Part 23 of the Moneycontrol Classroom deals with key parameters to look at before analysing investments in the telecom space.
Gross revenue – This figure includes all income from services and other income.
Standard deduction – Charges and roaming revenue paid to other service providers, GST and services taxes.
Adjusted Gross Revenue – Gross revenue minus standard deduction.
ARPU -- Average revenue per user, which is calculated by dividing total revenue by the number of subscribers. This figure is watched closely by analysts as it gives an idea about how various factors such as pricing, competition and policy changes are affecting the per subscriber revenue earned by a company. Higher the ARPU relative to historical levels and relative to competition the better.
EV -- Enterprise Value is the market value of all shares (market capitalisation) and the market value of debt of a company, less any cash. Market capitalisation is calculated by multiplying the share price by the number of shares outstanding.
EBITDA -- Earnings before interest, tax, depreciation and amortisation is a measure of a company's operating performance. A handy evaluation method by stripping any influence of financing and accounting decisions as well as tax environment.
EBITDA margin -- Expressed as a percentage, it is calculated by dividing EBITDA by revenue and then multiplying by 100. Investors would like to see this increase as it is a sign that the business health is improving.
Debt – Refers to all liabilities, short- and long-term. Since the telecom business is capital intensive and companies borrow substantially to meet their initial capital expenditure requirements, debt and debt-to-equity levels should be monitored. Investors should see if companies are generating adequate cash flows to service their debt levels and whether they are taking on more capex than their balance sheet can handle.
No comments:
Post a Comment