Jtl has planned to provide fixed phone services to its subscribers with the latest technology by lawjuris

JTL has planned to provide fixed phone services to its subscribers with the latest technology. EXECUTIVE SUMMARY JTL was awarded PSTN (Fixed Phone) License on June 22, 2004 by Bangladesh Telecommunication Regulatory Commission (BTRC) for providing fixed phone services in 16 districts of North-East Zone of Bangladesh covering about one-fourth area of the country. The principal activities of the company are to set up telecommunication system, install telephone exchange in Bangladesh and to carry out telecom operations with joint, local or foreign collaboration for the purpose of new connections and expansion of telecommunication network in the North Last Zone's district area. JTL has planned to provide fixed phone services to its subscribers with the latest technology. Code Division Multiple Access (CDMA) is one of the latest technologies being used world wide in wireless access communication system. JTL selected CDMA technology to extend telephone connections to scattered and low densely populated remote areas. The company has also planned to continue the existing cable line telephone system in the densely populated urban areas. CDMA 2000 1X has been opted for wireless telephone system that is easily convertible to 3G (third generation) system. Digital switching system has been chosen for cable line phone system. Copper cable and fiber optic cable have been selected for use in the access network. Digital microwave transmission system of 7 GHz is for long distance link and microwave transmission system of 15 GHz is for access link. These financial statements have been prepared on Generally Accepted Accounting Principles (GAAP) under the historical cost convention and in accordance with Bangladesh Accounting Standards, Companies Act, 1994 and other applicable laws and regulations. Fixed assets are stated at cost less accumulated depreciation. Cost includes expenditure directly attributable to the acquisition and installation of the assets. The company enjoys tax holiday benefit from 1 June 2005 to 31 May 2012 for seven years, under section 46 A (1) (b) of Income Tax Ordinance 1984. After three years of operation company fall into acute competitors pressure and BTRC rules and regulation. At that stage JTL has taken initiatives to do feasibility study for next five years.

1. INTRODUCTION 1.1 Birth of JTL With a view to operate business in telecommunication services, Jalalabad Telecom Limited (JTL) was registered on November 2002 as a private limited company (C-47651 with the Registrar of Joint Stock Companies & Firms, Bangladesh under the ambit of the Companies Act, 1994), Its corporate office is located at UTC Building (10`h Level), 8 Panthapath, Dhaka1215. It can be communicated to Tel: 880-2-9110739, 9110637, Fax: 880-2-8125 E-mail: info@jalalabadtel.net, Website: bijoyphone.net 1.2 License from BTRC JTL was awarded PSTN (Fixed Phone) License on June 22, 2004 by Bangladesh Telecommunication Regulatory Commission (BTRC) for providing fixed phone services in 16 districts of North-East Zone of Bangladesh covering about one-fourth area of the country. These 16 districts are excluding district headquuarter of Dhaka, Narayanganj, and Gazipur. 1. Sylhet, 2. Sunamganj, 3. Habiganj, 4. Moulavibazar, 5. Sheipur, 6. Jamalpur, 7. Netrakona, 8. Mymensingh, 9. Keshorganj, 10. Tangail, 11. Munshiganj, 12. Manikganj, 13. Narsingdi

14. Dhaka 15. Narangonj 16. Gazipur 1.3 Management & Organogram In order to ensure result oriented operation in various departments of JTL: Technical, Marketing, Customer Service, Finance & Accounts, Revenue and Administration, appropriate management structure has been developed. The figure 1-1 below demonstrates the organogram and management structure of JTL that depicts the chain of command among the officers.

CHAIRMAN

BOARD OF DIRECTOR

MANAGING DIRECTOR

OPERATION DIRECTOR

GM (F & A)

DGM (Eng)

DGM (P & D)

Marketing Manager

2. OPERATIONAL ACTIVITIES 2.1 Principle Activities of the Company The principal activities of the company are to set up telecommunication system, install telephone exchange in Bangladesh and to carry out telecom operations with joint, local or foreign

collaboration

for

the

purpose

new

connections

and

expansion

telecommunication network in the North Last Zone's district area licensed by the regulatory authority - . 'Bangladesh 'telecommunication Regulatory Commission (BTRC). The Company commenced its commercial operation from 16 June 2005.

