The company is operating in India, Bangladesh, Sir Lankan and 17 countries in Africa. It has more than 270 million subscribes across the globe. The company has four business segments namely Mobile Services, Delimited Services, Enterprise Services and Digital TV Services. Birth Irritate is also involved in the tower infrastructure business via its subsidiary Birth Infertile. The company provides services to all 23 telecoms circles of India. It has been the leader in market share in India in terms of subscriber base (22%) as well as on turnover basis (30%).
Africa business: – Birth Irritate acquired Kuwait based Cain Telecoms Africa business and gained presence in 17 countries. The company offers voice and data services in these countries. Passive understructure business. – The company in involved in the telecoms tower infrastructure business via its subsidiary Birth Infertile. Birth Infertile has 42% stake in Indus Towers (42% stake with Avoidance and 16% with Idea Cellular) which is one of the largest passive infrastructure companies in the world.
Page | 2 Share this Report on 10 YEAR X-RAY Analysis of Birth Irritate: Birth’s Consolidated 10 YEAR X-RAY has shown good performance. Birth has been a market leader and its increasing subscriber base has helped the company grow its Sales with a CARR of more than ?42% over the last 5 years. However, the PEPS performance of the company has not been good. A declining trend is observed in PEPS after FYI. PEPS performance: – Birth Irritate clocked excellent PEPS growth rates till FYI. However, the next three years have been bad for the company.
The company had to bear high interest burden due to the debt raised for acquiring Cain Telecoms Africa business and for the 36 roll-out in India. At the same time, the performance in Africa has not been good leading to lower profits. Besides, the hyper competitive nature of the Indian telecoms industry has led to continuous fall in tariffs leading to margin pressures. However, off-late Birth Irritate along with other incumbent players has started concentrating on profitability and has raised tariffs. Margins performance: – Similar trend is observed in the margins of the company.
The company’s margins were good and improved till FYI. After that, there was pressure on the margins. On the whole, low tariffs but high operating costs, high interest burden, high depreciation and amortization and the delayed turnaround of the African operations led to a fall in margins and PEPS of the company. High debt: – A big spike is seen in the company’s debt numbers in FYI 1 and IFFY. The company had to raise debt in order o acquire Cain Telecoms Africa business and for the 36 roll-out in India. This led to very high Debt to Equity and Debt to Net Profit ratios in the years after FYI.
Value creation: -Like in other parameters, the company did well in terms of value creation till FYI. In the period from IFFY to FYI, the company was able to generate higher returns on the employed capital when compared to the cost incurred on this capital. After FYI, there was a huge fall in ROCK due to high debt and low profits. The post FYI returns of capital employed were lower than the costs incurred on this capital leading to value destruction. On the whole, the 10 YEAR X-RAY performance of the company appears to be ORANGE (Somewhat Good).
Page | 3 Share this Report on Established advantages to drive growth: – Birth Irritate has few advantages that will help it drive its growth in future. – Largest player in the telecoms industry – A market leadership position in a growing telecoms market – A very strong brand which has helped it maintain customer loyalty – Minute-Factory model: This model allows Birth Irritate to minimize its costs substantially. In this model, the company partners with local players for its basic infrastructural needs and hence converts fixed cost to arable costs.
The beauty of the Minute-Factory is that it can add small capacities fairly rapidly and economically which is not possible in subscriber-led model. Global Acquisitions: -The Indian telecoms industry is hyper competitive in nature. To fight the intense competition, Birth Irritate has sought overseas businesses in the South Asian and African market. It has acquired Kuwait-based Cain Telecoms African assets and 70% stake in Bangladesh Ward Telecoms. The Company has used its successful ‘minute factory model’ (lowest-cost/min) in these territories.
Birth Irritate has about 271. 2 million subscribers worldwide – 199. Million in India, 6. 2 million in Bangladesh, 1. 7 million in Sir Lankan and 63. 7 million in Africa as of the end of March 2013. Telecoms penetration is low in Africa and hence, huge opportunities are available for Birth Irritate. So far, turning around the African operations has been a challenging task for the company in the past three years, since acquisition. This is due to the high competition, currency movements and political unrest in some countries and regions.
However, the African operations offer good opportunities and we can expect that these acquisitions will enhance the company’s global presence in elector space and will help it to increase its profitability in the coming years. Data business expected to be a future growth driver: – The data business is expected to be the next phase of growth for telecoms operators. Data services usage and penetration in India is very low when compared to other countries. However, the data usage and penetration has been on a rising trend.
The trend is expected to continue with availability of affordable smart phones and tablets, popularity of applications, coupled with the expansion of 36 networks and introduction of G networks. Birth Irritate got 36 licenses in 13 high revenue generating telecoms circles. It provides 36 services is other circles also as the company has entered in to contract with Idea and Avoidance. Under this contract, the 3 operators can use each other’s networks in circles where they do not have a license. Birth Irritate has also launched G services in a few places in India.
The data business could help Birth Irritate protect its market share, providing some respite in the current environment of intense competition in the voice market. Page | 4 Share this Report on Competitive position of the company: – India is the fastest-growing and the most nominative mobile market, with telecoms operators locked in a margin-destroying price war. India currently NAS amongst the world ‘s lowest telecoms diarists hyper competitive market, Birth Irritate is ahead of its peers in terms of turnover and subscriber base.
The company also beats other players in critical parameters such as ARPA and MOM. As mentioned earlier, the company is a market leader both in terms of subscriber base and revenue. Although the company has maintained its leadership position, it has been losing market share to other players like Idea and Avoidance, which is a cause of concern. Cancellation of 26 Licenses: – With the cancellation of 122 26 licenses issued in 2008 by Supreme Court, it was expected that there would be a substantial decline in competitive pressure in telecoms space and consolidation will take place.
While the big players have managed to gain market share from smaller players due to the cancellation of licenses, competitive intensity is still prevalent in the industry. Despite the fact that the number of major telecoms players has almost halved after the Supreme Court ruling, significant competition still prevails in the domestic market as promotions and discount packs for customers intention. The sector is expected to remain competitive. But the telecoms players are increasingly concentrating on profitability and on quality of customers.
Hence, tariffs and subsequently Arabs are expected to go up in the future. Telecoms industry: – Expanding telecoms networks to rural India, falling tariffs and continued reduction in handset costs, have been the key drivers for the growth of the telecoms industry. In the long run, the Indian telecoms market offers an attractive growth opportunity. The urban markets are quite dense for the voice services. However, rural tell-density is lose to ?40% and offers attractive opportunities for voice services. The urban markets offer attractive opportunities for the data and VASS services.
At the end, we can say that, the telecoms sector will continue to demonstrate attractive long term opportunities for its largest operator Birth Irritate. Concerns: Africa operations concerns: – The African operations have been a drag on the company’s overall performance. The performance has been below par because of high competition, currency movements, political unrests, regulatory issues, etc. The company could not turnaround the African operations in the time it expected to do so. The performance in Africa has a bearing on the company’s value creation potential in the future.
Falling market share: – Birth Irritate is a market leader both in terms of subscriber base and market share. Although the company has maintained its leadership position, it has been losing market share to other players like Idea and Avoidance, which is a cause of concern. The Indian telecoms industry offers good opportunities. Birth Irritate being the largest player in India is expected to do well and take advantage of the available opportunities. The rural market and the data services market are expected to be the next growth drivers. Globally, the company needs it Africa business to do well.