Telecom Companies growth models

I have added an ideapaper detailing how telecom companies find growth. The telecom service provider does not simply grow. These companies transform from voice telephony operators to bandwidth service operators and finally into a holding company for other telecom companies. The following IdeaPaper details those five phases of transformation. I have also given some key characteristics of each phase.

Bharti-MTN deal was example of how both companies were trying to move to phase V of the transformation. As of now France Telecom, Portugal Telecom, Vodafone, Singtel are this phase. I still believe it is too early for Bharti to move to phase V, particularly since there are ample avenues for growth still open to it. Bharti's eagerness to join the club was forced by the fact that telecom is developing globally and soon there won't be many opportunities to get access to subscribers and telecom assets. Anyways the interesting part is how telecom companies find growth.

Further, there are still ways and means to exploit current opportunity for telecom companies. But that is topic for further paper.

Disclaimer: I own Bharti stock.

Ideapaper - Growth Phases of Telecom Companies

How Cities Develop?

I have put together some thoughts on How Cities develop? in the form of an idea-book. Please feel free to download it here.

Introduction

Real estate development in every city is unique. Still hidden within, are certain principles that are common. To understand it, we need to understand two central concepts. First, how town evolve and second how evolution happens within a town.

I propose a seven phase model explaining how a population surrounding a business or factory transforms into a town. Through the transformation we point to some important developments in terms of people and their work.

The idea book postulates a growth model called “Affinity Factor Model” to explain how localities develop within a town. “Affinity factors” are those that drive the citizens towards them – e.g. business district and schools are key affinity factor.

The models help us understand why airports, usually built outside city limits, attract residential populations. Or, on a lighter note, we can guess where a company will locate its office!

We also derive a method to understand relative pricing between different areas. Further, we look at fundamental ideas for knowing if house prices are higher.

I also propose a structure of a township centred around a workplace based on first principles.

How Cities Develop

Media Pricing and Anti-Piracy

Mark Cuban raises an interesting point in his TV everywhere post.

While anti-piracy proponents have a valid point of view, there is other side that needs to be fixed as well. We pay for the same content multiple times. I have bought same song (as part of same or various albums) multiple times.

Anti-piracy movement has one idea to sort out. What are customers paying for? Is it media (CD or DVD or tape or flash drive etc) or the song/serial/movie etc. Then we can ask why same movie can be priced differently on blue-ray disc, CD, or from the web or cable TV. This part is almost never part of the debate.

A question on Currency Crisis

One of the most intriguing phenomenons during this recent slow-down has been the strengthen shown by non-dollar developed world currencies like GBP, AUD, Yen, EUR etc. I mean there has been correction, in Yen particularly. But it has not been of worrisome magnitude as anticipated.

Most of the developed world currencies are facing very similar problems like US. Consumption driven economy is fed by low-cost debt. Significant percentage of population is old. As the credit crisis struck the demand for good plummeted. The over-all economic model seems weakened just like the US. The only thing stopping a dollar collapse is USD's world currency status. But then why have these other currencies not fallen. Is the USD holding these up?

Some ideas on analysing Real Estate Developers

Real estate developers have been a significant part of value creation for investors. And they will continue to be. However, as times get difficult, it is important to pick the right developers to invest in. While these are logical, they are often ignored in my experience. I present an idea-Book looking into some key ideas while selecting successful real estate developers. Key points include:

• I believe first thing a developer must be sensitive to is business cycle. Irrational optimism leads to a fatal failure in preparing for eventual slowdown.
• Similarly, land bank quantity, quality and cost determine the future earning potential and growth of the developer.
• Developers’ also need an ability to manage through-cycle earnings for the company. In search of quick profits, developers often condemn the company to future revenue de-growth and lower or negative profitability.
• Cash flow management and debt structuring is other critical part of real estate business that can make or break the company.
• Lastly, I mention some ways in which real estate developers prevent value realisations for the listed entity.
• I hope these learning’s will be helpful. These do not comprise the complete list and must be used in conjunction with standard investment and valuation procedures and practices.

Please find the ebook enclosed below.

IdeaBook on Investing in Real Estate Developers