reditors [%] Unc laimed Dividend [%] Interes t A ccrued But Not Due [%]

P rovis ions [%] O ther Short-term Liabilities [%]



34/41

-34-

Telecommunications

DuPontsPyramid

Equity

per

comapny

2007

33422

2006

17218

2005

17827

2004

17780

Leverage

2007

1.5

46

Assets

per

company

2007

51683

2006

1.4

79

2006

25462

2005

1.3

55

2005

24147

ROE

2007

14.8

%

2004

1.1

39

TAT

2007

0.5

62

2004

20254

2006

9.9

%

2006

0.6

53

2005

10.8

%

2005

0.63

0

2004

7.7

%

ROA

2007

9.6

%

2004

0.5

87

Net

revenue

per

company

2007

29057

2006

6.7

%

2006

16638

2005

8.0

%

2005

15210

2004

6.8

%

RO

S

20

07

17.0%

2004

118

80

2006

10.2

%

2005

12.6

%

2004

11.6

%

Net

profit

per

company

2007

4954

2006

1

702

2005

1922

2004

1378

(*)Netprofitpercompanyornetrevenuepercompanyfrom

agivenyear

(**)Valueofassetspercompanyorequitypercompanyfromt

heendof

year

Equity

percompany(**)

[mnINR]

leverage=Assetsper

company/Equityper

company

Assetspercompany(**)

[mnINR]

Returnonnetsales

ROS=Netprofitper

company/Netrevenueper

company

Netprofitpercompany(*)

[mnINR]

Returnon

equity

ROE=ROA*leverage

Assetstur

nover

TAT=Netrev

enueper

company/As

setsper

compa

ny

Returnonassets

ROA=ROS*TAT

Netrevenuepercompany(*)

[mnINR]

*

*

/

/

/


35/41


36/41


37/41

-37-

Telecommunications

MergersandA

cquisitions

Takingover

company

Turkcell

SwanTelecom

Telenor

IdeaCellularLtd

AFKSistema

SintexIndustriesLtd

OrangeBusiness

Services

BhartiGroup

Vodafone

Microsoft

Takenover

company

DatacomSolutions

MobileLicencesof

AllianzInfratech

UnitechWireless

Spice

CommunicationsL

td.

Shyam

TelelinkLt

d

Digvijay

Communicationsa

nd

NetworksPvtLtd

EnterpriseNetwork

Servicesand

ManagedServices

BusinessofGTL

Ltd

BhartiAirtelLtd.

HutchisonEssar

BhartiAirtelLtd.

Ann

ouncementdate

(Statusofadeal)

Oct-31,2008

(announced)

Sep-25,2008

(announced)

Sep-10,2008

(completed)

Jun-26,2008

(completed)

Jun-25,2008

(completed)

Jun-18,2008

(completed)

Jul-02,2007

(completed)

May-09,2007

(completed)

Feb-11,2007

(completed)

Nov-13,2006

(completed)

Buyer'sName

Vodafone

BhartiGroup

Telenor

Turkcell

QuipoTelecom

InfrastructureLtd

IdeaCellularLtd

AFKSistema

OrangeBusiness

Services

SwanTelecom

SintexIndustriesLtd

Seller'sName

HutchisonTelecom

Vodafone

GTLLtd

AllianzInfratech

TargetC

ompany

HutchisonE

ssar

BhartiAirte

lLtd.

UnitechWir

eless

DatacomSolutions

WirelessTa

taTelecom

Infrastructu

re

SpiceComm

unications

Ltd.

