Indian mobile operators post biggest decline in return on capital among emerging telecom nations

Asian operators have seen a reduction in their return on capital employed
(ROCE) between 2008 and 2010, mainly due to rising competitiveness in their
markets which has dampened revenues and profits.

The decline was partly due to the large investments in network infrastructure
that they have been making and which are expected to yield long term rather than
immediate returns.

On the whole, developed market operators’ ROCE remains lower than that of their
emerging market peers, although the difference is not as great as it was in

While most emerging market operators in GSMA sample have seen a fall in ROCE,
the Indian operator stands out as having seen the biggest decline, driven by a
rising competitiveness in the Indian market that has reduced profitability and
significant increases in the asset base due to heavy network investments.

Return on capital for Indian operators was 11.9 percent in 2010 against 27.3 percent in 2008, showing a decrease of 12.4 percent in two years.

China recorded the highest return on capital at 25.6 percent in 2011 against 30.3 percent in 2008, decreasing at 4.7 percent.

Return of capital in the highly developed Japanese market was 15.4 percent in 2010 as compared with 16.4 percent in 2008.

Amongst the developed countries, the Korean operator stands out as the
outperformer, having reversed its sliding profitability up to 2008 by posting
earnings more than double that of 2008, driven by smartphone and data revenue

Despite the overall downwards trend, however, operators have managed to
maintain the delivery of shareholder value through this difficult economic
climate, according to GSMA.


Country                                     2008            2010      Difference

Australia                                    20.2              19.4       -0.8

Japan                                         16.4              15.4        -1

Korea                                          6.9                12.9       6

Singapore                                  9.6                 10.2      0.6

China                                         30.3                25.6      -4.7

Philippines                                19.4               17.6        1.8

Indonesia                                   9.2                 12.8       3.6

India                                            27.3                11.9        -12.4

By Team
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