Telecom Equipment Market – India April 2014
Executive Summary
Market Overview
Drivers & Challenges
Market Trends
As per 20-- - --, telecom equipment worth INR X1 bn was consumed in India Mobile handsets account for around Y% of the total telecom equipment industry in India Telecom equipment import have grown at a CAGR of around Y2% between 20-- and 20-Drivers:
Challenges:
Growth in Wireless Subscriber Base Next Generation Voice and Data Services Government Initiatives and Progressive Reforms in the Industry IPv4 to IPv6 Migration
Security Concerns High Telecom Equipment Imports
Telecom Equipment Certification Android Smartphones and Tablets Strengthening of R&D Infrastructure Sharing Major Players
Competitive Landscape
Company A
Company B
Company C
Company D
Company E
Company F
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
2
•Economic Indicators •Introduction •Market Overview •Drivers and Challenges •Market Trends •Competitive Landscape •Strategic recommendation •Appendix
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
3
Economic Indicators (1/3) GDP at Factor Cost: Quarterly INR tn 15
13
d1 c1 b1
12
a1
14
c4 b4 a4
c3 b3 a3
d2 c2 b2 a2
11
Q1
Q2 2010-11
2011-12
2012-13
Q3 2013-14
Q4
Inflation Rate: Monthly % 2 1
p
r
s
q
0 -1 -2
t Jul 2013 - Aug 2013
Aug 2013 - Sep 2013
Sep 2013 - Oct 2013
Oct 2013 - Nov 2013
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
Nov 2013 - Dec 2013 4
Introduction Telecom Equipment - Overview • Economic and social development of India is significantly influenced by its telecom industry • Modern and robust telecommunication systems demand state-of-the-art telecom equipment • Cellular network technology such as 3G and 4G, broadband internet services, telephony services, network requirements and other telecom products and services has led to increased demand for telecom equipment
• Telecom equipment can be broadly classified into Segment 1, Segment 2 and segment 3 • Alternatively, it can also be classified into two categories in terms of type of consumer • In category 1, fixed and mobile switches, base stations, routers, & transmission equipment largely represent Type 1, whereas towers, shelters & cables falls under Type 2
Type 1
Category 1 Type 2
Telecom Equipment
Type 1
Category 2
Type 2 Type 3
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
5
Significant demand exists for telecom equipment in India but it is being TextText TextText by TextText TextText Market Overview – India (1/5) • Growth in telecom sector has enabled telecom equipment companies to flourish in India, regardless of passive or active telecom infrastructure, or mobile devices • While majority of the domestic telecom equipment companies started off as resellers of telecom products made by foreign companies, the focus is gradually shifting to domestic production
• As per 20-- - --, telecom equipment worth INR X1bn was consumed in India • Mobile handsets account for around Y1% of the total telecom equipment industry in India • Despite competition from foreign handset giants such as Apple, Samsung and others, domestic companies such as Micromax, Lava and Karbonn Mobiles, among others, have come up with innovative handsets and Tablets at affordable price
• Chinese and European telecom equipment products dominate the market in India at present
Telecom Equipment – Market Size & Growth
Telecom Equipment – Domestic Consumption
INR bn x3 x2
Y%
Y% a1
a2
a3
a5
a4
x1 X%
x 2013
2014e
2015e
2016e
2017e
p
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
q Note: Data available from TRAI till 2010
6
Market share for Segment 3 and Segment 2 is expected to grow significantly over the coming years Market Overview – India (5/5) Segment 1 – Market Size & Growth INR bn x3 x2
Segment 2 – Market Size & Growth INR bn
X%
a1
a2
a5
a4
a3
x1 x
x2
Y%
x1
a4
2017e
a1
a2
a3
2014e
2015e
2016e
a5
x 2014e
2015e
2016e
2017e
2018e
2018e
Segment 3 – Market Size & Growth INR bn x3 x2
Z% a1
a2
a3
2014e
2015e
2016e
a4
a5
2017e
2018e
x1 x
• Segment 2 is expected to capture higher market share by 20-- among the three segments
• Staggering number of mobile devices, explosion of video traffic, expanding business and mission-critical applications, cloud-based application virtualization, and service delivery requirements are the prime factors fueling the demand for Segment 2 TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
7
Drivers & Challenges
Drivers
Challenges
Growth in Wireless Subscriber Base
Security Concerns
Next Generation Voice and Data Services
High Telecom Equipment Imports
Government Initiatives and Progressive Reforms in the Industry IPv4 to IPv6 Migration
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
8
Country’s wireless subscriber base looks promising due to present opportunities and future potential Growth in Wireless Subscriber Base
Impact