2.2 Contract signing with telecom equipment supplier Contract for Switching & Fiber Optic Transmission System The first contract was signed with Huawei Tech. Investment Co. Limited on 24"' October, 2004 for Design, Supply, Installation, Testing, Commissioning of Switch & Optical Transmission System at Sylhet city. Under this contract, Huawei supplied JTL digital switching system for 10,000 lines CLL network in Sylhet city. Capacity of the switch is expandable to 30,000 lines. Supplied fiber optic transmission system provides STM-4 transmission capacity (upgrade able up to STM-16) in the backbone ring carrier system in Sylhet city. Contract for CDMA WLL Equipment On February 02, 2005 second contract has been reached with Huawei Tech. Investment Co. Limited for design, supply, installation, testing & commissioning of Switch & CDMA WLL system, Under this contract Huawei is to supply equipments for development of CDMA WLL network in greater Sylhet, greater Dhaka (excluding metropolitan area), and greater Mymensingh region. JTL plans to install CDMA access network for 58,000 subscribers in first phase of its project implementation. Under this Contract, Huawei so far supplied I BSC, 6 BTSs, 1 set CNET (MSU expansion), 1 set PDSN equipment, 1 set OMM equipment, 1 set standard IN equipment, SMS equipment, and VMS equipment.

Contract for Microwave Transmission Equipment JTL entered into agreement with Stratex Networks INC, USA on 10"' March, 2005 for Survey, Planning, Design, Supply, Installation, Testing & Commissioning of Microwave Transmission System. Under this contract Stratex supplied 19 Microwave links for establishing transmission network. 2.3 Out Side Plant (OSP) Copper Cable Network Outside Plant work for building of copper cable network includes plan for cable network, supply of primary cable, secondary, cable, cabinet, DP (distribution point) & other accessories and installation of copper cable, cabinet, DP & accessories. Actually, OSP for copper cable system has been started from September, 2004. Underground cable including overhead secondary cable, cabinet & DP etc. has been planned for the locations of Zindabazar, Amberkhana, Shibganj & Moulavibazar. OSP work in Zindabazar area was completed by March, 2005. Works at Shibganj & Amberkhana completed by June, 2005. Cable work at Moulavibazar will be completed within one month. Fiber Optic cable Network As per plan to build fiber optic ring transmission network for communicating traffic between RSUs & BTSs (installed at Shibganj, Amberkhana at Sylhet ) with MSU & BSC (installed at Zindabazar, Sylhet), fiber optic cable has been supplied from Huawei. Local contractor completed installation of fiber optic cable running through the PDB poles by April, 2005. The total running length of the fiber cable is about 18 kin. Later, two spur fiber optic links -- one from JTL MSU, Zindabazar connecting to BTTB TAX, Taltala, Sylhet, another one from Amberkhana to Akhali for connecting the BTS & RIM installed therewith MSU, Zindabazar have been extended. 2.4 Installation, Testing Commissioning of Main Switching Unit (MSU) Switching equipment has been supplied from Huawei in November, 2004. The MSU cum local switch was installed at Zindabazar, Sylhet site. This is the first project implementation of JTL

for establishing landline telephone system in Sylhet city. Under this project, MSU for initial capacity of 10,000 lines has been installed by Huawei at Zindabazar in Decemaber, 2004. Remote switching units (RSU) each having capacity of 2500 lines have also been installed in Shibganj, Amberkhana of Sylliet city. MSU controls and manages RSUs. MSU itself has local connectivity capacity with 2500 lines. Later another RSU of same 2500 lines has been installed in Moulavibazar. 2.5 Commercial operation for Fixed Phone service JTL has launched the commercial operation of its Fixed Phone Services with the brand name BIJOY PHONE on June 16, 2005 in Sylhet city. Its services were later expanded to Tajpur, Sreemongal and Moulavibazar town. CLL network has been developed to provide fixed phone services in the densely populated cities / towns while WLL network has been established for meeting telephone demands for population living in remote areas (sub-urban & rural areas). Line connections are being given to subscribers in Sylhet city and Moulavibazar district. Few other thanas of Sylhet district are in the process of coming into the CDMA WLL network coverage under proposed BTS in those areas. The existing network and customers are in Greater Sylhet region. All the technical, customer care, marketing/sales and revenue services to them are being run in Sylhet city under the regional office at Zindabazar, Sylhet. The company's Finance, Billing and Operations activities are kept directly under the corporate office in Dhaka.

2.6 Installation, testing and commissioning of CDMA WLL System In order to expand JTL's PSTN network by providing CDMA wireless services, CDMA WLL network equipments have been supplied from Huawei in June 2005. Core CDMA network equipments - BSC, OMM, and PDSN have been installed in Zindabazar site. 3 BTSs have been installed at Shibganj (3000 lines), Amberkhana (2500 lines) & Akhali (3000 lines). These 3 BTSs provide a total capacity of 8,500 connections in Sylhet city. Installation, testing and commissioning of these CDMA equipments have been completed by August, 2005. Commercial operation on CDMA WLL services commenced from September, 2005.

