JTL has planned to provide fixed phone services to its subscribers with the latest technology. EXECUTIVE SUMMARY JTL was awarded PSTN (Fixed Phone) License on June 22, 2004 by Bangladesh Telecommunication Regulatory Commission (BTRC) for providing fixed phone services in 16 districts of North-East Zone of Bangladesh covering about one-fourth area of the country. The principal activities of the company are to set up telecommunication system, install telephone exchange in Bangladesh and to carry out telecom operations with joint, local or foreign collaboration for the purpose of new connections and expansion of telecommunication network in the North Last Zone's district area. JTL has planned to provide fixed phone services to its subscribers with the latest technology. Code Division Multiple Access (CDMA) is one of the latest technologies being used world wide in wireless access communication system. JTL selected CDMA technology to extend telephone connections to scattered and low densely populated remote areas. The company has also planned to continue the existing cable line telephone system in the densely populated urban areas. CDMA 2000 1X has been opted for wireless telephone system that is easily convertible to 3G (third generation) system. Digital switching system has been chosen for cable line phone system. Copper cable and fiber optic cable have been selected for use in the access network. Digital microwave transmission system of 7 GHz is for long distance link and microwave transmission system of 15 GHz is for access link. These financial statements have been prepared on Generally Accepted Accounting Principles (GAAP) under the historical cost convention and in accordance with Bangladesh Accounting Standards, Companies Act, 1994 and other applicable laws and regulations. Fixed assets are stated at cost less accumulated depreciation. Cost includes expenditure directly attributable to the acquisition and installation of the assets. The company enjoys tax holiday benefit from 1 June 2005 to 31 May 2012 for seven years, under section 46 A (1) (b) of Income Tax Ordinance 1984. After three years of operation company fall into acute competitors pressure and BTRC rules and regulation. At that stage JTL has taken initiatives to do feasibility study for next five years.
1. INTRODUCTION 1.1 Birth of JTL With a view to operate business in telecommunication services, Jalalabad Telecom Limited (JTL) was registered on November 2002 as a private limited company (C-47651 with the Registrar of Joint Stock Companies & Firms, Bangladesh under the ambit of the Companies Act, 1994), Its corporate office is located at UTC Building (10`h Level), 8 Panthapath, Dhaka1215. It can be communicated to Tel: 880-2-9110739, 9110637, Fax: 880-2-8125 E-mail: info@jalalabadtel.net, Website: bijoyphone.net 1.2 License from BTRC JTL was awarded PSTN (Fixed Phone) License on June 22, 2004 by Bangladesh Telecommunication Regulatory Commission (BTRC) for providing fixed phone services in 16 districts of North-East Zone of Bangladesh covering about one-fourth area of the country. These 16 districts are excluding district headquuarter of Dhaka, Narayanganj, and Gazipur. 1. Sylhet, 2. Sunamganj, 3. Habiganj, 4. Moulavibazar, 5. Sheipur, 6. Jamalpur, 7. Netrakona, 8. Mymensingh, 9. Keshorganj, 10. Tangail, 11. Munshiganj, 12. Manikganj, 13. Narsingdi
14. Dhaka 15. Narangonj 16. Gazipur 1.3 Management & Organogram In order to ensure result oriented operation in various departments of JTL: Technical, Marketing, Customer Service, Finance & Accounts, Revenue and Administration, appropriate management structure has been developed. The figure 1-1 below demonstrates the organogram and management structure of JTL that depicts the chain of command among the officers.
CHAIRMAN
BOARD OF DIRECTOR
MANAGING DIRECTOR
OPERATION DIRECTOR
GM (F & A)
DGM (Eng)
DGM (P & D)
Marketing Manager
2. OPERATIONAL ACTIVITIES 2.1 Principle Activities of the Company The principal activities of the company are to set up telecommunication system, install telephone exchange in Bangladesh and to carry out telecom operations with joint, local or foreign
collaboration
for
the
purpose
of
new
connections
and
expansion
of
telecommunication network in the North Last Zone's district area licensed by the regulatory authority - . 'Bangladesh 'telecommunication Regulatory Commission (BTRC). The Company commenced its commercial operation from 16 June 2005.
