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Funding Patterns in the Telecommunication Services Industry in Latin America, Asia-Pacific, Sub-Saharan Africa and Arab States

  • April 2014
  • -
  • Frost & Sullivan
  • -
  • 58 pages

Summary

Table of Contents

The first segment in this funding pattern study analyses the historical sources of funds. This includes analysis of historical equity and fixed income offerings by volume and value. The segment also explores the option of using M&A to raise funds. The next segment analyses the pattern in which these funds have been deployed in terms of capital expenditure, stock repurchased, dividends paid, and debt retirement levels. The next segment estimates the requirement of funds during the forecasting period by analysing various trends and quantifying the impacts. Based on this and historical trends, the study concludes with three possible scenarios detailing the distribution of funds across various financial instruments and various revenue ranges.


Executive Summary

In comparison with North America (NA) and the European Union (EU) region, the sale of
equity stake for investment purposes is more popular in Latin America, Asia-Pacific (APAC),
and Sub-Saharan Africa (SSA).

Profitability and operating costs of telecommunication firms are impacted by inefficient
spectrum policies and government regulations preventing consolidation in the market.

Leverage levels of all 4 regions are far lower than firms in North America because of lack of
sophisticated debt markets and an absence of debt investors.

Region-specific trends such as a lack of fixed broadband networks in SSA and Latin
America are impacting the amount of funds needed by firms in those regions.

Similarly, region-specific trends are also impacting the sources of funds for firms. For
instance, the lack of VC firms coupled with the absence of sophisticated equity and debt
markets is causing small-size telecommunication services firms in Arab states to look to
other regions to attract investments. Similarly, low interest rates in the EU and US debt
markets have caused large firms such as Bharti Airtel to issue debt in these markets.

In terms of fund requirements for meeting future expenses and capital investments, APAC
has the highest requirements because of its geographic size, population, and extent of
development. Arab states have the fewest requirements because their geographic size and
high population density reduces the amount of funds needed.

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