As a next step of network development, 3 other locations in Moulavibazar district have been brought under CDMA WLL network service by installing 3 BTSs at Moulavibazar (2500 lines), Sreemongal (2000 lines) & Tajpur (3000 lines). These 3 BTSs added CDMA service of a total of 7500 subscribers in the network. Installation, testing & commissioning of these BTSs in Moulavibazar district have been completed in December, 2005. Commercial operation on CDMA services in Moulavibazar region started on January 01, 2006. Existing CDMA network covering Sylhet city and Moulavibazar district has capacity of 16,000 WLL connections.

2.7 Distribution of commissioned lines by location As aforesaid, fixed phone services provided in the network of JTL are of two types: CLL & WLL. Installed and commissioned to subscribers line facilities cover Sylhet city and greater Moulavibazar district. As depicted in the following graphical charts, in summary it could be stated that a total of 10,608 CLL lines have been installed and commissioned while 16,000 lines commissioned include to CDMA WLL network. About 60% lines of total commissioned 26,608 lines are of CDMA WLL and 40% lines are of CLL. 2.8 Tower Construction Rooftop self-supported towers have been selected for BTS & microwave transmission system. First two rooftop towers (20 meter) have been erected at the roofs of the building sites of Shibganj & Amberkhana for BTS. This work has been completed in early 2005. In the next stage, towers have been erected at the sites, Al-Hamrah, Sylhet (20 meter), Akhali, Sylhet (12 meter), Tajpur (25 meter), Moulavibazar (20 meter) & Sreemongal (20 meter). It should be noted that Al-Hamrah site has been acquired for setting up main microwave station. At present, as a part of expansion of CDMA WLL network, tower & site work are on going at Syedpur in Jagannatpur. It is planned that one BTS will be installed there. 2.9 Installation, Testing, Commissioning of Microwave Transmission link Microwave transmission equipments have been supplied from Stratex Networks for establishing transmission network. After making necessary site survey, Line of Sight Survey

(LOS), LOS link budgeting, the following; transmission links have so far been installed, tested and commissioned in Sylhet region. Name of Link

Hop Distance

Purpose

Amberkhana --- Gas Bhabau, 2 km Sylhet

Interconnection between the networks of JTL and AKTEL.

Al-llamrah-Tajpur

27 km

Access link for BTS & RIM

Tajpur -- Moulavibazar

22 km

Access link for BTS & RSU

Moulavibazar - Sreemongal

20 km

Access link for BTS '

Al-Hamrah At-Falah Marketing Complex, Sylhet

2 km

Interconnection between the networks of JTI_ and CityCell.

One link from Tajpur to Syedpur, Jagarnnathpur will be installed soon. Survey & planning works are going on to install 6 other links in Dhaka periphery locations for establishment of access transmission links for CDMA WLL network there. Space at T.K. Bhaban, Kawranbazar, Dhaka has been acquired as central site for installation of transmission equipments and other core network equipments required for CDMA WLL project in Dhaka periphery.

3. TECHNICAL SYSTEM 3.1 Overview of Technical System JTL has planned to provide fixed phone services to its subscribers with the latest technology. Code Division Multiple Access (CDMA) is one of the latest technologies being used world wide in wireless access communication system. JTL selected CDMA technology to extend telephone connections to scattered and low densely populated remote areas. The company has also planned to continue the existing cable line telephone system in the densely populated urban areas. CDMA 2000 1X has been opted for wireless telephone system that is easily convertible to 3G (third generation) system. Digital switching system has been chosen for cable line phone system. Copper cable and fiber optic cable have been selected for use in the access network. Digital microwave transmission

system of 7 GHz is for long distance link and microwave transmission system of 15 GHz is for access link. Standard 1N (Intelligent network) system has been planned and procured for providing services: Pre-Paid service (PPS), Free-Phone service (FPH), Virtual Private Network (VPN), and other value added services 3.2 Core Network Digital switching based Main Switching Unit (MSU) / Host Switch has been selected. MSU has been planned to provide Cable Line Loop (CLL) and CDMA Wireless Local Loop (WLL) telephone services. MSU is also for building interconnecting links with networks of other operators. Huawei's digital switching system C&C08 has been procured along with RSU, RIM, BSC & BTS. Remote Switching Unit (RSU) & Remote Integrated Module (RIM) are access switches for connecting remote subscribers. RSU & RIM are connected with MSU for switching, control and administration. Call details records available in the MSU could be taken to billing center for bill processing. Core switching network along with all interconnecting links are demonstrated in the Diagram 2-1. 3.3 Services Created and Provided by the PSTN Network of JTL JTL's CLL & CDMA WLL network can support the following supplementary & value added services for its customers. • • • • • • • • • • • • • •

