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Bachelor of Business Administration

School of Business and Management

Christ University
Bangalore
2022

Financial Management (BBA331)

CIA 3 :
A report on sectoral Analysis on Capitalisation, Leverage and
Dividend Policy

Submitted By :
Thepnatee Chanpornpakdi 2120533
Anuchand V. 2120582
Adnan CP 2120511
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Table Of Contents

S.No. CONTENT PAGE No.

1 INTRODUCTION 3

2 JIO 4-5

3 AIRTEL 6-8

4 VODAFONE IDEA 9-10

5 COMPARISON OF CAPITALISATION 11

6 COMPARISON OF CAPITAL STRUCTURE 12

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Introduction

The sector we have chosen is telecommunications. We are focusing on the Indian

telecommunications companies.

The company that our team have chosen are JIO,AIRTEL and VI

JIO has market share 36.48%

AIRTEL has market share 31.66%

VI has Market share 9.58%

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JIO

Reliance Jio Infocomm Limited, doing business as Jio, is an Indian telecommunications

company and a subsidiary of Jio Platforms, headquartered in Navi Mumbai, Maharashtra,
India.

The 4G services were launched internally on 27 December 2015. The company commercially
launched its 4G services on 5 September 2016, offering free data and voice services until 31
December, which was later extended until 31 March 2017. Within the first month, Jio
announced that it had acquired 1.6 crore (16 million) subscribers and has crossed 5 crore (50
million) subscriber mark in 83 days since its launch, subsequently crossing 100 million
subscribers on 22 February 2017. By October 2017, it had about 13 crore (130 million)
subscribers.

Dividend policy of JIO

OBJECTIVE

The objective of this Policy is to ascertain the parameters to be considered by the Board of
directors of the corporation before declaring or recommending dividend.

The Company has had an Associate in Nursing uninterrupted dividend payout since listing.

In future, the corporation would endeavor to pay property dividends keeping visible the
Company’s policy of meeting the long-term growth objectives from internal money accruals.
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FINANCIAL PARAMETERS

The Board of Directors of the Company shall consider the following financial / internal
parameters while declaring or recommending dividend to shareholders:

Profits earned during the financial year

Retained Earnings

Earnings outlook for next three to five years

Expected future capital / liquidity requirements

Any other relevant factors and material events.

JIO Future Plans

(1) FUP or Fair Usage Policy means there’s a limit set by the operator and crossing the set
calling minutes the user will be charged. For instance, under the Rs 199 plan, Jio has set the
voice calling FUP limit to 300 minutes.

(2) Rs 2,199 All-in-One Jio plan. This is an annual plan and was previously priced at Rs
1,776. The old Rs 1,776 offered 1.5GB data per day, unlimited calls to Jio users, and 4,000
FUP minutes for other networks with a validity of 334 days. These services are offered at
different prices from Rs. 2000 - Rs. 200.

(3) Logistics management. Retail store operation, Customer Care & Services. Market
Development activities and product promotion. People & channel training. Different rules or
policies have been taken in order to improve different sectors in the company.
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AIRTEL

Bharti Airtel Limited, commonly known as Airtel, is an Indian multinational

telecommunications services company based in New Delhi. It operates in 18 countries across
South Asia and Africa, as well as the Channel Islands with $60 billion market capital and
$600 million net profit revenue of $15 billion and 70,000 employees. Curren

In 1984, Sunil Mittal started assembling push-button phones in India. In 2009, Airtel
launched its first international mobile network in Sri Lanka. In June 2010, Bharti acquired the
African business of Zain Telecom for $10.7 billion making it the largest ever acquisition by
an Indian telecom firm. The company unveiled a new logo with 'airtel' written in lowercase.
Sri Lanka followed on 28 November 2010 and on 20 December 2010, Warid Telecom
rebranded to 'airtel' in Bangladesh.

Dividend policy

The objective of this Policy is to:

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(i) specify the parameters (including internal and external factors) that shall be
considered while declaring the dividend;
(ii) lay down the circumstances under which the shareholders of the Company may or
may not expect dividend; and
(iii) provide for the manner of utilization of retained earning

Financial Parameters

(a) Financial performance including profits earned (standalone), available distributable

reserves etc.