2.2 Contract signing with telecom equipment supplier Contract for Switching & Fiber Optic Transmission System The first contract was signed with Huawei Tech. Investment Co. Limited on 24"' October, 2004 for Design, Supply, Installation, Testing, Commissioning of Switch & Optical Transmission System at Sylhet city. Under this contract, Huawei supplied JTL digital switching system for 10,000 lines CLL network in Sylhet city. Capacity of the switch is expandable to 30,000 lines. Supplied fiber optic transmission system provides STM-4 transmission capacity (upgrade able up to STM-16) in the backbone ring carrier system in Sylhet city. Contract for CDMA WLL Equipment On February 02, 2005 second contract has been reached with Huawei Tech. Investment Co. Limited for design, supply, installation, testing & commissioning of Switch & CDMA WLL system, Under this contract Huawei is to supply equipments for development of CDMA WLL network in greater Sylhet, greater Dhaka (excluding metropolitan area), and greater Mymensingh region. JTL plans to install CDMA access network for 58,000 subscribers in first phase of its project implementation. Under this Contract, Huawei so far supplied I BSC, 6 BTSs, 1 set CNET (MSU expansion), 1 set PDSN equipment, 1 set OMM equipment, 1 set standard IN equipment, SMS equipment, and VMS equipment.
Contract for Microwave Transmission Equipment JTL entered into agreement with Stratex Networks INC, USA on 10"' March, 2005 for Survey, Planning, Design, Supply, Installation, Testing & Commissioning of Microwave Transmission System. Under this contract Stratex supplied 19 Microwave links for establishing transmission network. 2.3 Out Side Plant (OSP) Copper Cable Network Outside Plant work for building of copper cable network includes plan for cable network, supply of primary cable, secondary, cable, cabinet, DP (distribution point) & other accessories and installation of copper cable, cabinet, DP & accessories. Actually, OSP for copper cable system has been started from September, 2004. Underground cable including overhead secondary cable, cabinet & DP etc. has been planned for the locations of Zindabazar, Amberkhana, Shibganj & Moulavibazar. OSP work in Zindabazar area was completed by March, 2005. Works at Shibganj & Amberkhana completed by June, 2005. Cable work at Moulavibazar will be completed within one month. Fiber Optic cable Network As per plan to build fiber optic ring transmission network for communicating traffic between RSUs & BTSs (installed at Shibganj, Amberkhana at Sylhet ) with MSU & BSC (installed at Zindabazar, Sylhet), fiber optic cable has been supplied from Huawei. Local contractor completed installation of fiber optic cable running through the PDB poles by April, 2005. The total running length of the fiber cable is about 18 kin. Later, two spur fiber optic links -- one from JTL MSU, Zindabazar connecting to BTTB TAX, Taltala, Sylhet, another one from Amberkhana to Akhali for connecting the BTS & RIM installed therewith MSU, Zindabazar have been extended. 2.4 Installation, Testing Commissioning of Main Switching Unit (MSU) Switching equipment has been supplied from Huawei in November, 2004. The MSU cum local switch was installed at Zindabazar, Sylhet site. This is the first project implementation of JTL
for establishing landline telephone system in Sylhet city. Under this project, MSU for initial capacity of 10,000 lines has been installed by Huawei at Zindabazar in Decemaber, 2004. Remote switching units (RSU) each having capacity of 2500 lines have also been installed in Shibganj, Amberkhana of Sylliet city. MSU controls and manages RSUs. MSU itself has local connectivity capacity with 2500 lines. Later another RSU of same 2500 lines has been installed in Moulavibazar. 2.5 Commercial operation for Fixed Phone service JTL has launched the commercial operation of its Fixed Phone Services with the brand name BIJOY PHONE on June 16, 2005 in Sylhet city. Its services were later expanded to Tajpur, Sreemongal and Moulavibazar town. CLL network has been developed to provide fixed phone services in the densely populated cities / towns while WLL network has been established for meeting telephone demands for population living in remote areas (sub-urban & rural areas). Line connections are being given to subscribers in Sylhet city and Moulavibazar district. Few other thanas of Sylhet district are in the process of coming into the CDMA WLL network coverage under proposed BTS in those areas. The existing network and customers are in Greater Sylhet region. All the technical, customer care, marketing/sales and revenue services to them are being run in Sylhet city under the regional office at Zindabazar, Sylhet. The company's Finance, Billing and Operations activities are kept directly under the corporate office in Dhaka.
2.6 Installation, testing and commissioning of CDMA WLL System In order to expand JTL's PSTN network by providing CDMA wireless services, CDMA WLL network equipments have been supplied from Huawei in June 2005. Core CDMA network equipments - BSC, OMM, and PDSN have been installed in Zindabazar site. 3 BTSs have been installed at Shibganj (3000 lines), Amberkhana (2500 lines) & Akhali (3000 lines). These 3 BTSs provide a total capacity of 8,500 connections in Sylhet city. Installation, testing and commissioning of these CDMA equipments have been completed by August, 2005. Commercial operation on CDMA WLL services commenced from September, 2005.