Call forwarding of all types Call waiting Call barring of all types Conference call Centrex Virtual call center Caller 1D Presentation (CLIP) Caller ID Restriction (CLLR) Alarm Call Malicious call tracing Abbreviated dialing Hotline Do not disturb Absent subscriber service

• • • • • •

Emergency calling SMS (only WLL) VMS Dial up & Packet data internet Telephone address catalogue up to 100 nos. (WLL case) VOIP

4. SIGNIFICANT ACCOUNTING POLICIES a) Basic Accounting These financial statements have been prepared on Generally Accepted Accounting Principles (GAAP) under the historical cost convention and in accordance with Bangladesh Accounting Standards, Companies Act, 1994 and other applicable laws and regulations. b) Tangible fixed assets and depreciation Fixed assets are stated at cost less accumulated depreciation. Cost includes expenditure directly attributable to the acquisition and installation of the assets. Any repairs and maintenance expenses are charged to the income statement during the period when these are incurred. Depreciation on fixed assets has been charged on straight-line method considering the economic and technical lives. Full year's depreciation have been charged at the year of acquisition of the assets and no depreciation is charged during the year of disposal. As the Company has gone into operation as on 16 June 2005, depreciation on assets for these financial statements has been charged from that date. c) Intangible asset and amortization Intangible asset are stated at cost less amortization. This will be amortized over a period of five years starting from 16 June 2005. d) Inventories Inventories include Wireless Local Loop (WLL) telephone sets and Drop Wire cables and are measured at the lower of cost and net realizable value- Cost is determined using the weighted average method. Net realizable value is the estimated selling price in the ordinary course of business less variable selling expenses.

e) Preliminary expenses Preliminary expenses represent expenses incurred for formation of the company and are being amortized over a period of five years starting from the year 2005. During the year, proportionate amount has been charged in these financial statements. f) Pre-operating expenses All revenue expenditures before the commencement of commercial operation as on 16 June 2005 were recorded as "Pre-operating expenses" and are being amortized over a period of ten years starting from the year 2005. During the year, proportionate amount has been charged in these financial statements, g) Amortization of license and application fee The first tenure of the License from BTRC is 20 years for which Tk. 20,600,000 has been paid on account of License and Application fees: This amount will be amortized over a period of 15 years. Accordingly, proportionate amount has been charged in these financial statements. h) Tax holiday The company enjoys tax holiday benefit from 1 June 2005 to 31 May 2012 for seven years, under section 46 A (1) (b) of Income Tax Ordinance 1984. i) General i) Figures appearing in these financial statements have been rounded off to the nearest Taka. ii) Figures relating to previous year have been rearranged wherever necessary to conform to the current year's presentation. iii) The Company commenced it's commercial operation as on 16 June 2005, as such no comparative information for profit and loss account have been shown in these financial statements.

5. FINANCIAL DIAGNOSIS 5.1. Subcriber Base by Geagraphical Area

Zone Sylhet Mouluvibazar Sremongol Tajpur Total

Subscribers 2200 700 900 500 4300

2500

2000

1500

1000

500

r Ta jp u

go l Sr em on

ib az ar uv M ou l

Sy lh et

5.2. Sales Trend base by subcriber

Year 2005 2006 2007

Subscribers 2500 5300 4200

6000 5300

5000

4200

4000 3000 2500 2000 1000 0 2005

2006

2007

5.3. Sales In Amount

Year 2005 2006 2007

Amount 800,000 2,000,000 1,500,000

Sales in Amount

2,000,000

1,500,000

800,000

2005

2006

2007

6. FEASIBILITY STUDY After three years of operation company fall into acute competitors pressure and BTRC rules and regulation. At that stage JTL has taken initiatives to do feasibility study for next five years based on some assumption which discuss elaborately below 6.1 ASSUMPTIONS Revenue 2008

