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Sunday, April 30, 2017

Telecom Story :

 

Just like it is hard to imagine a day without electricity, it is hard to imagine a day without internet. And the company which provides these internet servcies are Telecom.

The credit for today’s ease of business should go to Telecom industry. They made the impossible possible. Today, with smart phone in hand, the indian public not only communicates but does browsing, whatsapp, face book – just like that. Infact there is generation of people who didnot see a fixed phone line – but jumped to mobile telephone. They bypassed evolutionary tree in the communication industry.

Though telecom is used by almost everyone, the service providers are in deep red. Thanks to the huge infrastructure cost, intense competition, high cost of bidding and series of scams.

Among telecom companies, Bharthi airtel is a premier telecom company. Following are few interesting facts about Bharthi:

  • Bharthi is India’s largest telecom provider
  • Bharthi operates in India, Srilanka and 15 African countries – accounting for 24% of world’s population
  • In India, Bharthi coves 95% of India’s land mass.
  • Provides Fixed line, Wireless telephony, digital tv and telecom solutions to enterpes.
  • Provider of Telecom infrastructure :
    • Bharthi Infratel
    • 42% stake in Indus towers – jv with Idea and Vodafone
    • Aggregate portfolio of 90255 towers including 3897 own towers
  • Challenges / concerns:
    • Net debt : US$ 12.60 billionm
    • Proposed merger of Vodafone-idea dwould displace Bharthi from No:1 position
    • Price war by Reliance JIO – to keep rocking the boat

As you would see, inspite of all strengths – Telecom industry continues to bleed. With telecom becoming inevitable / essential part of life, logically they should make better profits. With monthly rental / prepaid top up’s – companies like Bharthi shoudl do well. But the growth might be very gradual, making it a lousy company for investors.

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