global market research report : telecom equipment market in india 2014

Telecom Equipment Market – India

April 2014

2 TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT

Executive Summary

Drivers:

Market Overview

Drivers & Challenges

Market Trends

Competitive Landscape

As per 20-- - --, telecom equipment worth INR X1 bn was consumed in India

Mobile handsets account for around Y% of the total telecom equipment industry in India

Telecom equipment import have grown at a CAGR of around Y2% between 20-- and 20--

Telecom Equipment Certification

Android Smartphones and Tablets

Strengthening of R&D

Infrastructure Sharing

Challenges:

Major Players

Company A Company B Company C

Company D Company E Company F

Security Concerns

High Telecom Equipment Imports

Growth in Wireless Subscriber Base

Next Generation Voice and Data Services

Government Initiatives and Progressive Reforms in the Industry

IPv4 to IPv6 Migration


•Economic Indicators

•Introduction

•Market Overview

•Drivers and Challenges

•Market Trends

•Competitive Landscape

•Strategic recommendation

•Appendix

4

Economic Indicators (1/3)

11

12

13

14

15

b2

a2

Q1

d1 c1

b1

a1

Q4

c4

b4

a4

Q3

c3

b3

a3

Q2

d2

c2

INR tn

2013-14 2012-13 2011-12 2010-11

GDP at Factor Cost: Quarterly

Inflation Rate: Monthly

-2

-1

0

1

2

q

Jul 2013 - Aug 2013

p

%

Nov 2013 - Dec 2013

t

Oct 2013 - Nov 2013

s

Sep 2013 - Oct 2013

r

Aug 2013 - Sep 2013

TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT


Introduction

Telecom Equipment - Overview

• Economic and social development of India is significantly influenced by its telecom industry

• Modern and robust telecommunication systems demand state-of-the-art telecom equipment

• Cellular network technology such as 3G and 4G, broadband internet services, telephony services, network

requirements and other telecom products and services has led to increased demand for telecom equipment

Telecom Equipment

• Telecom equipment can be broadly classified into Segment 1, Segment 2 and segment 3

• Alternatively, it can also be classified into two categories in terms of type of consumer

• In category 1, fixed and mobile switches, base stations, routers, & transmission equipment largely represent Type 1,

whereas towers, shelters & cables falls under Type 2

Category 1

Category 2

Type 1

Type 2

Type 3

Type 1

Type 2


Significant demand exists for telecom equipment in India but it is being TextText TextText by TextText TextText

Market Overview – India (1/5)

• Growth in telecom sector has enabled telecom equipment companies to flourish in India, regardless of passive or

active telecom infrastructure, or mobile devices

• While majority of the domestic telecom equipment companies started off as resellers of telecom products made by foreign

companies, the focus is gradually shifting to domestic production

• As per 20-- - --, telecom equipment worth INR X1bn was consumed in India

• Mobile handsets account for around Y1% of the total telecom equipment industry in India

• Despite competition from foreign handset giants such as Apple, Samsung and others, domestic companies such as Micromax, Lava

and Karbonn Mobiles, among others, have come up with innovative handsets and Tablets at affordable price

• Chinese and European telecom equipment products dominate the market in India at present

x3

x2

x1

x

INR bn Y%

2017e

a5

2016e

a4

2015e

a3

2014e

a2

2013

a1

Telecom Equipment – Market Size & Growth Telecom Equipment – Domestic Consumption

X%

Y%

q p Note: Data available from TRAI till 2010


Market share for Segment 3 and Segment 2 is expected to grow significantly over the coming years

Market Overview – India (5/5)

x3

x2

x1

x

2018e

a5

2017e

a4

2016e

a3

2015e

a2

2014e

a1

INR bn Z%

Segment 3 – Market Size & Growth

x3

x2

x1

x

INR bn X%

2018e

a5

2017e

a4

2016e

a3

2015e

a2

2014e

a1


x2

x1

x

a4

2017e 2015e 2016e

INR bn

Y% a5

2018e

a3 a2

2014e

a1


• Segment 2 is expected to capture higher market share by 20-- among the three segments

• Staggering number of mobile devices, explosion of video traffic, expanding business and mission-critical applications, cloud-based application virtualization, and service delivery requirements are the prime factors fueling the demand for Segment 2


