Some food for thought
"Baseball is like a poker game. Nobody wants to quit when
he's losing; nobody wants you to quit when you're ahead."
—Jackie Robinson (American Athlete, 1919-1972)
Word for the day
Rigmarole (n)
An elaborate or complicated procedure. For example, to go
through the rigmarole of a formal dinner.
First thought this morning
Indian Telecom Sector - Neither here nor there
As an investor, I find the Indian telecom sector quite
intriguing. Despite, being one of the fastest growing sectors in past
10-12years, it has not rewarded the investors adequately.
Founded in mid 19th century by British, presently with 1.2bn
subscribers, Indian telecom sector is the second largest telecom network in the
world. In past 12years, the number of wireless subscribers has grown 7x and
data users have grown 58x.
Over last one decade the sector has seen a large number of
marginal players exiting the market after suffering huge losses. Some large
players have consolidated their operations to survive.
Despite ~18% CAGR rise in number of users during past 12years,
the revenue has grown ~5% CAGR. While the debt has increased ~19% CAGR from
Rs325bn at end of FY07 to Rs2.5trn at the end of FY18.
It is pertinent to note that the quality of Indian telecom network
is considered to be one of the poorest amongst leading economies. The capex in
telecom infrastructure per subscriber by operators is also one of the lowest.
While it is for the management students, research scholars and
financial experts to study the phenomenon in detail, as of now, I can just say
the following two things:
(a) Blaming the
disrupter (Reliance JIO) for all that ails Indian telecom sector would be
inappropriate.
(b) There is no case
for investing in any of the 4 listed telecom operators. These are neither
"sunrise" businesses, nor dividend yielding utilities.
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