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The purpose of this paper is to examine the optimal leverage ratio, speed of adjustment, and which factors contribute to achieving the target of selected telecom companies in a partial adjustment framework from 2008 to 2017. Further is to analyze the likelihood of bankruptcy of sample companies by Altman Z-Score model and to suggest which theory of capitals structure is better in explaining leverage strategies and judicious mix of debt and equity structure of the selected telecom companies.

This paper chooses a partial adjustment model and uses the generalized method of moments technique to identify the variables that influence the target leverage ratio and the factors that influence the speed at which the target leverage is adjusted. Second, the Altman Z-score model is used in this paper to research the financial status of telecom companies using financial instruments and techniques.

For Indian telecom firms, firm-specific variables such as profitability, NDTS and Z-score lead to greater debt adjustment towards optimal level target leverage. The paper also highlights new paradigms in the Indian telecom sector, stating that top market leaders such as Bharti Airtel, BSNL, Idea, Vodafone and R.com, among others, should focus on debt reduction and interest payments, as well as implement new strategies to solve the crisis and change financial policies.

It mainly focuses on firm-specific variables because the firm-specific variables affect the leverage framework. The country-specific variables are not taken into the study. These results may be unique to telecom companies due to some peculiarities existing in the telecom sector in India. Although other sectors, both national and international level, can be taken into consideration.

This paper has ramifications for corporate executives, investors and policymakers in India, for example, in terms of considering different transition costs while changing a telecom company’s financing decisions.

To the best of the authors’ knowledge, this is the first paper of its kind to look at both financial and econometric tools to assess financial performance using the Altman Z-Score model, as well as decide leverage strategies and the pace with which they can be adjusted to target leverage in the context of Indian telecom companies.

The purpose of this paper is to provide a conceptual framework of staged development that examines strategies of domestic companies, government policies, and impacts of foreign multinational companies (MNCs) at different periods of catch‐up of latecomers.

A multi‐case approach is employed to examine four domestic telecom‐equipment companies that have significant impact on China's telecom‐equipment industry. They are: Huawei Technology Corporation (Huawei), Shenzhen Zhongxin Technology Corporation (ZTE), Datang Telecom Technology Corporation, Ltd (Datang), and Great Dragon Information Technology (GDT).

This paper identifies four distinct stages of the catching‐up process, featuring different institutional environment, government involvement, and the ensuing actions of foreign MNCs and domestic companies. During the initial stage, China's government decision of directly leapfrogging to the most advanced switch equipment had a profound impact, because it led to both heavy reliance on foreign MNCs and the pursuance of switch research and development (R&D) by domestic research institutes and new technology companies. The dominance of foreign MNCs is challenged during the growth stage, because several domestic companies ascended and gained the capability to produce large‐scale, stored program controls and the government directly leveraged support in R&D, marketing, and finance. Although many uncompetitive domestic companies failed during the filtration stage, the management training received from foreign MNCs and newly available financing options provided necessary resources for some domestic companies to survive and expand. Domestic leaders globalized their marketing, production, and R&D functions and to become MNCs themselves in the globalization stage, thus finalizing the catching‐up.

The Chinese experiences shed light on late‐industrialization for other developing economies by suggesting that to catch‐up in high‐tech industries, government can become involved strategically to form a competitive and efficient market environment for innovation.

The paper proposes a new conceptual framework to analyze catching‐up of domestic companies as latecomers. This framework can be used to study catching‐up in other sectors in late‐industrializing countries.

Examines the restructuring of Hong Kong Telecom Ltd with respect to its two subsidiaries: Hong Kong Telecommunication International Ltd and Hong Kong Telephone Company Ltd. The process and impact of this restructuring is discussed. Investigates particularly the impact of internal and external factors such as functional structure, government regulations, customers, potential competitors and labour unions.

A new case study of accelerated internationalization (AI) shows that in only two years, Saudi telecom (STC) entered markets across the Middle East, Asia, and Africa. Managerial analysis identifies reasons for success while questioning strategic choices and their implications. Theory-driven analysis reviews STC's experience in light of selected theories and frameworks. This case is also intended for teaching purposes. The paper aims to discuss these issues.

Responding to Welch et al.'s call, the authors use “interpretive sense-making” and “contextualized explanation” and highlight environmental context in the case study development. The authors review case-based research, explain data collection problems, present managerial and theoretical analyses of the case, discuss the findings relative to the literature, and suggest directions for research.

Case analysis reveals STC's focus on global portfolio development as a driver of AI. Theoretical analysis confirms the psychic distance construct and its paradox, as well as the notion of epochs of internationalization while warning that the path and stages models of internationalization are at odds with AI. The authors call for a contingency view of the resource-based view as a function of context.

Limitations arise from the use of secondary data for case development because direct access to this Saudi company was not feasible.

AI is popular among wealthy Gulf telecoms ambitious for growth. Regional competition in the Gulf is characterized by copycat and follow-the-leader strategies which preclude elaboration of unique, inimitable or non-substitutable assets, resources or capabilities.

