ACKNOWLEDGEMT

TABLE OF CONTENTS

INTRODUCTION
TELECOMMUNICATION
The word telecommunication was adapted from the French word telecommunication. It is a compound of the Greek prefix Tele-, meaning 'far off', and the Latin communicate, meaning 'to share'. Telecommunication is the transmission of signals over a distance for the purpose of communication. In modern

times, this process almost always involves the sending of electromagnetic waves by electronic transmitters but in earlier years it may have involved the use of smoke signals, drums or semaphore. Today, telecommunication is widespread and devices that assist the process, such as the television, radio and telephone, are common in many parts of the world. There is also a vast array of networks that connect these devices, including computer networks, public telephone networks, radio networks and television networks. Computer communication across the Internet, such as e-mail and instant messaging, is just one of many examples of telecommunication. The basic elements of a telecommunication system are: 1) a transmitter that takes information and converts it to a signal for transmission 2) a transmission medium over which the signal is transmitted 3) a receiver that receives and converts the signal back into usable information. Often telecommunication systems are two-way and devices act as both a transmitter and receiver or transceiver. For example, a mobile phone is a transceiver. Telecommunication over a phone line is called point-to-point communication because it is between one transmitter and one receiver, telecommunication through radio broadcasts is called broadcast communication because it is between one powerful transmitter and numerous receivers. A collection of transmitters, receivers or transceivers that

communicate with each other is known as a network. Digital networks may consist of one or more routers that route data to the correct user. An analogue network may consist of one or more switches that establish a connection between two or more users. For both types of network, a repeater may be necessary to amplify or recreate the signal when it is being transmitted over long distances. This is to combat attenuation that can render the signal indistinguishable from noise. The shaping of a signal to convey information is known as modulation. Modulation is a key concept in telecommunications and is frequently used to impose the information of one signal on another. Modulation is used to represent a digital message as an analogue waveform. This is known as keying and several keying techniques exist these include phase-shift keying, frequency-shift keying, amplitudeshift keying and minimum-shift keying. Blue tooth, for example, uses phase-shift keying for exchanges between devices.

HISTORY OF GSM
The Group Special Mobile (GSM ) was created in 1982 by European Conference of postal and Telecommunications Administrations (CEPT) with the objective of developing a standard for a mobile telephone system that could be used across Europe. In 1989, GSM responsibility was transferred to the European Telecommunications Standards Institute (ETSI).The phase I of the GSM specifications were published in 1990. The first GSM network was launched in 1991 by Radio linja in Finland. By the end of 1993, over a million

subscribers were using GSM phone networks The growth of cellular telephone systems started in the early 1980s, particularly in being operated by 70 carriers across 48 countries.

The Global System for Mobile communications (GSM: originally from Group Special Mobile) is the most popular standard for mobile phones in the world. GSM service is used by over 2 billion people across more than 212 countries and territories. The ubiquity of the GSM standard makes international roaming very common between mobile phone operators, enabling subscribers to use their phones in many parts of the world. From the point of view of the consumers, the key advantage of GSM systems has been higher digital voice quality and low cost alternatives to making calls such as the Short Message Service (SMS).

The advantage for network operators has been the ability to deploy equipment from different vendors because the open standard allows easy interoperability. Like other cellular standards GSM allows network operators to offer roaming services which mean subscribers can use their phones all over the world. GSM is a cellular network, which means that mobile phones connect to it by searching for cells in the immediate vicinity. GSM networks operate in four different frequency ranges. Most GSM networks operate in the 900 MHz or 1800 MHz bands. Some countries in the Americas (including the United States and Canada) use the 850 MHz and 1900 MHz bands because the 900 and 1800 MHz frequency bands were already allocated. The GSM logo is used to identify compatible handsets and equipment. There are four different cell sizes in a GSM network 1) macro 2) Micro 3) Pico 4) Umbrella cells. The coverage area of each cell varies according to the implementation environment. Macro cells can be regarded as cells where the base station antenna is installed on a mast or a building above average roof top level. Micro cells are cells whose antenna height is under average roof top level; they are typically used in urban areas. Pico cells

are small cells whose diameter is a few dozen meters; they are mainly used indoors. Umbrella cells are used to cover shadowed regions of smaller cells and fill in gaps in coverage between those cells. The network behind the GSM system seen by the customer is large and complicated in order to provide all of the services which are required. It is divided into a number of sections and these are each covered in separate articles.

The Base Station Subsystem (the base stations and their

controllers).

The Network and Switching Subsystem (the part of the

network most similar to a fixed network). This is sometimes also just called the core network.

The GPRS Core Network (the optional part which allows

packet based Internet connections).

All of the elements in the system combine to produce many GSM services such as voice calls and SMS

Subscriber identity module (SIM )

One of the key features of GSM is the Subscriber Identity Module (SIM), commonly known as a SIM card. The SIM is a detachable smart card containing the user's subscription information and phone book. This allows the user to retain his or her information after switching handsets. Alternatively, the user can also change operators while retaining the handset

simply by changing the SIM. Some operators will block this by allowing the phone to use only a single SIM, or only a SIM issued by them; this practice is known as SIM locking, and is illegal in some countries. In the United States, Canada, Europe and Australia, many operators lock the mobiles they sell. This is done because the price of the mobile phone is typically subsidized with revenue from subscriptions and operators want to try to avoid subsidizing competitor's mobiles. A subscriber can usually contact the provider to remove the lock for a fee, utilize private services to remove the lock, or make use of ample software and websites available on the Internet to unlock the handset themselves. Some providers will unlock the phone for free if the customer has held an account for a certain period. Third party unlocking services exist that are often quicker and lower cost than that of the operator. In most countries removing the lock is legal. In countries like India, Pakistan, Indonesia, Belgium, etc., all phones are sold unlocked. However, in Belgium, it is unlawful for operators there to offer any form of subsidy on the phone's price. This was also the case in Finland until April 1, 2006, when selling subsidized combinations of handsets and accounts became legal though operators have to unlock phone free of charge after a certain period (at most 24 months).

Telecom Industry in India

The telecom industry is one of the fastest growing industries in

India. India has nearly 200 million telephone lines making it the third largest network in the world after China and USA. With a growth rate of 45%, Indian telecom industry has the highest growth rate in the world. Much of the growth in Asia Pacific Wireless Telecommunication Market is spurred by the growth in demand in countries like India and China. 1) Indias mobile phone subscriber base is growing at a rate of 82.2%. 2) China is the biggest market in Asia Pacific with a subscriber base of 48% of the total subscribers in Asia Pacific. Compared to that India s share in AsiacPacific Mobile Phone market is 6.4%. Considering the fact that India and China have almost comparable populations, Indias low mobile penetration offers huge scope for growth.

