INTRODUCTION

Telecom is one of the fastest-growing industries in India. Today India stands as the second-
largest telecommunications market in the world. The mobile phone industry in India would
contribute US$ 400 billion in terms of gross domestic product (GDP) of the country in 2014.
This sector which is growing exponentially is expected to generate about 4.1 million
additional jobs by 2020, as per Group Special Mobile Association (GSMA).
In the period April 2000 to January 2014, the telecom industry has got in foreign direct
investments (FDI) of about US$ 59,796 million, which is an increase of 6 per cent to the total
FDI inflows in terms of US$, as per report published by Department of Industrial Policy and
Promotion (DIPP).
Indias global system for mobile (GSM) operators had 4.14 million rural subscribers as of
January 2014, bringing the total to 285.35 million.
Between FY 07-16* Indias telephone subscriber base expanded at a Compound Annual
Growth Rate (CAGR) of 19.5 per cent to 1,022.61 million and teledensity to 80.98
In September 2015, total telephone subscription stood at 1,022.61 million, while teledensity
was at 80.98 percent
Players in the market

BSNL is the market leader with a 67.7 per cent share followed by MTNL with 11.5 per cent
market share. Next is Bharti Airtle at 10.9% followed by Tata and Reliance at 5% and 4.1%
respectively.
Vodafone is investing nearly US$ 3 billion over the next two years in India in expanding its
network infrastructure and distribution channel in the country, as per Vittorio Colao, CEO,
Vodafone Plc.

BlackBerry plans to set up enterprise solutions centres to educate corporate customers

about various BlackBerry Enterprise Service (BES) 10 solutions. "India is one of the fastest
growing markets in terms of smartphone and mobile data adoption, said according to Sunil
Lalvani, Managing Director (MD), BlackBerry India.

Tata Teleservices plans to set up nearly 4,000 wi-fi hotspots in nine cities across the country
in the next two years.
RISK AND RETURN
The telecommunications sector comprises a variety of companies that provide
communication services over wireless and cable connections. When assessing the
attractiveness of investing in any sector, investors typically look at the historic annual
returns that can form a basis for the expected annual returns.
Average annual returns include both capital appreciation and any dividends received by
telecom companies.
In July 2015, the annual average return in the telecommunications sector was
9.6% over the last five years. The annual return over the last year was 8.4%.
Investors typically supplement their analysis of historic returns with an opinion
about the overall risk profile for the sector. Investors assess quantitative and
qualitative risk factors, such as the competitive landscape, labour costs, the
sector's systematic and idiosyncratic risks, and the general economic
environment that can negatively affect expected returns. Recently, Internet
regulation significantly increased the risk of investing in the telecommunication
sector.
Profitability
Profitability plays an important role in determining expected returns. Investors typically
view any sustainable improvements in profitability as positive signs that drive future
earnings growth. Any deterioration in profitability should be viewed negatively and is
likely to diminish future growth and expected returns.

Growth
Growth in earnings and sales is the most important factor that determines expected
returns. However, if the growth in sales does not accompany growth in earnings, the
expected returns for a sector are likely to be lower. Growth can be determined through
judgement or fundamental factors, such as the sector's current profitability
and reinvestment rate.

IDEA
Idea Cellular (commonly referred to as simply Idea, and stylised as !dea) is an Indian mobile
network operator based in Mumbai, Maharashtra. Idea is a pan-India integrated GSM operator
offering 2G,3G and 4G mobile services. Idea is Indias third largest mobile operator by subscriber
base, After Vodafone India. Idea has 182 million subscribers as of 31 December 2015.

Idea competes with other major mobile operators including Airtel, Vodafone, BSNL, Reliance
Communications, Aircel, Telenor and Tata DoCoMo. While Idea competed very closely with the
then smaller operators like Reliance Communications, BSNL, Tata, Aircel in circa 2006-07, as of
31 Dec 2015, Idea has gone far ahead of the rest of these competitors clocking a Revenue
Market Share of over 18.5% while the rest remain below 9%. Over the last 3 years, Idea has
cornered an incremental Revenue Market Share of 33% giving tough competition to market
leaders Airtel and Vodafone by earning 1/3rd of the incremental market - way above its fair share
of the market.