This innovative approach to case development provides a rich database for probing analyses of managerial and theoretical implications of AI in a Gulf-based company.

During the recent past there have been two successive and successful takeovers of Telecom Italia, in both cases by other Italian companies and employing the device of “Chinese boxes” to secure control without the need either to hold a majority stake in the acquired company or to pay much regard to the interests of minority shareholders. This raises into question the extent to which “Anglo‐Saxon” attitudes in financial markets are making inroads in continental Europe; the willingness of continental European governments to permit foreigners to acquire control of the “commanding heights” of their economies; and the manner in which the European telecommunications sector is being restructured.

The Singapore Public Sector Divestment Committee has recommended privatization of public enterprises, including profit‐making monopolies such as Telecom, airport, port authority and broadcasting. Reviews preparation to privatize Singapore Telecom. Examines Telecom′s diversification strategy to enhance its visibility and international competitiveness. By maintaining its impressive profitability record, Telecom can be assured of a favourable reception by domestic and foreign investors when its shares are floated in 1993. Being the first statutory board to be privatized, its transformation is closely observed by others in the pipeline.

Finance.

This case can be taught in the Finance area as a part of the course on “Valuation” in a postgraduate program. MBA/EMBA/MBF.

Himachal Futuristic Communications Ltd. (HFCL) discontinued all of its old products and entered into manufacturing of telecom products for mobile telephony and turnkey projects. This complete change in product line was like a re-birth for the company. HFCL grew tremendously between FY 2012 and FY 2015. Its sales grew from Rs 2,638m in FY 2012 to Rs 26,129m in FY 2015, an increase of 114 per cent CAGR (compound annual growth rate). HFCL stock price increased from Rs 11.75 in March 2012 to Rs 19.90 in September 2014 because of this tremendous growth. The stock price came down to Rs 13.35 in March 2015, as the market was sceptical about HFCL sustaining this growth. In March 2015, Choudhary, an equity analyst, was wondering how to value this high growth company. If somehow he could ascertain the intrinsic value of the stock properly, he would be able to appropriately advise his clients about the HFCL stock.

The case learning objectives are as follows: to scan the competitive landscape of telecom equipment manufacturing industry and gauge the competitive advantages enjoyed by HFCL; to size the potential market of the industry and predict the level of sustained profitability for HFCL; to develop multiple scenarios based on key drivers and compile projected financial statements for each scenario; and to value the company using the scenario-based discounted cash flow technique by assigning probabilistic weights to each scenario.

Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

CSS 1: Accounting and finance.

The purpose of this paper is to investigate a possible business model for telecom operators for entering the IPTV (digital television) market.

The approach takes the form of a case study, literature search and interviews.

The IPTV business model always has to adjust to the change of external factors and uncertainties in the exploration and the exploitation phase. The four scenarios presented in this paper explicitly address the demand, regulatory and competition‐related uncertainties. The scenarios represent the different future possibilities in terms of regulatory environment, industry structure and consumer attitudes towards (IP)TV service. By choosing the right business model, telecom operators can sustain the market competition and deliver customer value and economic benefits. In the light of limited resources, when balancing the requirement of IPTV business model design, telecom operators have to focus on the critical design issues in each of the scenarios.

This is a one‐case study, so no cross‐analysis with other cases was possible.

The research does not stop when the critical design issues have been analysed, but takes them a step further to shed light on the viability of the business model in an exploration phase. This is done by integrating the business model framework analysis with scenario analysis. Scenario analysis indicates various future possibilities and provides a platform for analyzing the decisions regarding critical design issues that have to be made in an uncertain future environment. The competing views on future developments are helpful in reducing the future uncertainties with regard to viability and feasibility of business models for IPTV.

This is one of the first studies that looks into the relationships between business models and scenarios. Also, the application on IPTV is quite novel.

Sets out to question whether massive restructuring of the Telecoms sector in Europe will happen and what, if any, effect this would have, based on the takeover battle for Telecom Italia, involving both domestic and foreign bidders. Concludes by analysing winners and losers in the takeover’s aftermath with mainland Europe’s possible consequences.

Companies in the telecom industry – and in many other consumer markets – have introduced customer or loyalty clubs over a number of years. Customer clubs have been used as a loyalty‐building measure following the deregulation of telecom markets in Europe. They were introduced as a strategic instrument intended to foster customer retention and to contribute to increased sales and profitability. These clubs are the most recognizable part of many CRM strategies. Their short‐ and long‐term effects on loyalty are not obvious, however. The aim of this article is to explore the effects of the customer club on customer relationships in telecommunications by presenting results from two qualitative studies, which are quantified and reported in terms of responses to the club. The results of this empirical study in a Swedish telecom company reveal that the majority of customer‐club members do not perceive their membership as adding value or contributing to higher commitment and improved loyalty. Nevertheless, there are differences between non‐members and members regarding their perceptions of the service provider. The target group of club members has significantly higher satisfaction with the company than the non‐member customers.