History of Indian Telecommunications

Started in 1851 when the first operational land lines were laid by the government near Calcutta (seat of British power). Telephone services were introduced in India in 1881. In 1883 telephone services were merged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the governments,

Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best to bring under state's control. The first wind of reforms in telecommunications sector began to flow in 1980s when the private sector was allowed in telecommunications equipment manufacturing. In 1985, Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system). In 1986, two wholly government-owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas. In 1990s, telecommunications sector benefited from the general opening up of the economy. Also, examples of telecom revolution in many other countries, which resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a change process finally resulting in opening up of telecom services sector for the private sector. National Telecom Policy (NTP)1994 was the first attempt to give a comprehensive road map for the Indian telecommunications sector. In 1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI was formed to act as a regulator to facilitate the growth of the telecom sector. New National Telecom Policy was adopted in 1999 and cellular services were also launched in the same year. Telecommunication sector in India can be divided into two segments: Fixed Service Provider (FSPs), and Cellular Services. Fixed line services consist of basic services, national or domestic long distance and international long distance Services. The state operators (BSNL and MTNL),

account for almost 90 per cent of revenues from basic services. Private sector services are presently available in selective urban areas, and collectively account for less than 5 per cent of subscriptions. However, private services focus on the business/corporate sector, and offer reliable, high- end services, such as leased lines, ISDN, closed user group and videoconferencing. Cellular services can be further divided into two categories: Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector is dominated by Airtel, Vodafone- Hutch, and Idea Cellular, while the CDMA sector is dominated by Reliance and Tata Indicom. Opening up of international and domestic long distance telephony services are the major growth drivers for cellular industry. Cellular operators get substantial revenue from these services, and compensate them for reduction in tariffs on airtime, which along with rental was the main source of revenue. The reduction in tariffs for airtime, national long distance, international long distance, and handset prices has driven demand.

Milestones in Telecom Reforms

1)1984 Manufacturing of subscriber terminal equipment opened to private sector. 2)1985 Telecom was constituted into a separate department with a separate board. 3)1986 MTNL and VSNL created as corporations. 4) 1988 Government introduces in-dialing scheme. PABX services only within a building, or in adjoining buildings. 5)1989 Telecom Commission formed. 6)1991 Telecom equipment manufacturing opened to private

sector. Major international players like Alcatel, AT&T, Ericsson, Fujitsu, and Siemens entered equipment manufacturing market. 7)1992 VAS sector opened for private competition. 8)1993 Private networks allowed in industrial areas. 9)1994 Licenses for radio paging (27 cities) issued. 10)May 1994 New Telecom Policy announced. 11)September 1994 Broad guidelines for private operator entry into basic services announced. 12)November 1994 Licenses for cellular mobiles for four metros issued. 13)December 1994 Tenders floated for bids in cellular mobile services in 19circles, excluding the four metros, on a duopoly basis. 14)January 1995 Tenders floated for second operator in basic services on a circle basis. 15)July 1995 Cellular tender bid opened. 16)August 1995 Basic service tender bid opened; the bids caused lot of controversy. A majority of bids were considered low. 17)December 1995 LOI s issued to some operators for cellular mobile operations in circles. 18)January 1996 Rebidding takes place for basic services in thirteen circles. Poor response. 19)The Telecom Regulatory Authority of India (TRAI) formed by ordinance. 20)October 1996 LOI s being issued for basic services. 21)March 1997 The TRAI Act passed in Parliament. 22)June 1998 Several VASs available through private operators. The first private basic service becomes operational. 23)March 1999 Announcement of National Telecom Policy. 24)January 2000 Amendment to the TRAI Act.

25)August 2000 Announcement of Domestic Long Distance Competition Policy. 26)October 2000 Planned Corporatization of DoT.

Telecommunications Regulatory Authority of India (TRAI)

The Telecommunications Regulatory Authority of India or TRAI (established in 1997) is the independent regulator established by the Government of India to regulate the telecommunications business in India. Notwithstanding anything contained in the Indian Telegraph Act, 1885, the functions of the Authority shall be to(a) Make recommendations, on a request from the licensor, on

the following matters, namely: (i) need and timing for introduction of new service provider; (ii) terms and conditions of license to a service provider; (iii) revocation of license for non-compliance of terms and conditions of license: (iv) Measures to facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services. (v) Technological improvements in the services provided by the service providers. (vi) Type of equipment to be used by the service providers after inspection of equipment used in the network. (vii) measures for the development of telecommunication technology and any other matter relatable to telecommunication industry in general; (b) Discharge the following functions, namely:(i) ensure compliance of terms and conditions of license; (ii) notwithstanding anything contained in the terms and conditions of the license granted before the commencement of the Telecom Regulatory Authority (Amendment) Ordinance,2000, fix the terms and conditions of inter connectivity between the service providers; (iii) Ensure technical compatibility and effective inter connection between different service providers. (iv) regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services; (v) lay down the standards of quality of service to be provided by the service providers and ensure the quality of service and

conduct the periodical survey of such service provided by the service providers so as to protect interest of the consumers of telecommunication services; (vi) lay down and ensure the time period for providing local and long distance circuits of telecommunication between different service providers; (vii) maintain register of interconnect agreements and of all such other matters as may be provided in the regulations; (viii) keep register maintained under clause (viii) open for inspection to any member of public on payment of such fee and compliance of such other requirement as may be provided in the regulations; (ix) ensure effective compliance of universal service obligations: (c) Levy fees and other charges at such rates and in respect of such services as may be determined by regulations. (d) Perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this act. Provided that the recommendations of the Authority specified in the clause (a) of this sub-section shall not be binding upon the Central Government: Provided further that the Central Government shall seek the recommendations of the Authority in respect of matters specified in sub-clauses (i) and (ii) of clause (a) of this sub-section in respect of new license to be issued to a service provider and the Authority shall forward its recommendations within a period of sixty days from the

date on which that Government sought the recommendations: Provided also that the Authority may request the Central Government to furnish such information or documents as may be necessary for the purpose of making recommendations under sub-clauses (i) and (ii) of clause (a) of this sub-section and that Government shall supply such information within a period of seven days from receipt of such request: Provided also that the Central Government may issue a license to a service provider if no recommendations are received from the Authority within the period of specified in the second provision or within such period as may be mutually agreed upon between the Central Government and the Authority. Provided also that if the Central Government has considered that recommendation of the Authority comes to a prima facie conclusion that such recommendation cannot be accepted or needs modifications, it shall, refer the recommendations back to the Authority for its reconsideration.