As a next step of network development, 3 other locations in Moulavibazar district have been brought under CDMA WLL network service by installing 3 BTSs at Moulavibazar (2500 lines), Sreemongal (2000 lines) & Tajpur (3000 lines). These 3 BTSs added CDMA service of a total of 7500 subscribers in the network. Installation, testing & commissioning of these BTSs in Moulavibazar district have been completed in December, 2005. Commercial operation on CDMA services in Moulavibazar region started on January 01, 2006. Existing CDMA network covering Sylhet city and Moulavibazar district has capacity of 16,000 WLL connections.
2.7 Distribution of commissioned lines by location As aforesaid, fixed phone services provided in the network of JTL are of two types: CLL & WLL. Installed and commissioned to subscribers line facilities cover Sylhet city and greater Moulavibazar district. As depicted in the following graphical charts, in summary it could be stated that a total of 10,608 CLL lines have been installed and commissioned while 16,000 lines commissioned include to CDMA WLL network. About 60% lines of total commissioned 26,608 lines are of CDMA WLL and 40% lines are of CLL. 2.8 Tower Construction Rooftop self-supported towers have been selected for BTS & microwave transmission system. First two rooftop towers (20 meter) have been erected at the roofs of the building sites of Shibganj & Amberkhana for BTS. This work has been completed in early 2005. In the next stage, towers have been erected at the sites, Al-Hamrah, Sylhet (20 meter), Akhali, Sylhet (12 meter), Tajpur (25 meter), Moulavibazar (20 meter) & Sreemongal (20 meter). It should be noted that Al-Hamrah site has been acquired for setting up main microwave station. At present, as a part of expansion of CDMA WLL network, tower & site work are on going at Syedpur in Jagannatpur. It is planned that one BTS will be installed there. 2.9 Installation, Testing, Commissioning of Microwave Transmission link Microwave transmission equipments have been supplied from Stratex Networks for establishing transmission network. After making necessary site survey, Line of Sight Survey
(LOS), LOS link budgeting, the following; transmission links have so far been installed, tested and commissioned in Sylhet region. Name of Link
Hop Distance
Purpose
Amberkhana --- Gas Bhabau, 2 km Sylhet
Interconnection between the networks of JTL and AKTEL.
Al-llamrah-Tajpur
27 km
Access link for BTS & RIM
Tajpur -- Moulavibazar
22 km
Access link for BTS & RSU
Moulavibazar - Sreemongal
20 km
Access link for BTS '
Al-Hamrah At-Falah Marketing Complex, Sylhet
2 km
Interconnection between the networks of JTI_ and CityCell.
One link from Tajpur to Syedpur, Jagarnnathpur will be installed soon. Survey & planning works are going on to install 6 other links in Dhaka periphery locations for establishment of access transmission links for CDMA WLL network there. Space at T.K. Bhaban, Kawranbazar, Dhaka has been acquired as central site for installation of transmission equipments and other core network equipments required for CDMA WLL project in Dhaka periphery.
3. TECHNICAL SYSTEM 3.1 Overview of Technical System JTL has planned to provide fixed phone services to its subscribers with the latest technology. Code Division Multiple Access (CDMA) is one of the latest technologies being used world wide in wireless access communication system. JTL selected CDMA technology to extend telephone connections to scattered and low densely populated remote areas. The company has also planned to continue the existing cable line telephone system in the densely populated urban areas. CDMA 2000 1X has been opted for wireless telephone system that is easily convertible to 3G (third generation) system. Digital switching system has been chosen for cable line phone system. Copper cable and fiber optic cable have been selected for use in the access network. Digital microwave transmission
system of 7 GHz is for long distance link and microwave transmission system of 15 GHz is for access link. Standard 1N (Intelligent network) system has been planned and procured for providing services: Pre-Paid service (PPS), Free-Phone service (FPH), Virtual Private Network (VPN), and other value added services 3.2 Core Network Digital switching based Main Switching Unit (MSU) / Host Switch has been selected. MSU has been planned to provide Cable Line Loop (CLL) and CDMA Wireless Local Loop (WLL) telephone services. MSU is also for building interconnecting links with networks of other operators. Huawei's digital switching system C&C08 has been procured along with RSU, RIM, BSC & BTS. Remote Switching Unit (RSU) & Remote Integrated Module (RIM) are access switches for connecting remote subscribers. RSU & RIM are connected with MSU for switching, control and administration. Call details records available in the MSU could be taken to billing center for bill processing. Core switching network along with all interconnecting links are demonstrated in the Diagram 2-1. 3.3 Services Created and Provided by the PSTN Network of JTL JTL's CLL & CDMA WLL network can support the following supplementary & value added services for its customers. • • • • • • • • • • • • • •
Call forwarding of all types Call waiting Call barring of all types Conference call Centrex Virtual call center Caller 1D Presentation (CLIP) Caller ID Restriction (CLLR) Alarm Call Malicious call tracing Abbreviated dialing Hotline Do not disturb Absent subscriber service
• • • • • •
Emergency calling SMS (only WLL) VMS Dial up & Packet data internet Telephone address catalogue up to 100 nos. (WLL case) VOIP
4. SIGNIFICANT ACCOUNTING POLICIES a) Basic Accounting These financial statements have been prepared on Generally Accepted Accounting Principles (GAAP) under the historical cost convention and in accordance with Bangladesh Accounting Standards, Companies Act, 1994 and other applicable laws and regulations. b) Tangible fixed assets and depreciation Fixed assets are stated at cost less accumulated depreciation. Cost includes expenditure directly attributable to the acquisition and installation of the assets. Any repairs and maintenance expenses are charged to the income statement during the period when these are incurred. Depreciation on fixed assets has been charged on straight-line method considering the economic and technical lives. Full year's depreciation have been charged at the year of acquisition of the assets and no depreciation is charged during the year of disposal. As the Company has gone into operation as on 16 June 2005, depreciation on assets for these financial statements has been charged from that date. c) Intangible asset and amortization Intangible asset are stated at cost less amortization. This will be amortized over a period of five years starting from 16 June 2005. d) Inventories Inventories include Wireless Local Loop (WLL) telephone sets and Drop Wire cables and are measured at the lower of cost and net realizable value- Cost is determined using the weighted average method. Net realizable value is the estimated selling price in the ordinary course of business less variable selling expenses.