2009

2010

2011

2012

No. of Subscribers Prepaid Postpaid Total

3,106 777 3,883

15,430 3,858 19,288

23,230 5,808 29,038

31,030 7,758 38,788

38,830 9,708 48,538

Churn (Deactivated customers, %) Outgoing Incoming

3% 70% 30%

65% 35%

62% 38%

60% 40%

58% 42%

Minutes per day per subscriber

28.0

AMPU Growth

28.7

29.4

30.2

31.0

2.5%

2.7%

Total AMPU per month outgoing Total Air time - outgoing Prepaid Postpaid

588 2,282,910 1,369,746 913,164

560 10,794,249 6,476,550 4,317,700

547 15,888,318 9,532,991 6,355,327

544 21,093,104 12,655,863 8,437,242

540 26,204,345 15,722,607 10,481,738

Prepaid AMPU Peak Hour Off Peak Hour Total

309 132 441

294 126 420

287 123 410

286 122 408

283 121 405

Post Paid AMPU Peak Hour Off Peak Hour Total

706 470 1,176

672 448 1,119

657 438 1,094

653 435 1,088

648 432 1,080

Revenue from Inter connection for incoming 2

3 01

Total Airtime - incoming per year

Interconnection Sharing Rate (Tk.) Peak Off Peak

0.40 0.40

Revenue from Interconnection Peak revenue Off peak revenue total revene incoming

3,287,390 1,408,882 4,696,272

19,529,288 8,369,695 27,898,983

32,719,685 14,022,722 46,742,407

47,248,554 20,249,380 67,497,934

63,757,881 27,324,806 91,082,687

Average Revenue per Minute Prepaid Post paid

0.56 0.60

0.53 0.57

0.51 0.54

0.48 0.51

0.46 0.49

Revenue from Call Charge, Monthly Prepaid 247 Post paid (excl. line rent) 706

223 638

207 593

196 560

185 528

ARPU, Monthly

69,747,4

52 11,740,6

Total AMPU per month incoming

116,856,0

91 168,744,8

227,706,7

Prepaid Post paid (incl. line rent) ARPU per minute Product Prepaid Post paid

247 856

223 788

207 743

196 710

No. of Users (as %) 80% 20%

Usage Total 60% 40%

Peak Hour 70% 60%

Usage Off Peak Hour 30% 40%

0.40

17,098,091

25,167,096

33,411,477

41,507,682

8,808,107 25,906,199

12,964,868 38,131,964

17,211,973 50,623,450

21,382,745 62,890,427

Inter-connection charge Inter-connection charge (Peak Hour) 0.40 Inter-connection charge (Off Peak Hour) 0.40 Inter-connection Expense Inter-connection expense (Peak Hour) 3,616,129 Inter-connection expense (Off Peak Hour) 1,862,855 Total Inter-connection expense 5,478,984 Subsidy/Acquisition Cost Subsidy/Acquisition cost customer

185 678

per

DIRECT OPERATING COST Royalty to BTRC Interconnectivity Cost Subsidy/Customer acquisition cost Total Cost

605,207 5,478,984 6,084,191

2,227,664 25,906,199 28,133,863

3,327,404 38,131,964 41,459,368

4,624,992 50,623,450 55,248,442

5,614,774 62,890,427 68,505,201

Rate of Royalty to BTRC

2.00%

Operation & maintenance (O&M)

2008

2009

2010

2011

2012

Rent

1,452,000

1,597,200

1,756,920

2,904,000

3,194,400

3,513,840

60,500

66,550

73,205

48,400

53,240

58,564

24,200

26,620

29,282

1,200,0

1,320,0 00

2,400,0 Salaries and allowance

2,640,0 00

50,0 Printing and stationeries

55,0 00

40,0 Postage and telephone

44,0 00

20,0 Entertainment

22,0 00

Training and development

- 10,0 00

Books and periodicals

Consultancy fees

- 12,0 13,2 00 00 20,0 22,0 00 00 1,000,0 1,100,0 00 00 500,0 550,0 00 00 175,0 192,5 00 00 150,0 165,0 00 00 4,000,0 4,400,0 00 00 1,000,0 1,100,0 00 00 10,577,000. 11,634,700. 00 00

Car running and maintenance Traveling and conveyance Insurance premium Stores & spares Fuel & lubricants Repairs & maintenance Electricity bills Miscellaneous expense Total Cost Put into Process

12,100

13,310

14,641

14,520

15,972

17,569

24,200

26,620

29,282

1,210,000

1,331,000

1,464,100

605,000

665,500

732,050

211,750

232,925

181,500

199,650

11,0

256,2 219,6 5,856,4 4,840,000

5,324,000

00 1,464,1

1,210,000 1,331,000 00 12,798,170. 14,077,987. 15,485,785. 00 00 70

General & Administrative Expense 2,640,0 Office rent

2,400,000

3,513,8 2,904,000

3,194,400

9,240,0 Salaries and remuneration

8,400,000

12,298,4 10,164,000

11,180,400

302,500

332,750

242,000

266,200

60,500

66,550

3,025,000

3,327,500

12,100

13,310

72,600

79,860

275,0 Printing & stationeries

250,000

Postage & telephone

200,000

Entertainment

50,000

Publicity and advertisement

2,500,000

Books and periodicals

10,000

Audit and legal fees

60,000

366,0

220,0

292,8

55,0

73,2

2,750,0

3,660,2

11,0

14,6

66,0

87,8

132,0 Car running and maintenance Traveling and conveyance

120,000 50,000

145,200 55,0 60,500

175,6 159,720 66,550

92 73,2

05 1,100,0

Miscellaneous expense

1,000,000 00 15,040,0 00 00

Total

1,464,1

1,210,000 1,331,000 00 16,544,0 18,198,4 20,018,2 00 40 64

22,020,0

Collection from Sales / Collection of receivables Credit Term

days 1,016,3

Beg. A/R Ending A/R

Collection from Sales (Cash)