• Currently, India has a substantial wireless subscriber base that is growing at a rapid pace As of Sep 20--, total wireless subscribers base touched x1 mn as compared to x2 mn in Jun 20--
• It has been observed that Indian states with the highest commercial activity and business operations possess higher wireless subscriber base as compared to rest of the states • Growth in the subscriber base creates requirement of telecom equipment which ensures services can be provided in best possible manner • Also, with falling prices of mobile devices, popularity of end-user telecom equipment is also rising significantly
Wireless Subscriber Base – India mn x6 x5 x4 x3 x2 x1 x
X%
a2
a1
2013*
2016e * Data as of month1 20--
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
9
Market Trends (1/4)
Telecom Equipment Certification
Android Smartphones and Tablets
SAMPLE
• TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText • TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText • TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText • TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText
• TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText • TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText
• TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText • TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText • TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
10
Porter’s Five Forces Analysis Threat of New Entrants • Text Text Text Text ext Text Text Text Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text Impact X
Bargaining Power of Suppliers • Text Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text
Competitive Rivalry • Text Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text • Text Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text
Impact X
Impact X
Impact X
Bargaining Power of Buyers • Text Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text
Impact X Threat of Substitutes • Text Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text ext Text Text Text
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
11
Competitive Benchmarking (1/5) Public Trading Comparables Company A
Company B
Company C
Company D
Market Capitalization (INR mn)
Share Price (INR)
EV/EBITDA (x)
EV/Revenue (x)
PE Ratio
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
12
Competitive Benchmarking (4/5) Key Ratios of Top 2 Companies – Operational Basis Debtors Turnover Ratio 20--
Asset Turnover Ratio
20-a2
x4
a2
x4
x3 x1
a1
x5
b2
a1
x3 x1
b1
x
x Company A
Company B
Company A
Company B
• Company b has consistently recorded higher debtors turnover ratio than its peers for FY1 and FY2 • Company a recorded the highest asset turnover ratio of y1 followed by Company bwhich recorded asset turnover ratio of y2
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
13
Public: Domestic Company – Company A (1/4) Company Information
Offices and Centres – India
Corporate Address Tel No. Fax No. New Delhi
Website Year of Incorporation Ticker Symbol Stock Exchange
Products and Services Category Electrical components Equipment
Head Office
Products/Services
Key People Name
Designation
Person 1
Chairman
Person 2
Managing Director
Person 3
Director
Person 4
Additional Director
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
14
Public: Domestic Company – Company A (2/4) Financial Snapshot INR mn x4 x3 x2 x1 x
Key Ratios
Total Income
Net Profit/Loss
INR mn
c2
d2
c1 c1
d1
y4 y3 y2 y1 y
2012
2013
b2 a2 a1
b1
2010
2011
Financial Summary • The company reported total income of INR ‘d1’ bn in FY 20--, registering an increase of ‘p’% over FY 20-• It earned an operating margin of ‘x.x’ per cent in FY 20--, an increase of ‘y.y’ percentage points over FY 20-• The company reported debt to equity ratio of ‘w.w’ in FY 20--, an increase of ‘z.z’ per cent over FY 20--
Key Financial Performance Indicators Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Absolute)
y-o-y change (20-- – -- )
20--
20--
20--
20--
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios
• The company earned a net profit of INR ‘d2’ bn in FY 20--, as compared to net profit of INR ‘c2’ bn in FY 20--
Indicators
Particulars
Value (dd/mm/yyyy)
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
Decline
15
Public: Domestic Company – Company A (3/4) Key Business Segments Segment 1 x2 a1%
Key Geographic Segments
Segment 2 a2%
a3% b3%
b2%
x1 b1% x
c1% 2010
Segment 3
c3%
c2%
a4%
Region 1 x2
b4% x1
100%
c4%
Region 1 is the only geographic segment in which the company has been operating for the past five years
x
2011
2012
2013
2013
Business Highlights Description
News • Company A is a part of the Company 1Group established in collaboration with globally renowned ,
Overview
Collaborations Expansion Plans