e) Preliminary expenses Preliminary expenses represent expenses incurred for formation of the company and are being amortized over a period of five years starting from the year 2005. During the year, proportionate amount has been charged in these financial statements. f) Pre-operating expenses All revenue expenditures before the commencement of commercial operation as on 16 June 2005 were recorded as "Pre-operating expenses" and are being amortized over a period of ten years starting from the year 2005. During the year, proportionate amount has been charged in these financial statements, g) Amortization of license and application fee The first tenure of the License from BTRC is 20 years for which Tk. 20,600,000 has been paid on account of License and Application fees: This amount will be amortized over a period of 15 years. Accordingly, proportionate amount has been charged in these financial statements. h) Tax holiday The company enjoys tax holiday benefit from 1 June 2005 to 31 May 2012 for seven years, under section 46 A (1) (b) of Income Tax Ordinance 1984. i) General i) Figures appearing in these financial statements have been rounded off to the nearest Taka. ii) Figures relating to previous year have been rearranged wherever necessary to conform to the current year's presentation. iii) The Company commenced it's commercial operation as on 16 June 2005, as such no comparative information for profit and loss account have been shown in these financial statements.
5. FINANCIAL DIAGNOSIS 5.1. Subcriber Base by Geagraphical Area
Zone Sylhet Mouluvibazar Sremongol Tajpur Total
Subscribers 2200 700 900 500 4300
2500
2000
1500
1000
500
r Ta jp u
go l Sr em on
ib az ar uv M ou l
Sy lh et
0
5.2. Sales Trend base by subcriber
Year 2005 2006 2007
Subscribers 2500 5300 4200
6000 5300
5000
4200
4000 3000 2500 2000 1000 0 2005
2006
2007
5.3. Sales In Amount
Year 2005 2006 2007
Amount 800,000 2,000,000 1,500,000
Sales in Amount
2,000,000
1,500,000
800,000
2005
2006
2007
6. FEASIBILITY STUDY After three years of operation company fall into acute competitors pressure and BTRC rules and regulation. At that stage JTL has taken initiatives to do feasibility study for next five years based on some assumption which discuss elaborately below 6.1 ASSUMPTIONS Revenue 2008
2009
2010
2011
2012
No. of Subscribers Prepaid Postpaid Total
3,106 777 3,883
15,430 3,858 19,288
23,230 5,808 29,038
31,030 7,758 38,788
38,830 9,708 48,538
Churn (Deactivated customers, %) Outgoing Incoming
3% 70% 30%
65% 35%
62% 38%
60% 40%
58% 42%
Minutes per day per subscriber
28.0
AMPU Growth
28.7
29.4
30.2
31.0
2.5%
2.5%
2.7%
2.7%
Total AMPU per month outgoing Total Air time - outgoing Prepaid Postpaid
588 2,282,910 1,369,746 913,164
560 10,794,249 6,476,550 4,317,700
547 15,888,318 9,532,991 6,355,327
544 21,093,104 12,655,863 8,437,242
540 26,204,345 15,722,607 10,481,738
Prepaid AMPU Peak Hour Off Peak Hour Total
309 132 441
294 126 420
287 123 410
286 122 408
283 121 405
Post Paid AMPU Peak Hour Off Peak Hour Total
706 470 1,176
672 448 1,119
657 438 1,094
653 435 1,088
648 432 1,080
Revenue from Inter connection for incoming 2
3 01
3
Total Airtime - incoming per year
80
58
18
34
18
Interconnection Sharing Rate (Tk.) Peak Off Peak