Interconnection receivables

3,781,0

5,933,7

- 25 74 58 1,016,3 3,781,0 5,933,7 74 58 43 29,244,0 108,618,4 164,217,5 60 12 14

8,561,7 43

8,561,7

10,104,5 88

228,621,6

279,195,8 69

revenue

Credit Term

days 771,9

Beg. A/R Ending A/R

- 90 771,9 34

4,586,1 34

4,586,1

7,683,6 83

11,095,5 51

11,095, 551

14,972,4 97

Payment of operating expenses Credit Term

days 10,577,0

Operation & maintenance 00 General and administrative expense 00

11,634,7 00

15,040,0

16,544,0 00

25,617,0 Total

12,798,1 70 18,198,4 00

28,178,7

- 50 2,134,7 25

Ending A/P

70 2,348,2

2,348,2

64 37,505,8 50 2,583,0

48 2,583,0

22,020,0

34,096,2 27

15,485,7 86

20,018,2

30,996,5

2,134,7 Beg. A/P

14,077,9 87

2,841,3 52

3,125,4 87

Interconnection expenses payable Credit Term Beg. A/R

days -

900,6

4,258,5

6,268,2

8,321,6

55 900,6 Ending A/R

53 4,258,5

6,268,2 68

8,321,6 63

10,338,1 52

6.2 PROJECT COST (Tk) PROJECT COST

Already Invested Local Currency

Land & Development : Land & Land Development

To be Invested Foreign Currency Local Equivalent in BDT Currency

1,900,0 00

Site Preparation

100 -

,000

2, 000,000

1,900,0 00

Site & Civil Works: Cost of Site Acquisition & Civil Works 00 Advance against Sites & Spaces

,000

000,000

,000

500,000

,000

500,000

000

100,000

000

100,000

,000

200

10,

200

220,000,0 00

Duty, Clearing forwarding etc.

10,300,0 Imported Machinery: Imported Machinery

100

10,300,0

10,

84,100,

304,

Imported Machinery

220,000,0 00

Local Machineries & Equipments: Local Machineries & Equipments

84,100,

304,

61,400,0 00

Local Machineries & Equipment

42,000

61,400,0 00

Transport, furniture & fixtures Transport & vehicles

Total

4,200,0

103, 400,000

42,000

103, 400,000

1,800

00 Furniture & fixtures

,000 4,000,0

1,000

00 Computer & office equipment

,000 7,200,0 ,000 7,500,0

Other Project Cost Pre-operating Expense

10, 000,000

6,000

00 Total transport, furniture & fixtures, etc. 00

5, 000,000

2,800

00 Leasing of E-1

000,000

,000 22,900,0

13, 500,000

11,60

34,

0,000

500,000

100,000

14,100,0 00

Marketing Expense

14,

2,500,0

2,500

00 License & application fee

,000

5, 000,000

20,600,0 00

Bank Guarantee Margin

20, -

600,000

5,000,0 00

Bank interest and charges

1,000 -

,000

6,500,0 00

Contingency

,000

Initial Net Working capital

40, 000,000

5,000 ,000

48,700,0 00

000,000 33,500

Other Project Cost

5, 000,000

42,000 -

90,

,000

700,000

Total Cost of the Project

365,200,0 00

84,100, 95,900,000

545,200,000

000 -

6.3 MEANS OF FINANCE Source Equity

Amount Percentage 200,000,0 00 37% 345,200,0

Term Loan Total

63% 545,200,0 100%

00 Comparison of project cost with other operators

Total project cost (Tk.)

Dhaka Phone Ltd.

Ranks Tel.