Drivers & Challenges

Drivers


Next Generation Voice and Data Services

Government Initiatives and Progressive Reforms in the Industry

IPv4 to IPv6 Migration

Challenges

Security Concerns

High Telecom Equipment Imports


Country’s wireless subscriber base looks promising due to present opportunities and future potential

• Currently, India has a substantial wireless subscriber base that is growing at a rapid pace

As of Sep 20--, total wireless subscribers base touched x1 mn as compared to x2 mn in Jun 20--

• It has been observed that Indian states with the highest commercial activity and business

operations possess higher wireless subscriber base as compared to rest of the states

• Growth in the subscriber base creates requirement of telecom equipment which ensures

services can be provided in best possible manner

• Also, with falling prices of mobile devices, popularity of end-user telecom equipment is also

rising significantly


x5

x4

x3

x2

x1

x

x6 X%

2016e

a2

2013*

a1

mn

Wireless Subscriber Base – India

Impact

* Data as of month1 20--

10

SAMPLE


Market Trends (1/4)

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• TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText

Telecom Equipment Certification



Android Smartphones and

Tablets




11

Porter’s Five Forces Analysis

Competitive Rivalry • Text Text Text Text ext Text Text Text

ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text

• Text Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text

Bargaining Power of Buyers • Text Text Text Text ext Text Text

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Threat of New Entrants • Text Text Text Text ext Text Text

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Impact X

Impact X

Impact X

Bargaining Power of Suppliers • Text Text Text Text ext Text Text


Impact X

Threat of Substitutes • Text Text Text Text ext Text Text


Impact X


12

Competitive Benchmarking (1/5)

Public Trading Comparables

Company A Company B Company C Company D

Market Capitalization (INR mn)

Share Price (INR)

EV/EBITDA (x)

EV/Revenue (x)

PE Ratio


13

Key Ratios of Top 2 Companies – Operational Basis

Competitive Benchmarking (4/5)

x5

x4

x3

x1

x

Company B

a2

Company A

a1

Asset Turnover Ratio

• Company b has consistently recorded higher debtors turnover ratio than its peers for FY1 and FY2

• Company a recorded the highest asset turnover ratio of y1 followed by Company bwhich recorded asset turnover ratio of y2

x4

x3

x1

x

Company B

b2 a2

Company A

b1 a1

20-- 20--

Debtors Turnover Ratio


14

Key People

Products and Services

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Ticker Symbol

Stock Exchange

Category Products/Services

Electrical components

Equipment Name Designation

Person 1 Chairman

Person 2 Managing Director

Person 3 Director

Person 4 Additional Director

New Delhi

Public: Domestic Company – Company A (1/4)

Head Office


15

Financial Snapshot Key Ratios

Financial Summary

• The company earned a net profit of INR ‘d2’ bn in FY 20--, as compared to net profit of INR ‘c2’ bn in FY 20--

• The company reported total income of INR ‘d1’ bn in FY 20--, registering an increase of ‘p’% over FY 20--

• It earned an operating margin of ‘x.x’ per cent in FY 20--, an increase of ‘y.y’ percentage points over FY 20--

• The company reported debt to equity ratio of ‘w.w’ in FY 20--, an increase of ‘z.z’ per cent over FY 20--

Key Financial Performance Indicators

Indicators Value (dd/mm/yyyy) Market Capitalization (INR mn)

Total Enterprise Value (INR mn)

EPS (INR)

PE Ratio (Absolute)

Particulars y-o-y change

(20-- – -- ) 20-- 20-- 20-- 20--

Profitability Ratios Operating Margin

Net Margin

Profit Before Tax Margin

Return on Equity

Return on Capital Employed

Return on Working Capital

Return on Assets

Return on Fixed Assets

Cost Ratios Operating costs (% of Sales)

Administration costs (% of Sales)

Interest costs (% of Sales)