0.40 0.40
0.40 0.40
0.40 0.40
0.40 0.40
0.40 0.40
Revenue from Interconnection Peak revenue Off peak revenue total revene incoming
3,287,390 1,408,882 4,696,272
19,529,288 8,369,695 27,898,983
32,719,685 14,022,722 46,742,407
47,248,554 20,249,380 67,497,934
63,757,881 27,324,806 91,082,687
Average Revenue per Minute Prepaid Post paid
0.56 0.60
0.53 0.57
0.51 0.54
0.48 0.51
0.46 0.49
Revenue from Call Charge, Monthly Prepaid 247 Post paid (excl. line rent) 706
223 638
207 593
196 560
185 528
ARPU, Monthly
69,747,4
63
3
52 11,740,6
35
3
Total AMPU per month incoming
116,856,0
91 168,744,8
227,706,7
Prepaid Post paid (incl. line rent) ARPU per minute Product Prepaid Post paid
247 856
223 788
207 743
196 710
No. of Users (as %) 80% 20%
Usage Total 60% 40%
Peak Hour 70% 60%
Usage Off Peak Hour 30% 40%
0.40
0.40
0.40
0.40
0.40
0.40
0.40
0.40
17,098,091
25,167,096
33,411,477
41,507,682
8,808,107 25,906,199
12,964,868 38,131,964
17,211,973 50,623,450
21,382,745 62,890,427
Inter-connection charge Inter-connection charge (Peak Hour) 0.40 Inter-connection charge (Off Peak Hour) 0.40 Inter-connection Expense Inter-connection expense (Peak Hour) 3,616,129 Inter-connection expense (Off Peak Hour) 1,862,855 Total Inter-connection expense 5,478,984 Subsidy/Acquisition Cost Subsidy/Acquisition cost customer
185 678
per
DIRECT OPERATING COST Royalty to BTRC Interconnectivity Cost Subsidy/Customer acquisition cost Total Cost
605,207 5,478,984 6,084,191
2,227,664 25,906,199 28,133,863
3,327,404 38,131,964 41,459,368
4,624,992 50,623,450 55,248,442
5,614,774 62,890,427 68,505,201
Rate of Royalty to BTRC
2.00%
2.00%
2.00%
2.00%
2.00%
Operation & maintenance (O&M)
2008
2009
2010
2011
2012
Rent
00
1,452,000
1,597,200
1,756,920
2,904,000
3,194,400
3,513,840
60,500
66,550
73,205
48,400
53,240
58,564
24,200
26,620
29,282
1,200,0
1,320,0 00
2,400,0 Salaries and allowance
00
2,640,0 00
50,0 Printing and stationeries
00
55,0 00
40,0 Postage and telephone
00
44,0 00
20,0 Entertainment
00
22,0 00
Training and development
- 10,0 00
Books and periodicals
00
Consultancy fees
- 12,0 13,2 00 00 20,0 22,0 00 00 1,000,0 1,100,0 00 00 500,0 550,0 00 00 175,0 192,5 00 00 150,0 165,0 00 00 4,000,0 4,400,0 00 00 1,000,0 1,100,0 00 00 10,577,000. 11,634,700. 00 00
Car running and maintenance Traveling and conveyance Insurance premium Stores & spares Fuel & lubricants Repairs & maintenance Electricity bills Miscellaneous expense Total Cost Put into Process
-
-
-
12,100
13,310
14,641
-
-
-
14,520
15,972
17,569
24,200
26,620
29,282
1,210,000
1,331,000
1,464,100
605,000
665,500
732,050
211,750
232,925
18
181,500
199,650
15
11,0
256,2 219,6 5,856,4 4,840,000
5,324,000
00 1,464,1
1,210,000 1,331,000 00 12,798,170. 14,077,987. 15,485,785. 00 00 70
General & Administrative Expense 2,640,0 Office rent
2,400,000
00
3,513,8 2,904,000
3,194,400
40
9,240,0 Salaries and remuneration
8,400,000
00
12,298,4 10,164,000
11,180,400
40
302,500
332,750
25
242,000
266,200
20
60,500
66,550
05
3,025,000
3,327,500
50
12,100
13,310
41
72,600
79,860
46
275,0 Printing & stationeries
250,000
00
Postage & telephone
200,000
00
Entertainment
50,000
00
Publicity and advertisement
2,500,000
00
Books and periodicals
10,000
00
Audit and legal fees
