Why the profitability of Indian Telco companies is too strong?

by Véronique Queffélec on novembre 19, 2010


This article has been written by Véronique Queffélec and Bertrand Chokrane.

In India the power of conglomerates allows vertical integration of the entire value chain. Operator to the distributor, through relays and telco loops.

In contrast to China zero horizontal and vertical integration. The main stream in China is a splitting of the value chain through Chinese Company or JV responsible for the telco operating system, a second one in charge of relay, a third of the commercial distribution.

Visibility in terms of growth in operating profitability and investment companies in India is therefore easier. A single point controls the entire value chain. The problem of China is somewhat similar to the U.S.. This raises the question of society on which we will invest. The operator, antenna, or distributor? Inevitably non-vertically integrated industry has meant that operating margins are lower on each of the key players.

The estimated projected operating profit before tax levy for the year 2011/2012, Reliance and Airtel is between 5 to 10 times higher than that of American and Chinese traders. Bright prospects for BSE!