EVOLUTION OF THE INDIAN TELECOM MARKET

1. Penetration and growth The Indian cell phone market essentially started in 1992 with the sale of licenses, which enabled the private sector to participate in the industry (COAI, 2006). In 1994, cellular service licenses were granted for the major metropolitan areas. This then expanded to 15 circles in the following year. Services were rolled out in 1995 with Kolkata becoming the

first city to get a cellular network in August 1995. However, in December 2000 5 years after launch of cellular licenses penetration was still quite low. In fact, there were only about 3.2 million subscribers, primarily in the major cities and large towns. The major driver for change was the Telecom Regulatory Authority of India (TRAI).TRAI was instituted in 1997, and soon started building policies and regulations to push prices downward and spur competition. By December 2004, there were about 93mn phones in the country, of which 48mn subscribers were cellular (TRAI, Dec. 2005). The number of cellular phone users increased to about 76mn in December 2005 and about 89mn phones in March 2006 (Financial Express, Apr 2006). This trend indicates a CAGR of over 30%. Jorma Ollila, Chairman and CEO of Nokia, recently commented that India is amongst the top 5 telecom markets in the world (Light reading 2006) when he visited the country to reiterate his firms commitment to the market. Indeed, no other country in the world has added 4-5mn mobile phones per month. Exhibit 1 shows the growth of the postpaid and prepaid market in India, including prediction for 2010. Player The Indian wireless market has both CDMA and GSM network operators. CDMA operators entered the picture and grew rapidly Reliance, which owns about 70% of the CDMA market currently with ~ 20.44 mn subscriptions, grew at over

114% year on year in 2002-03 one of the most explosive phone launches ever ( TRAI Jun 2003, Financial Express, Apr 2006). The overall CDMA subscriber base, though, is still about 22.2% of the market with Tata Tele services taking up most of the remaining CDMA share. The GSM players account for the remaining ~78% - with a market that is less dominated by one player. Bharti, stateowned BSNL, and Hutch control the largest parts of this market and have been adding subscribers at an impressive pace. As of April 2006, Bharti was the largest player by far, with 30.37 Mn subscribers. BSNL had a subscriber base of 20.44mn, followed closely by Hutch with 22% of the GSM market and an overall share of 15.02%. The Telecom Regulatory Authority of India overseas the evolution of this market Since its establishment in 1997, this agency has made many key judgments including statements on tariffs, quality of service, next generation networks, etc. TRAI also releases quarterly reports on the state of the telecom industry with special emphasis on tariffs, interoperability between networks, and usage (TRAI). Since Indian regulation makes it difficult for network operators to also sell phones (due to revenue share agreements), there is a completely parallel market for users to buy phones. In the GSM space, users go to handset providers to buy phones and then to network operators to get network services. Most global handset manufacturers are present in India with Nokia leading the pack by far. In 2005, more than 31mn handsets were sold. Of this, Nokia captured about 60% share over

18mn phones in one year. Motorola, which has a smaller share, is seeing growth with the introduction of more advanced phones including its Razor platform. Samsung, LG and Sony Ericcson all have reasonable market share as well with LG catering almost exclusively to the CDMA space through a tie-up with Reliance.

THE INDIAN MARKET BASIC DEMAND TRENDS

Demand for cellular services is interesting for a variety of reasons. Before catering to this market, service providers must consider unmet needs, price sensitivity, diversity in consumer profiles, and the skew in urban-rural markets. 1. Unmet needs Current Indian tele density is 11.43 (i.e. only 11.43 phones both cellular and fixed line exist per 100 people) While that points to a staggering ~ 125mn phones already in the market, it also points to a large unmet demand. Specifically, peer countries have much higher tele density. China has a mobile tele density of 28.3 while in Malaysia, that number is 77. If India is to attain Chinas tele density in 5 years up from its current penetration of ~ 7%, this implies an almost 4x increase in the number of phones. This would lead to demand for about 210mn additional phones in that time. 2. Young, growing, consuming market More than 95% of Indias population is under the age of

65.70% of the countrys citizens are below the age of 36, and half of those are under 18. (Bharadwaj etal, 2005; Wikipedia; Census Maps; Answers .com). Further, the standard of living has been increasing: only 26% of the population is below the poverty line now, compared to over 50% in the mid-70s. (Sinha, Jayant, 2005) Thus, the young, mobile segment of the population is quite large and more connected than any previous generation. In addition, it earns more and is more willing to spend on convenience products than previous generations. In fact, in some instances, consumer products like cell phones now have are a symbol of status. Young consumers are willing to buy new phones and are constantly looking for good deals and the opportunity to trade up to better products. 3. Value sensitivity The Indian consumer is also very price sensitive. Product managers have found that consumers in India will not buy products unless there is a clear value proposition at the lowest possible price. For instance, Nokia successfully introduced a customized version of their 1100 phone with features uniquely tailored to India dust-resistant body and a built-in flashlight making it very popular among truck drivers (Bharadwaj etal, 2006). The phone itself retails for about $40. Indians also expect a high quality of services at the lowest possible tariff rate. Thus, tariffs in India for voice services are among the lowest in the world. While average American carrier charges about 30-40 cents per minute, the corresponding rate for an Indian carrier is only about 2 cents per minute. (Cingular, T- Mobile, TRAI Dec 2006).

4) Pre- paid rules Indian consumers choose plans and tariff structures that minimize monthly expenditure. Further, they also choose tariff plans that let them switch easily especially since they shop on price. Thus Pre- paid SIM cards are the dominant method of revenue generation. With this scheme, consumers buy a SIM card to use in their phones with a set amount of money on it (say ~$10). In addition, since receiving calls in India is free, very often consumers will only receive calls on their phones. And almost every cellular company has also introduced free incoming plans for 1-2years & lifetime free incoming plans. Thus, revenues per user are low, with Pre -paid users contributing ~$5.6 per month. While the average post-paid user spends much more contributing ~$19 per month this is a small segment of the market in India. In 2006, for example, over 95% of new phone additions were Pre- paid plans. (TRAI Dec 2006) (See Exhibit 1 for potential growth of Pre- paid vs. post-paid in India). 5)Rural vs. Urban Market While growth in India is significant, there is a large difference between urban and rural markets. Tele density varies wildly. For example, cities like Mumbai, Delhi, Chennai, and Kolkata have a tele density around 49% while Circles B and C (which include far-less urban states) see a penetration of 2.6% (See Exhibit 7 for market penetration in India varied by geographical areas). Also, service providers pay Access Deficit charges to subsidize the (mainly government run) players that serve the unprofitable rural markets. However, as network operators run into an increasingly saturated market in