60,000
00
366,0
220,0
292,8
55,0
73,2
2,750,0
3,660,2
11,0
14,6
66,0
87,8
132,0 Car running and maintenance Traveling and conveyance
120,000 50,000
00
145,200 55,0 60,500
175,6 159,720 66,550
92 73,2
00
05 1,100,0
Miscellaneous expense
1,000,000 00 15,040,0 00 00
Total
1,464,1
1,210,000 1,331,000 00 16,544,0 18,198,4 20,018,2 00 40 64
22,020,0
Collection from Sales / Collection of receivables Credit Term
60
days 1,016,3
Beg. A/R Ending A/R
25
Collection from Sales (Cash)
43
Interconnection receivables
3,781,0
5,933,7
- 25 74 58 1,016,3 3,781,0 5,933,7 74 58 43 29,244,0 108,618,4 164,217,5 60 12 14
8,561,7 43
8,561,7
10,104,5 88
228,621,6
279,195,8 69
revenue
Credit Term
60
days 771,9
Beg. A/R Ending A/R
90
- 90 771,9 34
4,586,1 34
4,586,1
7,683,6 83
7,683,6 83
11,095,5 51
11,095, 551
14,972,4 97
Payment of operating expenses Credit Term
60
days 10,577,0
Operation & maintenance 00 General and administrative expense 00
11,634,7 00
15,040,0
16,544,0 00
25,617,0 Total
12,798,1 70 18,198,4 00
28,178,7
00
00
50
- 50 2,134,7 25
Ending A/P
40
70 2,348,2
2,348,2
64 37,505,8 50 2,583,0
48 2,583,0
48
22,020,0
34,096,2 27
25
15,485,7 86
20,018,2
30,996,5
2,134,7 Beg. A/P
14,077,9 87
2,841,3 52
2,841,3 52
3,125,4 87
Interconnection expenses payable Credit Term Beg. A/R
60
days -
900,6
4,258,5
6,268,2
8,321,6
55 900,6 Ending A/R
53 4,258,5
55
53
68
63
6,268,2 68
8,321,6 63
10,338,1 52
6.2 PROJECT COST (Tk) PROJECT COST
Already Invested Local Currency
Land & Development : Land & Land Development
To be Invested Foreign Currency Local Equivalent in BDT Currency
1,900,0 00
Site Preparation
100 -
,000
-
-
2, 000,000
1,900,0 00
Site & Civil Works: Cost of Site Acquisition & Civil Works 00 Advance against Sites & Spaces
,000
000,000
-
,000
500,000
-
-
-
-
,000
500,000
000
-
100,000
-
-
-
000
-
100,000
-
,000
-
,000
200
10,
200
220,000,0 00
Duty, Clearing forwarding etc.
2,
-
10,300,0 Imported Machinery: Imported Machinery
100
10,300,0
00
10,
84,100,
304,
-
Imported Machinery
220,000,0 00
Local Machineries & Equipments: Local Machineries & Equipments
84,100,
304,
61,400,0 00
Local Machineries & Equipment
42,000
61,400,0 00
Transport, furniture & fixtures Transport & vehicles
Total
4,200,0
103, 400,000
42,000
103, 400,000
1,800
6,
00 Furniture & fixtures
,000 4,000,0
1,000
00 Computer & office equipment
,000 7,200,0 ,000 7,500,0
Other Project Cost Pre-operating Expense
10, 000,000
6,000
00 Total transport, furniture & fixtures, etc. 00
5, 000,000
2,800
00 Leasing of E-1
000,000
,000 22,900,0
13, 500,000
11,60
34,
-
0,000
500,000
-
-
100,000
14,100,0 00
Marketing Expense
14,
2,500,0
2,500
00 License & application fee
,000
5, 000,000
20,600,0 00
Bank Guarantee Margin
20, -
600,000
5,000,0 00
Bank interest and charges
1,000 -
,000
6,500,0 00
Contingency
-
,000
-
Initial Net Working capital
40, 000,000
5,000 ,000
48,700,0 00
000,000 33,500
-
Other Project Cost
6,
5, 000,000
42,000 -
90,
,000
700,000
-
-
-
Total Cost of the Project
365,200,0 00
84,100, 95,900,000
545,200,000
000 -
6.3 MEANS OF FINANCE Source Equity
Amount Percentage 200,000,0 00 37% 345,200,0
Term Loan Total
00
63% 545,200,0 100%
00 Comparison of project cost with other operators
Total project cost (Tk.)
Dhaka Phone Ltd.
Ranks Tel.