1,460,400,000

2,300,000,000

Telebarta 3,103,041,03 3

JTL 545,200,000

6.4 BUDGETED BALANCE SHEET 2008

2009

(13,029,2 Cash

37)

19,878, 494

1,016, Bills Receivables Interconnection Receivables

325 Revenue

Other Short Term Assets

134

000 &

000 51,935,

238

476 493,264,

Net Fixed Assets

762

Total Assets

840

441,329,

482,023, 2,134, A/P Interconnection payable

750 expense

225 900,

655

Total Current Liabilities

405

Long Term Debt Less: Loan repayment Net Long Term Debt

000

2,841, ,487

663

10,338 ,152

11,163, 015

345,200,

3,125

8,321,

8,851, 316

345,200,

610,16 5,176

352

268

778 345,200,

527,664,

6,268,

6,606,

285,523 ,810

195

048

553 3,035,

337,459,

2,583,

4,258,

259,676 ,190

048 476,531,

2,348,

,000

952

775

545,200

207,740,

389,394,

469,575, 226

,366

000

286

324,641

545,200,

155,805, 714

524

190,205,

148

000

14,972 ,497

545,200,

103,870,

,588

551

490

10,104

11,095,

87,137,

545,200,

,282

743

299,564

8,561,

7,683, 683

702 545,200,

854

758

28,245,

2012

170,547,

5,933,

4,586,

990

22)

Long Term Assets Less: Depreciation Amortization

049

074 771,

2011 73,520,

3,781,

(11,240,9 Total Current Assets

2010

13,463 ,640

331,200,

317,200

000 000 ,000 (14,000,0 (14,000,0 (14,000, 00) 00) 000) 345,200, 345,200, 331,200, 317,200, 303,200 000 000 000 000 ,000

348,235, Total Liabilities

405

351,806, 778

340,051, 316

015

Total Capital

200,000, 200,000, 200,000, 000 000 000 (66,211,5 (82,231,5 (70,536,5 65) 52) 45) 7,017, 005 133,788, 117,768, 136,480, 435 448 460

Total Liabilities and Equity

840

Share Capital Retained Earnings Reserve for Tax holiday

482,023,

469,575, 226

328,363, ,640

200,000, 000 (31,273,5 95) 30,574, 775 199,301, 180

476,531, 775

316,663 200,000 ,000 27,601 ,628 65,899 ,908 293,501 ,536

527,664, 195

610,16 5,176

6.5 BUDGETED INCOME STATEMENT Particulars

2008

2009

Revenue

368

209

196

599

714

30,260,

2010

111,383,

30,260,

166,370,

111,383, 209

2011 231,249,

166,370,

280,738,

231,249,

368

Less. VAT @ 15%

752

Net Revenue Less: Cost of Revenue

617

Interconnection cost

984

Royalty to BTRC

207

664

404

992

774

Subsidy/Customer acquisition cost

8,280, 551

28,034,

103,102,

21,950, Operating Revenue Commercial Expenses:

425

50,623,

5,614,

55,248, 442

111,915, 900

62,890, 427

4,624,

41,459, 368

258,609, 667

450 3,327,

74,968, 795

212,499,

38,131,

28,133, 863

22,129, 047

382

964 2,227,

6,084, 191

18,750,

153,375,

25,906,

714

217

267

199 605,

Total Cost of Revenue

12,994, 929

658 5,478,

599

280,738,

Total Revenue

2,225,

196

2012

68,505, 201

157,250, 940

190,104, 466

10,577, Operation & maintenance General & Administrative Expense

000

11,634, 700

15,040, 000

Bad Debt & Other Provisions

12,798, 170

16,544, 000

109,

14,077, 987

18,198, 400

374,

15,485, 786

20,018, 240

559,

22,020, 064

786,

950,

752

844

579

255

522

Other Administrative Expenses Fixed Operating Cost

25,726, 752

EBITDA

(3,776,3 27)

EBIT Less: Interest on Term Loan

46,415,

40,960, 000

31,556, 149

251

Depreciation Amortization

28,553, 544

80,359, 750

40,960, 000

34,882, 482 122,368, 458

40,960, 000

38,456, 372 151,648, 094

40,960, 000

10,975, 10,975, 10,975, 10,975, 10,975, 238 238 238 238 238 (55,711,5 (5,519,9 28,424, 70,433, 99,712, 65) 87) 512 220 856 10,500, 10,500, 9,712, 7,612, 5,512, 000 000 500 500 500

Less: Interest on W/C Profit Before Tax

(66,211,5

65) Profit Before Tax

(16,019,9

87) (66,211,5

18,712,

012 (16,019,9

62,820,

720 18,712,

94,200, 356

62,820,

94,200,

65)

87)

012

720

356

Less. Income Tax Profit After Tax

(66,211,5 65)

Retained Earning

(16,019,9 87)

(66,211,5 65)

Cumulative Retained Earning

(16,019,9 87)

(66,211,5 65)

(82,231,5 52)