cities, they are slowly turning to rural areas to grow. To enter these markets, carriers will have to make large capital investments, create low introductory pricing, and only offer a basic level of services. Although growth in rural markets will be slower and require a larger investment per customer, with no guarantee of the same amount of revenue, the thirst for communication and poor landlines infrastructure makes rural India a unique opportunity for growth. Consequently, operators are dropping prices to ensure they get their hands on the expanding customer pie and the large untapped market means that revenues from the voice market will drive the growth for the next few years. 6. Demographics The expected growth in the Indian GDP, 6-7 percent annually from 2005 to 2007, is a good indicator of the increased purchasing power of the population (Asian Development Bank 2005). A greater percentage of the Indian population has higher levels of disposable income with which to purchase products and services. Along with lower connectivity costs and cheaper handsets, the mobile market in India is seeing a huge influx of subscribers who can now afford basic coverage .India is also experiencing changing demographics that have contributed to the explosion in the mobile market. Approximately 70 percent of Indias 1.1 billion population is between the ages of 15 and 40 (U.S Census BureauInternational Database, 2003). As a result, telecom players are looking at a young population with increased pay scales and more job opportunities. Furthermore, a high percentage of these Indians are still living at home and saving their salaries. Thus, this generation is able to spend a large percentage of

their income on the purchase of entertainment and consumer electronics, including cell phones. 7. Role of Government The Indian government has played a significant role in setting the stage for growth in mobile telecommunications. Through the oversight of the Telecom Regulatory Authority of India (TRAI), the government has made many change to regulations and policies to remove hurdles and spark growth. First, the Indian government introduced the Unified Licensing Regime in 2003. This regime allows operators to offer any service through the technology of their choice, in any area in which they currently operate. Thus, all telecom services (including voice, data, cable TV, and radio broadcasting) can now be delivered through a single medium and are covered by a single license. Unified licensing shifted operator behavior and caused operators to start focusing on converged services and networks for cost efficiency which, in turn, allows them to offer pricing conducive to rapid growth. In addition, the Indian government has raised the maximum foreign direct investment (FDI) limit from 49 percent to 74 percent in Telecom Sector. The government also enacted the Access Deficit Charge (ADC) policy, which requires that a share of call revenue be paid to the government to assist in funding network expansion into rural areas. As of early 2005, several regulations were imminent. First, the launch of an All India license would give operators the right to provide all forms of service throughout India with one license. This structure would initiate the next phase of market consolidation, with the result likely being five to six main players. The players would have greater scale which would

lead to higher cost efficiency and, ultimately, more flexibility, and allow even fixed line users to switch to mobile services seamlessly possibly increasing competition in the market. Finally, the government needed to decide how to increase spectrum capacity, since 2G networks are nearing full capacity (2G stands for second generation cellular technologies, which are circuit-based, voice technologies deployed in the 1990s. This standard is being replaced around the world with 3G networks that are faster .

GROWTH OF TELECOM NETWORK (2008)

With a strong population of over 1.1 Billion, India has become one of the most dynamic and promising Telecom markets of the world. In recent times, the country has emerged as one of the fastest growing telecom markets in the world. It has third largest telecom network and the second largest wireless network in the world.

NETWORK EXPANSION
The total number of telephones has reached 4297.25 lakh as on March 31, 2009 as compared to3004.92 lakh as on March 31, 2008.

 While 1292.33 lakh connections were added during the twelve months of 2008-09, about 108 lakh connections were added every month during the current fiscal year. The tele density, as given in the following graph, has shown a sustained increase during last few years. It increased from 26.22% in March 2008 to 36.98% in March 2009.

Cellular Service Providers

As on Apr 2007 India has 167 million mobile phone subscribers. Out of this 125 million are GSM users and 41 million CDMA users. BSNL, Bharti Air tel, Hutch, Idea, Aircel, Spice and MTL are

the main GSM providers in India. Reliance Communications and Tata Indicom are the main CDMA providers in India. Bharti Airtel Airtel is providing cellular services in Delhi, Mumbai, Kolkata, Chennai, Andhra Pradesh, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Goa, Orissa, Punjab, Rajasthan, Tamil Nadu, UP and West Bengal. Airtel is the No.1 cellular service provider in India using GSM technology. Airtel has 23% market share in India with a total subscriber base of 38 million. Reliance Communications Reliance has both CDMA and GSM networks and total subscriber base of 29 million or 17% market share. It has GSM network in Assam, Bihar, Himachal Pradesh, Kolkata, North East, Madhya Pradesh, Orissa and West Bengal. Reliance has CDMA networks in other states and cities. Bharat Sanchar Nigam Limited (BSNL) BSNL is a state owned telecom company which has GSM presence in almost every cities and towns. BSNL has 27 million subscribers with a market share of 16%. Tata Indicom Tata Indicom is a main CDMA provider in India with 16 million

subscribers all over India. Tata Indicom has presence in almost every states and cities in India Airtel has more than 100 million subscribers and BSNL has half as much. But, BSNLs revenues was more than Airtels until now. For the first time Airtel has surpassed BSNL to become countrys number one telecom operator in terms of subscribers and revenues. There is a drop of 0.4% in BSNLs revenues when compared with the previous fiscal year. Airtel has increased its revenues by 39.8% - a very impressive growth. BSNL did not face the heat until now as the revenues werent dipping. That doesnt hold good any more and it has to buck up or revamp before it turns into an Air India. BSNL doesnt have the same kind of excuses of Air India as it operates in a lucrative telecom market. The other operator which has seen a drop in revenues is MTNL. This is in spite of all the 3G spectrum and the leg-up both BSNL and MTNL got from the government. Giving subsidies and special treatment doesnt work after all. Reliance saw a decent growth of 23.1% and its revenues are 22341 crores. It is 3rd in line. The best growth in revenues was by IDEA Cellular at 50.7%. Airtel and Reliance are the 2 India based operators to feature in the top 20 telecom operators by subscribers.