1,460,400,000
2,300,000,000
Telebarta 3,103,041,03 3
JTL 545,200,000
6.4 BUDGETED BALANCE SHEET 2008
2009
(13,029,2 Cash
37)
19,878, 494
1,016, Bills Receivables Interconnection Receivables
325 Revenue
Other Short Term Assets
134
-
-
000 &
000 51,935,
238
476 493,264,
Net Fixed Assets
762
Total Assets
840
441,329,
482,023, 2,134, A/P Interconnection payable
750 expense
225 900,
655
Total Current Liabilities
405
Long Term Debt Less: Loan repayment Net Long Term Debt
000
000
2,841, ,487
663
10,338 ,152
11,163, 015
345,200,
3,125
8,321,
8,851, 316
345,200,
610,16 5,176
352
268
778 345,200,
527,664,
6,268,
6,606,
285,523 ,810
195
048
553 3,035,
337,459,
2,583,
4,258,
259,676 ,190
048 476,531,
2,348,
,000
952
775
545,200
207,740,
389,394,
469,575, 226
,366
000
286
324,641
545,200,
155,805, 714
524
190,205,
148
000
14,972 ,497
545,200,
103,870,
,588
551
490
10,104
11,095,
87,137,
545,200,
,282
743
-
299,564
8,561,
7,683, 683
702 545,200,
854
758
28,245,
2012
170,547,
5,933,
4,586,
990
22)
Long Term Assets Less: Depreciation Amortization
049
074 771,
2011 73,520,
3,781,
(11,240,9 Total Current Assets
2010
13,463 ,640
331,200,
317,200
000 000 ,000 (14,000,0 (14,000,0 (14,000, 00) 00) 000) 345,200, 345,200, 331,200, 317,200, 303,200 000 000 000 000 ,000
348,235, Total Liabilities
405
351,806, 778
340,051, 316
015
Total Capital
200,000, 200,000, 200,000, 000 000 000 (66,211,5 (82,231,5 (70,536,5 65) 52) 45) 7,017, 005 133,788, 117,768, 136,480, 435 448 460
Total Liabilities and Equity
840
Share Capital Retained Earnings Reserve for Tax holiday
482,023,
469,575, 226
328,363, ,640
200,000, 000 (31,273,5 95) 30,574, 775 199,301, 180
476,531, 775
316,663 200,000 ,000 27,601 ,628 65,899 ,908 293,501 ,536
527,664, 195
610,16 5,176
6.5 BUDGETED INCOME STATEMENT Particulars
2008
2009
Revenue
368
209
196
599
714
-
-
-
-
-
30,260,
2010
111,383,
30,260,
166,370,
111,383, 209
2011 231,249,
166,370,
280,738,
231,249,
368
Less. VAT @ 15%
752
Net Revenue Less: Cost of Revenue
617
Interconnection cost
984
Royalty to BTRC
207
664
404
992
774
Subsidy/Customer acquisition cost
-
-
-
-
-
8,280, 551
28,034,
103,102,
21,950, Operating Revenue Commercial Expenses:
425
50,623,
5,614,
55,248, 442
111,915, 900
62,890, 427
4,624,
41,459, 368
258,609, 667
450 3,327,
74,968, 795
212,499,
38,131,
28,133, 863
22,129, 047
382
964 2,227,
6,084, 191
18,750,
153,375,
25,906,
714
217
267
199 605,
Total Cost of Revenue
12,994, 929
658 5,478,
599
280,738,
Total Revenue
2,225,
196
2012
68,505, 201
157,250, 940
190,104, 466
10,577, Operation & maintenance General & Administrative Expense
000
11,634, 700
15,040, 000
Bad Debt & Other Provisions
12,798, 170
16,544, 000
109,
14,077, 987
18,198, 400
374,
15,485, 786
20,018, 240
559,
22,020, 064
786,
950,
752
844
579
255
522
-
-
-
-
-
Other Administrative Expenses Fixed Operating Cost
25,726, 752
EBITDA
(3,776,3 27)
EBIT Less: Interest on Term Loan
46,415,
40,960, 000
31,556, 149
251
Depreciation Amortization
28,553, 544
80,359, 750
40,960, 000
34,882, 482 122,368, 458
40,960, 000
38,456, 372 151,648, 094
40,960, 000
40,960, 000
10,975, 10,975, 10,975, 10,975, 10,975, 238 238 238 238 238 (55,711,5 (5,519,9 28,424, 70,433, 99,712, 65) 87) 512 220 856 10,500, 10,500, 9,712, 7,612, 5,512, 000 000 500 500 500
Less: Interest on W/C Profit Before Tax
(66,211,5
65) Profit Before Tax
(16,019,9
87) (66,211,5
18,712,
012 (16,019,9
62,820,
720 18,712,
94,200, 356
62,820,
94,200,
65)
87)
012
720
356
-
-
-
-
-
Less. Income Tax Profit After Tax
(66,211,5 65)
Retained Earning
(16,019,9 87)
(66,211,5 65)
Cumulative Retained Earning
(16,019,9 87)
(66,211,5 65)
(82,231,5 52)
18,712, 012
62,820, 720
11,695,
94,200, 356
39,262,
58,875,
008 950 222 (70,536,5 (31,273,5 27,601, 45) 95) 628
6.6 BUDGETED CASHFLOW STATEMENT Investment Yr
2008
Net Profit Before Tax
-
65)
Add: Depreciation
-
00
Add: Amortization
-
38
Add: Interest
-
00
EBITDA
-
27)
51
50
58
94
-
-
-
-
-
2009
2010
2011
2012
Operating Activities : (66,211,5
(16,019,9 87)
40,960,0
40,960,0 00
10,975,2