ShyamTele

linkLtd

EnterpriseNetwork

Servicesan

dManaged

ServicesBu

sinessofG

TLLtd

MobileLicencesof

AllianzInfratech

Digvijay

Communica

tionsand

NetworksPvtLtd

Announcementdate

Feb-11,2007

May-09,2007

Sep-10,2008

Oct-31,2008

Sep-09,2008

Jun-26,2008

Jun-25,2008

Jul-02,2007

Sep-25,2008

Jun-18,2008

Valueofadeal

[mnUSD]

(Statusofadeal)

10900.00

(completed)

1467.68

(completed)

1238.88

(completed)

1122.01

(announced)

776.66

(announced)

627.16

(completed)

348.00

(completed)

49.19

(completed)

43.28

(announced)

12.57

(completed)

Thestatusofpresenteddealsmaychangeorsomeofdealsmaydropoutfromt

hesubsequentreports

(e.g.

duetocancelationsofthem)

Las

tmergers

The

lastmergersrefertothetransactions

affectinganalysedsector.

The

datasourceisISIDealwatch

Thelargestbuy/

selloffers

Thelargestbuy/selloffersrefertothetransactionsaffectinganalysedsector.ThedatasourceisISIDealwatch


38/41-38-

Telecommunications

Key Concepts

Definitions of Indices

Number of companies Number of reporting companies V

Net revenue per company [mn INR]Net sales

-----------------------------

Number of companies

V

---

V

Total operating cost per company [mn INR]Total operating costs

-----------------------------

Number of companies

V

---

V

Operating profit per company [mn INR]EBITDA

-----------------------------

Number of companies

V

---

V

Operating profit per profit-making company [mn INR]EBITDA

---------------------------------------------

Number of profit-making companies

V

---

V

Gross profit per company [mn INR]Profit before tax

-----------------------------

Number of companies

V

---

V

Gross profit per profit-making company [mn INR]Profit before tax

---------------------------------------------


V

---

V

Net profit per company [mn INR]

Profit after tax

----------------------------Number of companies

V

---V

Net profit per profit-making company [mn INR]Profit after tax

---------------------------------------------


V

---

V

Cash flow per company [mn INR]Net cash flow

---------------------------

Number of companies

V

---

V

Cash flow per profit-making company [mn INR]Net cash flow

---------------------------------------------


V

---

V

Operating Sales Margin [%]EBITDA

--------------

Net sales

V

---

V

Net Sales Margin [%]Profit after tax

----------------------

Net sales

V

---

V

Return on Equity [%]Profit after tax

--------------------------

Shareholders' funds

V

---

V

Return on Assets [%]Profit after tax

-----------------------

Total assets

V

---

V

Effective tax rate [%]Profit befor tax - Profit after tax

-------------------------------------------

Profit befor tax

V

---

V

Equity dividend ratio [%]Equity dividend for ordinary and prefered shares

------------------------------------------------------

Profit after tax

V

---

V

Share of profit-making companies [%]Number of profit making companies

---------------------------------------------

Number of companies

V

-----

V

Current ratio [%]Current assets

------------------------

Short-term liabilities

V

---

V

Quick ratio [%]Current assets - Inventory

-------------------------------


V

---

V

Super quick ratio [%]Cash & Bank

-------------------------


V

---

V

Sundry debtors to sundry c reditors ratio [%]Sundry debtors

------------------------

Sundry creditors

V

---

V

Days of coverage for Cash & Equivalent [days](Receivables + Inventories - Short term liabilities) * 360

------------------------------------------------------------------

Net sales

V

---

V

Days of coverage for receivables [days]Receivables * 360

-------------------------

Net sales

V

---

V

Days of coverage for inventories [days]Inventories * 360

----------------------------

Net sales

V---

V

Days of coverage for short term liabilities [days]Short term liabilities * 360

-----------------------------------

Net sales

V

---

V

V - Value for a given year

Financ

ialcycles

Definition of index

Generalindicators

Profitabilityratio

s

Liquidityratios


39/41-39-

Telecommunications

Debt to Equity ratio [%]Total debt

-----------------------

Shareholders' funds

V

---

V

Equity to total assets ratio [%]Shareholders' funds

------------------------

Total assets

V

---

V

Share of loans from banks in total debt [%]Secured and unsecured loans from banks

-------------------------------------------------

Total debt

V

---

V

Secured to unsecured loans ratio [%]