Top 10 telecom service providers by revenues :

Rank Operator Revenues 2006-07 Revenues Revenues Growth% 2007-08 2008-09

1 39.8 2 -0.4 3 23.1 4 43.6 5 50.7 6 20.6 7 12.4 8 -5.1 9 35.5 10 7.8

Bharti Airtel BSNL Reliance Vodafone IDEA Cellular Tata Comm TTSL MTNL Aircel TTML

17888 40135 14468 10565 4413 8857 5178 4923 1507 1422

26436 35296 18638 15477 6720 8263 5993 4729 2528 1730

36962 35167 22341 22224 10125 9963 6739 4487 3425 1323

MAXIS
Maxis expansion into Indonesia and India is another milestone in our aspiration to be the regional communications leader of choice. The acquisition of a 51% stake in PT Natrindo Telepon Seluler (NTS), Indonesia and a 74% equity interest in Aircel, India provides new growth opportunities for Maxis. These acquisitions give Maxis a strong foothold in two

of the worlds most attractive high-growth, low-penetration markets. This marks the beginning of the new world of Maxis a world beyond voice, and beyond borders.

Maxis in INDONESIA

On 29th April 2005, Maxis acquired 51% of PT Natrindo Telepon Seluler (NTS). Maxis are currently in the middle of rolling out a Java wide network to establish the company as a national operator. The initial launch phase encompasses 1,300 BTS, providing both 2G and 3G services. NTS expects to have up to 480 employees by launch date and to increase significantly upon launching.

MAXIS IN INDIA

Maxis in India Maxis completed the acquisition of a 74% stake in Aircel on March 21, 2006. Currently, Aircel has operations in 9 of the 23-telecom circles of India - Chennai, Tamil Nadu, West Bengal, Orissa, Assam, North East, Jammu and Kashmir, Himachal Pradesh and Bihar. Aircel launched its services in Bihar and Himachal Pradesh in December 2006 and also recently received the licenses to operate in the remaining 14-telecom circles of India giving it the ability to become a pan-India player. Maxis expansion into Indonesia and India is another milestone in our aspiration to be the regional communications leader of choice. The acquisition of a 51% stake in PT Natrindo Telepon Seluler (NTS), Indonesia and a 74% equity interest in Aircel, India provides new growth opportunities for Maxis. These acquisitions give Maxis a strong foothold in two of the worlds most attractive high-growth, low-penetration

markets. This marks the beginning of the new world of Maxis a world beyond voice, and beyond borders. MAP Maxis in Indonesia On 29th April 2005, Maxis acquired 51% of PT Natrindo Telepon Seluler. Maxis is currently in the middle of rolling out a Java wide network to establish the company as a national operator. The initial launch phase encompasses 1,300 BTS, providing both 2G and 3G services. NTS expects to have up to 480 employees by launch date and to increase significantly upon launching. Maxis in India Maxis completed the acquisition of a 74% stake in Aircel on March 21, 2006. Currently, Aircel has operations in 9 of the 23 telecom circles of India Chennai, Tamil Nadu, West Bengal, Orissa, Assam, North East, Jammu and Kashmir, Himachal Pradesh and Bihar. Aircel launched its services in Bihar and Himachal Pradesh in December 2006 and also recently received the licenses to operate in the remaining 14 telecom circles of India giving it the ability to become a pan-India player. Aircel expects to aggressively grow its subscriber base in India and is developing a broad range of new propositions for its customers - from branding, to increased network coverage, to innovative product and service offerings, to refreshing customer experience. As of 31st December 2006, Aircel serves more than 4.5 million subscribers with a network comprising of almost 4,000 BTS. Aircel continues to be the market leader in Tamil Nadu and Chennai circle. Aircels network provides 2G and GPRS services, and is EDGE capable. Aircel is also currently in the process of conducting 3G Trials across different cities in India. In addition, Aircel is the first cellular operator in India to launch wireless Internet services using Wi MAX technology. It aims to immediately extend its Wi

Max coverage to over 20 cities to serve enterprise broadband customers. Over the next few quarters, India is expected to add new subscribers at the rate of 5 to 6 million per month. India offers huge opportunities for Aircel given the current low mobile penetrations levels as well as challenges in terms of its geographic spread and low ARPU levels. Aircel expects to aggressively grow its subscriber base in India and is developing a broad range of new propositions for its customers - from branding, to increased network coverage, to innovative product and service offerings, to refreshing customer experience. As of 31st December 2006, Aircel serves more than 4.5 million subscribers with a network comprising of almost 4,000 BTS. Aircel continues to be the market leader in Tamil Nadu and Chennai circle. Aircels network provides 3G and GPRS services, and is EDGE capable. Aircel is also currently in the process of conducting 3G Trials across different cities in India. In addition, Aircel is the first cellular operator in India to launch wireless Internet services using Wi MAX technology. It aims to immediately extend its Wi Max coverage to over 20 cities to serve enterprise broadband customers. Over the next few quarters, India is expected to add new subscribers at the rate of 5 to 6 million per month. India offers huge opportunities for Aircel given the current low mobile penetrations levels as well as challenges in terms of its geographic spread and low ARPU levels.

About Aircel
Type Founded Headquarters Key people Industry Parent Products Website

Private 1999 Chennai, India Gurdeep Singh, CEO Telecom Maxis communications (74%) Apollo Hospital (26%) Mobile Telecommunication operator http: //www.aircel. com

The Aircel group is a joint venture between Maxis Communications Berhad of

Malaysia and Sindya Securities & Investments Private ltd. whose current shareholders are the Reddy family of Apollo Hospitals Group of India, with Maxis Communications holding a majority stake of 74%. Aircel commenced operations in 1999 and became the leading mobile operator in Tamil Nadu within 18 months. In December 2003, it launched commercially in Chennai and quickly established itself as a market leader a position it has held since. Aircel began its outward expansion in 2005 and met with unprecedented success in the Eastern frontier circles. It emerged a market leader in Assam and in the North Eastern provinces within 18 months of ope rations. Till today, the company gained a foothold in 18 circles include -ing Chennai, Tamil Nadu, Assam, North East, Orissa, Bihar, Jammu & Kashmir, Himachal Pradesh, West Bengal, Kolkata, Kerala, Andhra Pradesh, Karnataka,

Delhi, UP(West), UP(East), Maharashtra & Goa and Mumbai. The Company has currently gained a momentum in the space of tele- com in India post the allocation of additional spectrum by the Department of Telecom, Govt. of India for 13 new circles across India These include Delhi (Metro), Mumbai (Metro), Andhra Pradesh, Gujarat, Haryana, Karnataka,Kerala, Madhya Pradesh, Maharashtra & Goa, Rajasthan, Punjab, UP (West)and UP (East).

OUR PRESENCE

Telecom Circles & Metro districts are responsible for providing service to the customers. There are 24 Telecom Circles and 2 Metro districts.