(2,529,23 7)
7,612,5 00
80,359,7
(3,007,5 20) 43,407,7
5,51 00
122,368,4
(3,005,6 96)
10,97 38
9,712,5
46,415,2
1,247,0 90
10,975,2 38
00
40,96 00
10,975,2
10,500,0
(3,776,3
40,960,0 00
38
94,20 56
40,960,0
10,975,2 00
62,820,7 20
00
38 10,500,0
Payment of Income Tax Decrease (Increase) in net working capital Cash flow from operating activities -
18,712,0 12
151,64
(3,728,1 53)
77,354,0
(3,11 66)
118,640,
148,5
31
54
305
928
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Investment Activities : (2,000,0 Land Development
00)
Site & Civil works
00)
(10,500,0 (304,100,0 Imported Machinery
00) (103,400,0
Local Machinery
00) (34,500,0
Vehicles, furniture’s & fixtures
00) (90,700,0
Other Cost 00) Cash Provided from investment (545,200,0 activities 00) Financial Activities : 200,000, Issue of Share
000
Term Loan Payment of Interest
000
345,200, (10,500,0
(10,500,0
(9,712,5
(7,612,5
(5,51
00)
00)
00)
00) (14,000,0
Repayment of Term Loan Repaid
-
-
00)
00) (14,000,0
00)
(14,00 00)
Change in Bank Loan (W/C) Cash Provided from financing 545,200, (10,500,0 (10,500,0 (23,712,5 (21,612,5 (19,51 activities 000 00) 00) 00) 00) 00) (13,029,2
Net Changes in Cash
-
Add. Opening Cash balance
-
Ending Cash Balance
-
129,0 428 (13,029,2 19,878,4 73,520,0 170,54 37) 94 49 54 (13,029,2 19,878,4 73,520,0 170,547,8 299,56 37) 94 49 54 82 37)
32,907,7
31
53,641,5
54
97,027,8
05
6.7 FINANCIAL RATIO ANALYSIS Particulars Net Margin Gross Margin Return on Investment Current Ratio
2008 -236.18% 100.00% -13.42% 0.84
2009 -15.54% 100.00% -3.63% 3.56
2010 12.20% 100.00% 4.81% 5.27
2011 29.56% 100.00% 18.62% 6.92
2012 36.43% 100.00% 32.99% 8.02
Receivable turnover days
13
13
14
15
14
(2,529,236 EBITDA (BDT) EBITDA/Net Sales
.84) -9.02%
43,407,731 .26 42.10%
(5 Debt Service Coverage Ratio (times) .31)
Observation:
45 50.43% (0.
53)
7. OBSERVATION AND RECOMMENDATION Planning
77,354,054.
118,640,304. 93 55.83%
1 .20
148,528,928. 02 57.43%
3. 26
5. 11
JTL activities were not object oriented. There have lots of gap between company planning and its activities. Management did not properly comply/ follow up company’s budget and planning to achieve the objective. Recommendation: JTL management has to be goal congruence. They have required developing plan and budget based on study and analysis and properly follows the budget that will help company to achieve the objective. Organizational Structure Observation: JTL has poor organizational structure. Company has no specific criteria for decision making process. Managing Director is the only decision maker which has to be follow irrespective comply any plan or not. JTL has no marketing manager although Telecom is highly marketing based company. Recommendation: JTL must be develop a good organizational structure that will help to make right decision at the right time. JTL has required to recruit marketing manager. Sales Target and Marketing Plan Observation: Company are following visionary sales target without effective marketing plan and personnel and effective technical support. Recommendation: Management should consider proper marketing plan, personnel and technical feasibility to attract more subscribers. Project Cost Observation: JTL project cost is excess compare to operational area of the company. Company is spending many unutilized resources in different location where subscribers are very negligible. Recommendation:
JTL management should utilize the expensive resources that will generate more cash flow for the company. 8. CONCLUSION JTL (a PSTN operator) start its operation by local ownership with very latest technological equipment with the vision to operate in 16 districts.
But after three years of operation JTL
started to face acute business competition and BTRC rules and regulation. As a result it’s become very difficult for JTL to make up its operating cost. To start new journey with lot of courage and energy JTL has taken initiatives do to feasibility study for another five years period and new investment project.