Country 2-based Company 2 • The company manufactures generators, multipurpose engines, chemicals, yarns, pipes, consumer durables, precision cutting tools etc. • Company A got ISO 9002 certification in Month 19--, and has also been awarded ISO 14001 certification
• Company A collaborated with Company 3 for manufacturing of diesel generators with Company 3 brand of Engines • The group is planning to diversify and enter the IT industry
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
16
Public-Domestic Company: Company A – SWOT Analysis (4/4)
S
W
O
T
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
17
Private-Domestic Company: Company B. (1/5) Company Information
Offices and Centres – India
Corporate Address Tel No. Fax No. Website Year of Incorporation Mumbai
Head Office
Products and Services Category
Products/Services
Key People Products
Name
Designation
Person 1
Chief Financial Officer
Person 2
Head of Project
Person 3
Whole Time Director
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
18
Private-Domestic: Company B. – Shareholding Pattern (2/5) Ownership Structure X segment
Y segment
X%
Y%
Note: Shareholding pattern as on AGM dated 29th Sep 2012 TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
19
Private: Domestic Company – Company B (3/5) Financial Snapshot
Key Ratios
Total Income
Net Profit/Loss
Particulars
INR mn
INR mn d2
x3 b2
x2
c2
a2 x1
a1
b1
c1
y4 y3
d1
y2 y1
x
y 2010
2011
2012
2013
Financial Summary
20--
20--
20--
Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios
• The company reported total income of INR 1,529.9 mn in FY 20--, registering an increase of 0.34% over FY 20--
Leverage Ratios
• The company reported debt to equity ratio of ‘w.w’ in FY 20--, a decrease of ‘z.z’% over FY 20--
20--
Profitability Ratios
• The company incurred a net loss of INR –’d2’ mn in FY 20--, as compared to net profit of INR ‘c2’ mn in FY 20--
• The company earned an operating margin of ‘x.x’% in FY 20--, a decrease of ‘y.y’ percentage points over FY 20--
y-o-y change (20– – --)
Current Ratio Cash Ratio Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
Decline
20
Private-Domestic Company: Company B (4/5) Key Information Description
Details
• Company B provides passive telecommunication infrastructure in India • It was formerly known as Company B1. and it operates as a subsidiary of B3 Overview
• The company builds, owns, and operates telecommunication towers, optic fiber cable (OFC) network, and related assets; and provides these passive infrastructure assets on a shared basis to wireless and other communications service providers, as well as to noncommunications customers under long-term contracts
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
21
Private-Domestic Company: Company B – SWOT Analysis (5/5)
S
W
O
T
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
22
Strategic Recommendations (2/2) •Leverage on location based services mandate by the Government of India with various telecom equipment Telecom Equipment for Location Based Services • Text Text TextText TextText Text Text TextText TextText Text Text TextText TextText Text Text TextText TextText • TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText TextText
• Text Text TextText TextText Text Text TextText TextText Text Text TextText TextText Text Text TextText TextText TextText TextText Text Text TextText TextText • TextText TextText Text Text TextText TextText TextText TextText Text Text TextText TextText • Text Text TextText TextText Text Text TextText TextText Text Text TextText TextText Text Text TextText TextText TextText TextText Text Text TextText TextText Text Text TextText TextText Text Text TextText TextText Text Text TextText TextText Text Text TextText TextText TextText TextText Text Text TextText TextText
Accuracy Mandate in Percentage Urban Area
Suburban and Rural Area
Remote Area
Accuracy (Meters)
20--
20--
20--
20--
20--
20--
20--
50
X%
X%
X%
X%
X%
X%
X%
100
X%
X%
X%
X%
X%
X%
X%
300
X%
X%
X%
X%
X%
X%
X%
500
X%
X%.
X%
X%
X%
X%
X%
TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
23
Thank you for the attention Telecom Equipment Market – India 2014 report is a part of Netscribes’ Technology Series. For any queries or customized research requirements, contact us at: Phone: E-Mail:
+91 22 4098 7600 info@netscribes.com
About Netscribes, Inc. Netscribes, Inc. is a knowledge-consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content-management services, and knowledge-software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes, Inc. is a one-stop shop designed to fulfil clients’ profitability and growth objectives.
Disclaimer: This report is published for general information only. Although high standards have been used in the preparation, “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes and prior permission is required for guidelines on reproduction. TELECOM EQUIPMENT MARKET IN INDIA 2014.PPT
24