TELECOM CIRCLE IN INDIA

1. Andaman & Nicobar Telecom Circle 2. Andhra Pradesh Telecom Circle 3. Assam Telecom Circle 4. Bihar Telecom Circle 5. Chhattisgarh Telecom Circle 6. Gujarat Telecom Circle 7. Haryana Telecom Circle 8. Himachal Pradesh Telecom Circle 9. Jammu & Kashmir Telecom Circle 10. Jharkhand Telecom Circle 11. Karnataka Telecom Circle 12. Kerala Telecom Circle 13. Madhya Pradesh Telecom Circle 14. Maharashtra Telecom Circle 15. North East-I Telecom Circle for Meghalaya, Mizoram and Tripura 16. North East-II Telecom Circle for Arunachal Pradesh, Manipur and Nagaland. 17. Orissa Telecom Circle 18. Punjab Telecom Circle 19. Rajasthan Telecom Circle 20. Tamil Nadu Telecom Circle 21. Uttar Pradesh (East) Telecom Circle 22. Uttar Pradesh (West) Telecom Circle 23. Uttaranchal Telecom Circle

24. West Bengal Telecom Circle Metro Districts 1. Kolkata Telecom District 2. Chennai Telecom District

HOLDING COMPANY
1. DISHNET WIRELESS LIMITED 2. AIRCEL CELLULAR LIMITED 3. AIRCEL BUSINESS SOLUTIONS

DISHNET WIRELESS LIMITED-This Company provides

broadband services in different circles & it is one of the company which uses WIMAX technology. AIRCEL CELLULAR LIMITED-This Company provides mobile services in different circles. AIRCEL BUSINESS SOLUTIONS-This is the sub part of Aircel cellular limited which executes the ILD,NLD, WIMAX operations for Aircel cellular.

COMPANY PRODUCTS
AIRCEL SIM Cards

AIRCEL VOUCHERS AIRCEL E-Recharge AIRCEL INQ Mobile AIRCEL Pocket Internet

AIRCEL SERVICES
Any mobile service provider companies provide two types of facility for the usages: 1. PRE-PAID 2. POST-PAID PRE-PAID: PRE-PAID Define as a Pre paid and then use. In this type customer purchases the recharge coupons and other value added services card from retail shops and then that can use.

In the PRE-PAID if we have no sufficient balance then we cannot make a call. POST-PAID: POST-PAID Define as a post means first use and then paid. In this type of facility we can make a call unlimited till the credit limit. There are many types of facility who divert my opinion to use the Post-paid Facility.

VALUE ADDED SERVICES

COLOUR SMS CALLER RING BACK TONE AIRCEL 55555 SERVICE Music Stations: Astrology Jokes Bollywood News Tips AIRCEL HEALTH SERVICES RAILWAY SERVICES PLAY SCRABBLE Search your favorite Ring tone

Bengali Ring tones Voice Mail Service Save Your Contacts

Healthy Living Tips

SIM browser services Dictionary Funny Logos and Pictures Regional Ring tones Jokes Hollywood/English Ring tones, Picture Messages and Logos

Non-stop downloads of your favorite stars' Wallpaper, latest Polyphonic Ring tones, MP3 tones, True tones, Music Videos, Movie

videos, Themes, Movie Themes and Mobile games only on Aircel pocket internet. Whats more, activating this service is free and browsing the portal is charged just @10p/10Kb. Charges: SMS sent to 121 will be Free. Browsing charges 10paisa/10 Kb.

TARRIF PLANS
SERVICES RATE( Rs.)

Astro 5 Wall Papers 15 Polyphonic Ring tone 15 True Tones 20 Mp3 Tones 20 Animation 15 Videos 30 Themes 50 Movie Themes 30 Games 50 / 99 / 150

Voice Station
Voice Station Aircel 55500 service offers you a host of never before services from music on your mobile to tit-bits about celebrities. All you need to do is call 55500 from your Aircel mobile and follow the simple instructions to enter a world of information and entertainment. The service recognizes your voice and gives information based on the command given by you. Music Messaging and Ring tones Prayers Perform pooja from your Aircel mobile. Listen to an exhaustive collection of devotional songs like Supbrapatham, Bhajans, Amman Songs, and Gayathri & Gurbani . Astrology Service You can check your horoscope for the day, by entering your birth date. Astro info is updated every day. News Get the latest news updates. Information is available across Regional, State, National and International categories. Calls to

55500 services will be charged at Rs.6/min. Conditions Apply. Sports Get the latest news and information about the happening in the sports world, like live commentary, scores, schedules etc Jokes Smile with us by listening to the jokes. We have exhaustive collection which will make you burst in laughter for sure. Call rates Rs. 6/min.

Subscription Services:Service Subscription Keywords Send To

58000 58000 58000 58000 58000 58000 58000 58000

Charges
Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week

Alerts
Twice a day Ball by Ball update Once a Day Once a Day Thrice a Day Once a Day Twice a day Once a Day

Time
10:30 & 16:40 9:00 01:30:00 PM 01:30:00 PM 10:15 & 13:00 & 17:00 09:30:00 AM 13:00 & 14:55 1:15 & 14:00

News Headline + SUB NEWS Breaking News Cricket NEWS & SUB CRI SCORES Jokes Alert Astro Pack Stock Alert Though of the Day Alerts SUB JOKES SUB ASTRO <SUNSIGN> SUB STOCK SUB THO

MehfilETimepass SUB SHAYARI /Shayari Love Express SUB LOVE

Beauty Tips Alerts Health Tips Alerts Receipe Tips Alerts Fun Unlimited Alerts Regional News Alerts Ayurvedic Tips Alerts Amazing Facts Alerts

SUB BTIP SUB HTIP SUB RTIP SUB FUN SUB RNEWS SUB ATIP SUB AF

58000 58000 58000 58000 58000 58000 58000 58000 58000

Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week

Once a Day Once a Day Once a Day Once a Day Once a Day Once a Day Once a Day Once a Day Once a Day

13:45 17:30 15:20 10:00 & 14:45 14:50 7:30 12:30 13:45 7:00

Numerlogy Alerts SUM NUM1 TO NUM9 Guru Granth Sahib Alerts Geeta Shloakas Holy Bible Alerts Quran Alerts Ram Charit Manas Alerts Friendship Messages Alerts Career Guru Pack Fundoo Pack Super Sports Pack Word-a-Day Bihar News News - Bengal News - Kerela News Karnataka SUB GURU