18,712, 012

62,820, 720

11,695,

94,200, 356

39,262,

58,875,

008 950 222 (70,536,5 (31,273,5 27,601, 45) 95) 628

6.6 BUDGETED CASHFLOW STATEMENT Investment Yr

2008

Net Profit Before Tax

65)

Add: Depreciation

Add: Amortization

Add: Interest

EBITDA

27)

2009

2010

2011

2012

Operating Activities : (66,211,5

(16,019,9 87)

40,960,0

40,960,0 00

10,975,2

(2,529,23 7)

7,612,5 00

80,359,7

(3,007,5 20) 43,407,7

5,51 00

122,368,4

(3,005,6 96)

10,97 38

9,712,5

46,415,2

1,247,0 90

10,975,2 38

40,96 00

10,975,2

10,500,0

(3,776,3

40,960,0 00

94,20 56

40,960,0

10,975,2 00

62,820,7 20

38 10,500,0

Payment of Income Tax Decrease (Increase) in net working capital Cash flow from operating activities -

18,712,0 12

151,64

(3,728,1 53)

77,354,0

(3,11 66)

118,640,

148,5

305

928

Investment Activities : (2,000,0 Land Development

00)

Site & Civil works

00)

(10,500,0 (304,100,0 Imported Machinery

00) (103,400,0

Local Machinery

00) (34,500,0

Vehicles, furnitureâ&#x20AC;&#x2122;s & fixtures

00) (90,700,0

Other Cost 00) Cash Provided from investment (545,200,0 activities 00) Financial Activities : 200,000, Issue of Share

000

Term Loan Payment of Interest

000

345,200, (10,500,0

(10,500,0

(9,712,5

(7,612,5

(5,51

00)

00) (14,000,0

Repayment of Term Loan Repaid

00)

00) (14,000,0

00)

(14,00 00)

Change in Bank Loan (W/C) Cash Provided from financing 545,200, (10,500,0 (10,500,0 (23,712,5 (21,612,5 (19,51 activities 000 00) 00) 00) 00) 00) (13,029,2

Net Changes in Cash

Add. Opening Cash balance

Ending Cash Balance

129,0 428 (13,029,2 19,878,4 73,520,0 170,54 37) 94 49 54 (13,029,2 19,878,4 73,520,0 170,547,8 299,56 37) 94 49 54 82 37)

32,907,7

53,641,5

97,027,8

6.7 FINANCIAL RATIO ANALYSIS Particulars Net Margin Gross Margin Return on Investment Current Ratio

2008 -236.18% 100.00% -13.42% 0.84

2009 -15.54% 100.00% -3.63% 3.56

2010 12.20% 100.00% 4.81% 5.27

2011 29.56% 100.00% 18.62% 6.92

2012 36.43% 100.00% 32.99% 8.02

Receivable turnover days

(2,529,236 EBITDA (BDT) EBITDA/Net Sales

.84) -9.02%

43,407,731 .26 42.10%

(5 Debt Service Coverage Ratio (times) .31)

Observation:

45 50.43% (0.

53)

7. OBSERVATION AND RECOMMENDATION Planning

77,354,054.

118,640,304. 93 55.83%

1 .20

148,528,928. 02 57.43%

3. 26

5. 11

JTL activities were not object oriented. There have lots of gap between company planning and its activities. Management did not properly comply/ follow up companyâ&#x20AC;&#x2122;s budget and planning to achieve the objective. Recommendation: JTL management has to be goal congruence. They have required developing plan and budget based on study and analysis and properly follows the budget that will help company to achieve the objective. Organizational Structure Observation: JTL has poor organizational structure. Company has no specific criteria for decision making process. Managing Director is the only decision maker which has to be follow irrespective comply any plan or not. JTL has no marketing manager although Telecom is highly marketing based company. Recommendation: JTL must be develop a good organizational structure that will help to make right decision at the right time. JTL has required to recruit marketing manager. Sales Target and Marketing Plan Observation: Company are following visionary sales target without effective marketing plan and personnel and effective technical support. Recommendation: Management should consider proper marketing plan, personnel and technical feasibility to attract more subscribers. Project Cost Observation: JTL project cost is excess compare to operational area of the company. Company is spending many unutilized resources in different location where subscribers are very negligible. Recommendation:

JTL management should utilize the expensive resources that will generate more cash flow for the company. 8. CONCLUSION JTL (a PSTN operator) start its operation by local ownership with very latest technological equipment with the vision to operate in 16 districts.

But after three years of operation JTL

started to face acute business competition and BTRC rules and regulation. As a result itâ&#x20AC;&#x2122;s become very difficult for JTL to make up its operating cost. To start new journey with lot of courage and energy JTL has taken initiatives do to feasibility study for another five years period and new investment project.