(b) Impact of dividend payout on Company’s return on equity, while simultaneously

maintaining prudent and reasonably conservative leveraging in every respect viz.
interest coverage, DSCR (Debt Service Coverage Ratio) Net Debt: EBITDA and Net
debt: Equity, including maintaining a targeted rating – domestically and
internationally.

(c) Alternate usage of cash viz. acquisition/Investment opportunities or capital

expenditures and resources to fund such opportunities/expenditures, in order to
generate significantly higher returns for shareholders

(d) Debt repayment schedules

Airtel Future Plans

Airtel 5G Plus now lives in Panipat

Airtel 5G Plus services will be available to customers in a phased manner as the company
continues to construct its network and complete the roll out. Customers with 5G enabled
devices will enjoy high speed Airtel 5G Plus network at no extra cost until the roll out is
more widespread.
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Airtel powers the swanky new terminal in Kempegowda International Airport

Bengaluru with ultrafast Airtel 5G Plus

As South India’s busiest airport prepares for a formal inauguration, Airtel announced the
deployment of Airtel 5G Plus in Terminal 2, making it the first airport in India to get access
to the ultrafast 5G network. Customers can now enjoy blazing speeds on their mobile phones
while they are at the arrival and departure terminals, lounges, boarding gates, migration and
immigration areas, security gates, baggage claim belt areas etc.
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VODAFONE IDEA

Vi or Vodafone Idea Limited, also said as V! is an Indian telecom operator with its
headquarters based in Mumbai and Gandhinagar. It is a pan-India integrated GSM operator
offering 2G, 3G, 4G, 4G+, VoLTE, and VoWiFi service. As of 31 July 2022, Vi has a
subscriber base of 255.10 million, making it third largest mobile telecommunications network
in India and 10 th largest mobile telecommunications network in the world. The company
was created on 31 August 2018 by the merger of Vodafone India and Idea Cellular, to form a
new entity named Vodafone Idea Limited.

Dividend policy

Subject to applicable law, the Board shall declare or recommend dividend as follows:

(a) if the Leverage Ratio falls below 3:1, dividend of such amount as may be determined
by the Board; and
(b) if the Leverage Ratio falls below 2.5:1, an amount equal to one hundred per cent.
(100%) of:
(c) (i) the excess cash of the Company and its Subsidiaries as at the end of the last
completed financial year as determined by the Board by majority resolution; or
(d) (ii) if the Board has not passed a resolution to distribute the excess cash of the
Company and its Subsidiaries in accordance with
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(e) (i) above, then the Free Cash Flow of the Company for such financial year,

FACTORS TO BE CONSIDERED FOR DIVIDEND PAYOUT

• Leverage profile and capital adequacy metrics

• Stability of earnings
• Cash flow position from operations
• Future capital expenditure, inorganic growth plans and reinvestment opportunities
• Industry outlook and stage of business cycle for underlying businesses
• Overall economic / regulatory environment
• Contingent liabilities
• Past dividend trends
• Buyback of shares or any such alternate profit distribution measure

VI Future Plans

Vodafone Idea would face Rs 300 billion cash payout in the form of an AGR payout,
spectrum installment from past auctions, regular capex and interest payments.

Vodafone Idea plans to get back in the game with four-fold jump in capex to $2 billion
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Comparison of capitalisation

Capitalisation refers to the book value or the total of a company's debt and equity.

After finding the value capitalisation of each of the companies we can see that :

VI has the highest capitalisation since their cost of operations are high since they have the
least market share.

Airtel has the least capitalisation since their cost of operation is the least out of the
companies. Airtel has reduced its cost of operations and increased its customer acquisition to
increase its market share.

Jio has the second highest capitalisation with the highest market share and is still trying to
increase its market acquisition. The capitalisation is high due its cost of operations having to
keep up with nearly 40% market share demand.
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Comparison Capital Structure
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