SUB Geeta SUB BIBLE SUB QUR SUB RAM

58000 58000 58000 58000

Rs 7/week Rs 7/week Rs 7/week Rs 7/week

Once a Day Once a Day Once a Day Once a Day

6:40 6:40 8:45 8:45

SUB FRIENDS

58000

Rs 7/week

Once a Day

14:00

SUB CG SUB FNP SUB SSP SUB WORD SUB NEWSBH SUB NEWSBN SUB NEWSKER SUB NEWSKK

58000 58000 58000 58000 58000 58000 58000 58000

Rs 7/week Rs.30/month Rs.30/month Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week

Twice a day Twice a day Twice a day Once a Day Once a Day Once a Day Once a Day Once a Day

10:00 & 14:00 11:00 & 16:00 10:00 & 15:00 09:35:00 AM 11:40 11:40 11:40 11:40

News Maharashtra News - NCR News - North East News - Punjab News Rajasthan News - TN News - UP News - Gujarat News - AP

SUB NEWSMAH SUB NEWSNCR SUB NEWSNE SUB NEWSPN SUB NEWSRAJ SUB NEWSTN SUB NEWSUP SUB NEWSGJ SUB NEWSAP

58000 58000 58000 58000 58000 58000 58000 58000 58000

Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week Rs 7/week

Once a Day Once a Day Once a Day Once a Day Once a Day Once a Day Once a Day Once a Day Once a Day

11:40 11:40 11:40 11:40 11:40 11:40 11:40 12:40:00 PM 10:00

To unsubscribe from any of the services please contact Aircel Customer Care. SMS Charges to 58000: Rs.3/SMS Missed Call Alerts Want to know who called you when your mobile was switched off or out of coverage area? Just subscribe to the Aircel Missed Call Alerts service (MCA). There are two simple ways of doing it. After subscribing to the monthly service, you will receive alerts on your mobile for all the missed calls at no extra cost. Pay as you use option You also have the option of not subscribing to the service. In this option you can get the missed call alerts for the every request you send. SMS Charges to 5899903: Rs. 3/SMS Dialer Tunes

Aircel introduces Dialer Tunes! Get rid of boring Tring Tring and make your callers listen to latest tunes. Dial 56565, Registration Rs.30/month, call Rs.6/min & Rs.15/song.. Song validity is for a period of 90 days. Dialer tune is a special service through which the calling party can hear a song or music instead of the default "Tring Tring" tune. In order to get the Dialer service activated the subscriber has to register with the Dialer Tune service by calling 56565 and follow the instructions played by IVR. Once the user has registered for DIALER TUNE service the calling party will hear the song instead of the default ringing tune ("Tring Tring"). Subscriber will be confirmed with an SMS message of service activation. To change the selected song or to dedicate a special song to another user the subscriber has to call 56565 and follow the instructions which will play by IVR, While selecting the song it will play, whether to dedicate to all or a particular number. Through this the subscriber can dedicate a specific song for a specific subscriber.. Whenever this subscriber calls, he or she will get to hear the special song dedicated to the calling number. Select a new song and either assigns the song for all the callers or to particular caller so that the previous song will be replaced with the newly selected song. Subscriber will be confirmed with an SMS message of song change. The user can deregister from the DIALER TUNE service by calling the short code 56565 and follow the instructions played by IVR. Select the account details or profile management and can do deregistration of a single number or all. Once the subscriber is unregistered the calling party will not hear the song anymore and only the default "tring tring" will be played. The User can also unsubscribe from this service, by

calling Aircel Customer care at 9858012345 or 121 from local Aircel number The user can remove the song dedicated for a particular subscriber by calling 56565 at Rs.6/Min and follow the instructions played by IVR. Select the account details or profile management and can do deregistration of a single number. After removing the dedicated song the particular subscriber will hear the default song selected for all Live Astrology Astrology service on short code 55315 is a voice based LIVE SERVICE, where AIRCEL customers can call at Rs. 9/min and talk to formally trained & experienced ASTROLOGERS. Details of charges: Live Astrology service on 55315 Rs. 9/min (60 second pulse) Doctor On call Doctor-on-call' provides access to quality medical advice from the comfort of your home/ office. Gets instant advice on medical/ health and wellness queries from a panel of doctors specializing in various fields. Details of charges : Doctor on Call service on 54887 Rs. 9/min (60 second pulse).

COMPARISON OF AIRCEL WITH OTHER TELECOM INDUSTRIES

RATIO ANALYSIS CURRENT RATIO
SR. TELECOM 2004- 2005-06 2006NO PLAYRES 05 07 1 1.29 1.34 1.34 AIRCEL 2 3 4 5 BSNL TATA TELECOM BHARTI AIRTEL IDEA 1.75 1.84 0.47 2.45 1.98 1.19 0.44 0.74 2.46 1.08 0.47 0.87 2007-08 200809 1.35 1.35 2.47 1.44 0.57 0.43 2.25 1.31 0.69 0.36 200910 1.37 2.63 1.13 0.7 0.21

INTERPRETATION
The two basic components of this ratio are current assets and current liabilities. Current assets include cash and those assets which can be easily converted into cash within a short period of time, generally, one year, such as marketable securities or readily realizable investments, bills receivables, sundry debtors, (excluding bad debts or provisions), inventories, work in progress, etc. Prepaid expenses should also be included in current assets because they represent payments made in advance which will not have to be paid in

near future. Current liabilities are those obligations which are payable within a short period of tie generally one year and include outstanding expenses, bills payable, sundry creditors, bank overdraft, accrued expenses, short term advances, income tax payable, dividend payable, etc. A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. An increase in the current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio represents that there has been deterioration in the liquidity position of the firm. A ratio equal to or near 2:1 is considered as a standard or normal or satisfactory. The idea of having doubled the current assets as compared to current liabilities is to provide for the delays and losses in the realization of current assets. However, the rule of 2:1 should not be blindly used while making interpretation of the ratio. Firms having less than 2 : 1 ratio may be having a better liquidity than even firms having more than 2 : 1 ratio. This is because of the reason that current ratio measures the quantity of the current assets and not the quality of the current assets. If a firm's current assets include debtors which are not recoverable or stocks which are slow-moving or obsolete, the current ratio may be high but it does not represent a good liquidity position. The Current Ratio of AIRCEL is flatter over the subsequent year which means company is maintaining significant liquidity over the period of time. Their current ratio of the year 2009-10

is 1.37 which is likely similar to 1.35 in 2008-09.