Secured loans

-----------------------Unsecured loans

V

---V

Operating profit coverage [years]Total debt

---------------

EBITDA

V

-----

V

Labour intensity of production [%]Cost of employees

-----------------------

Net sales

V

---

V

Energy intensity of production [%]Power generation and distribution costs

--------------------------------------------

Net sales

V

---

V

Material intensity of production [%]Raw material costs

--------------------------------------------

Net sales

V

---

V

Total assets turover [%]Net sales

------------------

Total assets

V

---

V

Net fixed assets productivity [%]Net sales

------------------

Net block

V-----

V

Investment outlays per company [mn INR]Investments

--------------------------

Number of companies

V

---

V

Share of quoted equity investments [%]Quoted equity investments

-----------------------------------

Investments

V

---

V

Investment outlays as share in net revenue [%]Investments

----------------------

Net sales

V

---

V

Investment outlays to depretiation ratio [%]Investments

----------------------

Depreciation

V

---

V

Investment outlays index [%]Investments - Depretiation

-----------------------------------

Net block

V

---

V

Share of labor costs in total operating costs [%]Cost of employees

-------------------------

Total operating costs

V

---

V

Share of stock increase costs in total operating costs [%]Stock increase costs

---------------------------


V

---

V

Share of energy costs in total operating costs [%]Power generation and distribution costs

------------------------------------------------


V

---

V

Share of raw material cost in total operating costs [%]Raw material costs

------------------------------------------------


V

---

V

Share of other manufacturing expenses in total operating costs

[%]

Other manufacturing expenses

-------------------------------------


V

---

V

Share of selling and administration expenses in tot al operatingcosts [%]

Selling and administration expenses------------------------------------------


V---

V

Share of miscellaneous expenses in total operating costs [%]Miscellaneous expenses

-----------------------------


V

---

V

Share of depreciation in total operating costs [%]Depreciation

-------------------------


V

---

V

Definition of index

Financialleverageratios

Productionfactors

V - Value for a given year

Investmentoutlays

Costs


40/41


41/41

Telecommunications

Distribut ions of Financials present crit ical values of the distribut ions of various financials in the

analyzed sector. The presented critical values represent quartiles of the empirical distribution i.e. they

are calculated for 20%, 40%, 60% and 80% of the total populat ion of companies from the given

sector in a given year. These distributions make possible easy comparison of an analyzed company to

other companies in the sector, looking at it from various financial angles.

Market multipliers (P/E, P/BV) - are widely used for the valuation purposes. Price to Earnings (P/E) is

calculated by dividing closury company's capitalisation in the year after analysed year by the earnings

(net profits) from the last year. For the calculation of Price to Book Value (P/BV) the ending year book

value is taken.

DuPont Pyramid is a very useful tool to decompose Return on Equity (ROA) into various rat ios like:

Return on Assets (ROA), Return on Sales (ROS) and Total Assets Turnover (TAT). It enables easy

drawing of conclusions about the efficiency of an analyzed company in various areas of its activity.

- effective tax rate.

- required (by investors) rate of return from investments in the shares of an analysed company; i.e.

the expected rate of return when the market stays in equilibrium under CAPM assumptions,

- rate of return of a stock market index (BSESN, NSEI),

- expected rate of return of the stock market index (BSESN, NSEI),

- risk-free rate of return (Price of 364-days Treasury Bills)

- debt to equity ratio,

Liquidity (of public company) - ranked accordingly to the averaged daily shares' turnover from the last

year

Betas and Required Rates of Return - are calculated for listed companies under CAPM model.

- rate of return from investments in shares of an analysed company,

- Leveraged Beta,

- Unleveraged Beta,

- Required Rate of Return, where:

( )( )M

MiL

RVar

RRCov ,=

( )ED

L

U

+

=

11

iR

iR

MR

MR

fR

E

D

)fMfi RRRR +=

telecommunication[1]

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