Liquidity Ratios Current Ratio

Cash Ratio

Leverage Ratios Debt to Equity Ratio

Debt to Capital Ratio

Interest Coverage Ratio

Efficiency Ratios Fixed Asset Turnover

Asset Turnover

Current Asset Turnover

Working Capital Turnover

Capital Employed Turnover

Improved Decline

c1



Net Profit/Loss Total Income

y4

y3

y2

y1

y

x4

x3

x2

x1

x

2012

c2

c1

2011

b2

b1

2010

a2

a1

INR mn INR mn

2013

d2

d1

16

Key Business Segments Key Geographic Segments

Business Highlights

x2

x1

x

2013

c4%

b4%

a4%

2012

c3%

b3%

a3%

2011

c2%

b2%

a2%

2010

c1%

b1%

a1%

Segment 3 Segment 2 Segment 1

Description News

Overview

• Company A is a part of the Company 1Group established in collaboration with globally renowned , Country 2-based Company 2

• The company manufactures generators, multipurpose engines, chemicals, yarns, pipes, consumer durables, precision cutting tools etc.

• Company A got ISO 9002 certification in Month 19--, and has also been awarded ISO 14001 certification

Collaborations • Company A collaborated with Company 3 for manufacturing of diesel generators with Company 3 brand

of Engines

Expansion Plans • The group is planning to diversify and enter the IT industry

x2

x

x1

2013

100%

Region 1

Region 1 is the only geographic segment in which the company

has been operating for the past five years



17

Public-Domestic Company: Company A – SWOT Analysis (4/4)

T O

W S


18

Key People

Products and Services

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Private-Domestic Company: Company B. (1/5)

Head Office

Category Products/Services

Products

Mumbai

Name Designation

Person 1 Chief Financial Officer

Person 2 Head of Project

Person 3 Whole Time Director


19

Private-Domestic: Company B. – Shareholding Pattern (2/5)

Ownership Structure

Note: Shareholding pattern as on AGM dated 29th Sep 2012

X%

Y%

X segment Y segment


20

Financial Snapshot Key Ratios

Particulars y-o-y change

(20– – --) 20-- 20-- 20-- 20--

Profitability Ratios Operating Margin

Net Margin

Profit Before Tax Margin

Return on Equity

Return on Capital Employed

Return on Working Capital

Return on Assets

Return on Fixed Assets

Cost Ratios Operating costs (% of Sales)

Administration costs (% of Sales)

Interest costs (% of Sales)

Liquidity Ratios Current Ratio

Cash Ratio

Leverage Ratios Debt to Equity Ratio

Debt to Capital Ratio

Interest Coverage Ratio

Efficiency Ratios Fixed Asset Turnover

Asset Turnover

Current Asset Turnover

Working Capital Turnover

Capital Employed Turnover

Improved Decline

Financial Summary

• The company incurred a net loss of INR –’d2’ mn in FY 20--, as

compared to net profit of INR ‘c2’ mn in FY 20--

• The company reported total income of INR 1,529.9 mn in FY

20--, registering an increase of 0.34% over FY 20--

• The company earned an operating margin of ‘x.x’% in FY 20--, a

decrease of ‘y.y’ percentage points over FY 20--

• The company reported debt to equity ratio of ‘w.w’ in FY 20--,

a decrease of ‘z.z’% over FY 20--

Net Profit/Loss Total Income

y4

y3

y

y2

y1

x3

x2

x1

x

a1

INR mn INR mn

2013

d2

d1

2012

c2

c1

2011

b2

b1

2010

a2

Private: Domestic Company – Company B (3/5)


21

Private-Domestic Company: Company B (4/5)

Key Information

Description Details

Overview

• Company B provides passive telecommunication infrastructure in India

• It was formerly known as Company B1. and it operates as a subsidiary of B3

• The company builds, owns, and operates telecommunication towers, optic fiber cable

(OFC) network, and related assets; and provides these passive infrastructure assets on a

shared basis to wireless and other communications service providers, as well as to non-

communications customers under long-term contracts


22

Private-Domestic Company: Company B – SWOT Analysis (5/5)

T O

W S


23 TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT

Strategic Recommendations (2/2)

•Leverage on location based services mandate by the Government of India with various telecom equipment

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Telecom Equipment for Location Based Services

Accuracy

(Meters)

Urban Area Suburban and Rural Area Remote Area

20-- 20-- 20-- 20-- 20-- 20-- 20--

50 X% X% X% X% X% X% X%

100 X% X% X% X% X% X% X%

300 X% X% X% X% X% X% X%

500 X% X%. X% X% X% X% X%

Accuracy Mandate in Percentage

24

Thank you for the attention

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