aircel ltd Management discussions

AIRCEL LIMITED ANNUAL REPORT 2004-2005 MANAGEMENT DISCUSSION AND ANALYSIS Financial Results Your Directors are pleased to inform you that your Company has recorded Net Profit After Tax (PAT) for the fourth year in succession. Profit After Tax for the year was Rs. 792.85 million as compared to Rs. 227.83 million the previous financial year representing a growth of 248%. Operating Revenues during the year grew by 44% compared to the previous year. There was a significant increase in the net profit for the year, mainly due to increased revenues that was attributable to substantial growth of subscribers. The increase in profit was also on account of significant reduction in finance charges due to reduction of interest rates on major term loans and non-convertible debentures of the Company. Depreciation for the year has increased due to the increased capital expenditure on account of network expansions carried out during the year. OPERATIONS & NETWORK During the year under review, your Company undertook various network expansion activities to cater to the growing needs of subscribe base. Your Company installed two new Mobile Switching Centres (MSC), one each at Coimbatore and Madurai. The total switch capacity of your Company was increased to 39,200 Erlangs. During the year 125 new base stations were installed. Your Company extended its coverage in additional 130 new towns, taking the total number of towns covered to 330. Your Company had also installed a new Short Messaging Service (SMS) server that can serve upto 700 messages per second. Your Directors are pleased to report that Companys Phase III expansion programme was successfully completed during the year. Your Company embarked upon Phase IV expansion, which would be completed by June 2005. This would increase the Switch capacity apart from offering better quality of service and providing coverage in hitherto uncovered towns in the Circle. This expansion will also help the Company in offering General Pocket Radio Service (GPRS) to its subscribers. Your Company currently has seven Mobile Switching Centres (MSC), Seventeen Base Station Controllers (BSC) and 562 Base Transceiver Stations (BTS) across its network. The year saw phenomenal growth in the subscriber base of your Company. Your Directors are pleased to report that for the fourth year in succession, your Company has retained its market leadership with 35% share in the mobility market. The total number of subscribers as at 31st March 2005 was 1,214,010 as against 713,371 during the last year, thus registering an increase of 70%. Marketing During the year, the focus of your Company was on increasing its post-paid market share apart from consolidating its prepaid leadership position. Your Directors are pleased to report that various marketing initiatives of the Company during the year were well received in the market as is reflected in the growth of subscribers. Dealer Network The number of Post-paid dealers as at 31st March 2005 was 146 and the Pre- paid distributors were 54. The number of registered Pre-paid retailers as at the close of the financial year was 17,775. To increase the Companys reach in the Circle, your Company has been taking various measures to identify and appoint dealers who could market the Companys products aggressively to steer clear of competition. Your Company also appointed new agents in towns that have been newly covered by the Companys network. Accolades Your Directors are pleased to inform you that in a survey conducted by the International Data Corporation (IDC), your Company has been rated as No. 1 among all mobile operators in India in terms of overall satisfaction. In the rating. Your Company has scored 97 points on a 100-point user satisfaction scale, dearly crossing the Telecom Regulatory Authority of India (TRAI) benchmark of 95 per cent. In another survey viz. Mobile Users Satisfaction Survey 2004 conducted by Voice & Data, a leading publication in the communications sector, your Company has been rated as the No. 1 operator in terms of overall satisfaction. The survey places Aircel at the top of the table comprising of 15 operators (including 9 GSM operators) across the nation with 97% satisfaction levels against the industry average of 85.80%. Your Directors would like to reassure you of the Companys commitment to providing top quality service at affordable rates and setting new benchmarks and striving to achieve the same.