Idea Cellular is currently trading at Rs. 78.60, up by 3.20 points or 4.24% from its
previous closing of Rs. 75.40 on the BSE.
Date Ri Rm Rs
02-03-2015 18.90% -4.78% 8.28%
02-02-2015 -0.07% 0.61% -3.40%
01-01-2015 0.68% 6.12% 3.77%
01-12-2014 -3.09% -4.16% -5.39%
03-11-2014 -2.49% 2.97% -2.05%
01-10-2014 -2.02% 4.64% -0.18%
01-09-2014 2.84% -0.03% 5.96%
01-08-2014 3.22% 2.87% -1.36%
01-07-2014 18.42% 1.89% 5.67%
02-06-2014 -3.92% 4.94% 2.05%
01-05-2014 2.34% 8.03% 7.61%
01-04-2014 -2.00% 0.14% 1.52%
03-03-2014 6.63% 5.99% 10.38%
03-02-2014 -10.17% 2.96% -7.64%
01-01-2014 -14.02% -3.10% -6.22%
02-12-2013 -4.88% 1.82% -0.38%
01-11-2013 1.57% -1.76% -6.24%
01-10-2013 2.68% 9.21% 9.68%
02-09-2013 5.42% 4.08% 8.69%
01-08-2013 -5.36% -3.75% -11.23%
01-07-2013 19.40% -0.26% 17.31%
03-06-2013 7.98% -1.84% 0.04%
01-05-2013 -1.29% 1.31% -3.66%
01-04-2013 16.55% 3.55% 14.83%
01-03-2013 -3.14% -0.14% -8.46%
01-02-2013 4.12% -5.19% -5.78%
01-01-2013 8.82% 2.41% 6.85%
03-12-2012 6.95% 0.45% -3.52%
01-11-2012 13.37% 4.51% 22.10%
01-10-2012 0.36% -1.37% -1.27%
03-09-2012 14.26% 7.65% 9.70%
01-08-2012 -6.62% 1.12% -15.15%
02-07-2012 5.47% -1.11% -1.12%
01-06-2012 -0.25% 7.47% 1.11%
01-05-2012 -3.20% -6.35% -4.56%
02-04-2012 -20.54% -0.49% -9.20%
 Regression Statistics
Multiple R 0.144645885
R Square 0.020922432
-
Adjusted R Square 0.007873967
Standard Error 0.089600724
Observations 36

ANOVA
df SS MS F Significance F
Regression 1 0.005833068 0.005833068 0.726564184 0.399963797
Residual 34 0.272961852 0.00802829
Total 35 0.27879492

Standard Lower Upper

Coefficients Error t Stat P-value Lower 95% Upper 95% 95.0% 95.0%
- -
Intercept 0.016785536 0.015871137 1.057613945 0.297688202 0.015468495 0.049039566 0.01546849 0.04903957
- -
Rm 0.327158727 0.383814623 0.852387344 0.399963797 0.452846429 1.107163884 0.45284643 1.10716388

BETA IDEA 0.327

Rf 6.726
(Rm-Rf) 8

R Idea (Rf + BETA

IDEA (RM-RF) 9.342
 Regression Statistics
Multiple R 0.481070887
R Square 0.231429198
Adjusted R Square 0.208824175
Standard Error 0.073316106
Observations 36

ANOVA
Significance
df SS MS F F
Regression 1 0.055032 0.055032 10.23795429 0.002976494
Residual 34 0.182759 0.005375
Total 35 0.23779

Standard
Coefficients Error t Stat P-value Lower 95% Upper 95%
Lower 95.0% Upper 95.0%
- - -
Intercept -0.0033101 0.012986613 0.25488 0.800349454 0.029702031 0.02308192 0.029702031 0.023081916
Rm 1.00488412 0.314057658 3.19968 0.002976494 0.366642167 1.64312606 0.366642167 1.643126063

BETA TELECOM 1.004

Rf 6.726
(Rf-Rm) 8
R IDEA(Rf+BETA IDEA(Rm-Rf) 14.758