Earning Per Share

Sr No. 1 2 3 Telecom Players AIRCEL. BSNL TATA TELECOM BHARTI AIRTEL IDEA CELLULAR 2004- 200505 06 15.05 9.21 15.65 15.28 26.54 16.83 200607 7.4 14.03 16.44 200708 6.46 4.44 10.68 200809 5.45 1.15 18.1 200910 2.129 1.08 10.809

6.53

10.62

21.27

32.9

40.79

49.662

0.1

0.56

1.94

3.96

3.96

5.44

INTERPRETATION The earnings per share is a good measure of profitability and when compared with EPS of similar companies, it gives a view of the comparative earnings or earnings power of the firm. EPS ratio calculated for a number of years indicates whether or not the earning power of the company has increased. EPS of majority of the company have been reduced significantly except Bharti Airtel and Idea Cellular. Earning per Share of AIRCEL have been reduced from 15.05 (2004-05) to

5.45 (2008-09) and it will reduce in 2009-10 to 2.129. This may be mainly because of decrease in income of services over the period of time. Decrease in income from services can be attributed to increase in competitive rivalry as various international players like Vodafone and Reliance came into the Indian market with improved technology and made tariff wars to attract the customers. EPS of Bharti Airtel have been increased significantly over the years i.e. 6.53 (2004- 05) to 40.79 (2008-09) and 49.662(2009-10).This is because of improvement of technology by the company over the years as compared to other players like AIRCEL which made the company to capture the market share of these companies who doesnt go in tandem with the changing technology.

Debtor Turnover Ratio

Sr No. 1 Telecom Players AIRCEL. 2004- 200505 06 3.29 3.51 200607 4.12 200708 4.95 200809 5.365 200910 5.924

BSNL

5.03

5.73

6.2

5.92

6.41

6.743

TATA TELECOM BHARTI AIRTEL

6.3

5.62

4.78

3.25

3.12

1.995

11.38

12.57

14.31

12.28

12.78

13.417

IDEA CELLULAR

17.74 20.01

35.89

38.28

47.355 55.105

INTERPRETATION
A concern may sell goods on cash as well as on credit. Credit is one of the important elements of sales promotion. The volume of sales can be increased by following a liberal credit policy. The effect of a liberal credit policy may result in tying up substantial funds of a firm in the form of trade debtors (or receivables). Trade debtors are expected to be converted into cash within a short period of time and are included in current assets. Hence, the liquidity position of concern to pay its short term obligations in time depends upon the quality of its trade debtors. Accounts receivable turnover ratio or debtors turnover ratio indicates the number of times the debtors are turned over a year. The higher the value of debtors turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It is the reliable measure of the time of cash flow from credit sales. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm. Debtor Turnover Ratio of AIRCEL is- 5.36 for the year 20082009. So the debtor velocity is 365/5.36 which comes out as 62 days i.e. AIRCEL takes on an average 68 days to collect its money back from the debtors, which is again higher when compared to the industry standards of 54 days (BSNL).

RETURNS ON CAPITAL EMPLOYED

Sr No. 1 2 3 Telecom Players AIRCEL. BSNL TATA TELECOM BHARTI AIRTEL IDEA CELLULAR 2004- 200505 06 10.16 5.95 10.09 9.94 11.41 11.52 200607 6.77 9.05 10.28 200708 6.48 4.97 6.53 200809 4.785 1.46 6.23 200910 3.763 0.33 4.589

19.27 20.74

29.06

27.95

28.4

32.725

7.52

10.44

14.96

16.92

20.64

23.912

INTERPRETATION The prime objective of making investments in any business is to obtain satisfactory return on capital invested. Hence, the return on capital employed is used as a measure of success of a business in realizing this objective. Return on capital employed establishes the relationship between the profit and the capital employed. It indicates the percentage of return on capital employed in the business and it can be used to show the overall profitability and efficiency of the business. Return on capital employed ratio is considered to be the best measure of profitability in order to assess the overall

performance of the business. It indicates how well the management has used the investment made by owners and creditors into the business. It is commonly used as a basis for various managerial decisions. As the primary objective of business is to earn profit, higher the return on capital employed, the more efficient the firm is in using its funds. Return on Capital Employed Ratio of AIRCEL is 4.785 for the year 2008-2009, which indicate that the company is earning 4.8 percent return on the total capital employed that consists of fixed assets , investments and net working capital. Return on capital is even worse i.e. 3.76 for 2009-10 Return on capital employed is one of the key ratios that determine the fate of the company in the future. Through the graphs we can easily see that most of the companies are having negative trend in the past years due to their inability to meet the competition and rapid changes in technological environment. Only few of the private players like Bharti and Idea have improved their return on capital and have positive trend in the returns over the past 5 years.

Price Earning Ratio

Sr No. 1 2 3 Telecom Players AIRCEL. BSNL TATA TELECOM BHARTI AIRTEL IDEA CELLULAR 2004- 200505 06 8% 13% 5% 59% 7% 200607 4% 34% 7% 200708 3% 8% 4% 200809 1% 2% 7% 200910 1% 1% 3%

26%

27%

35%

30%

28%

31%

2%

18%

23%

29%

39%

48%

INTERPRETATION A valuation ratio of a company's current share price compared to its per-share earnings. Calculated as:

In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the whole story by itself. It's usually more useful to compare the

P/E ratios of one company to other companies in the same industry, to the market in general or against the company's own historical P/E. It would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has much different growth prospects. We can easily state that only expectation of investors of Bharti and Idea is growing i.e. the P/E ratio of Bharti Airtel and Idea is growing with each successive year but expectation from Idea is growing at increasing rate which means idea is one of the emerging leader in the industry and its expectations have been outperformed from the entire industry i.e. In 2009-10 P/E of Bharti is 31% whereas Idea is 48%. P/E of AIRCEL was 5% in 2005-06 but as the time passes expectation of the investors have been declined and now it is only 1%.

NET PROFIT MARGIN RATIO

Sr No. 1 2 3 Telecom Players AIRCEL. BSNL TATA TELECOM BHARTI AIRTEL IDEA CELLULAR 2004- 200505 06 16.1 30.4 22.2 9.7 24.7 12.1 200607 8.5 22.5 11.2 200708 7.7 9.3 8.9 200809 3.9 8 13.25 200910 1.26 -3.88 7.2

14.8

17.8

22.5

24

22.58

26.86

1.6

6.2

11.4

15.3

20.2

24.83

INTERPRETATION This ratio also indicates the firm's capacity to face adverse economic conditions such as price competition, low demand, etc. Obviously, higher the ratio the better is the profitability. But while interpreting the ratio it should be kept in minds that the performance of profits also be seen in relation to investments or capital of the firm and not only in relation to sales. Net Profit Ratio of AIRCEL is 1.26 for the year 2009-2010, which is lower in comparison with the industry ratio. It shows the inefficiency amongst the public sector undertaking. Profits

of the company are decreasing at an increasing rate which shows that highly negative trend for the company.