Performance Evaluation of Selected Telecom Companies in India - A Taxonomy Approach

Abstract

Indian telecommunications industry has shown massive upsurge in the recent years in all respects of industrial growth. From the status of state monopoly with very little growth, the industry has grown in to the level of an industry. The country is ranked third worldwide in terms of having the largest telecommunication network, after China and USA. The Industry is one of the fastest growing in the world with the growth rate of 40-45% p.a.

The liberalized economic policy in India led to the entry of more private and foreign players in to the Indian Telecom industry which in turn has led to a cut-throat competition which influenced the financial performance of the telecom companies. Hence it becomes imperative to assess the financial hea lth of the Indian telecom companies in terms of its liquidity, profitability and return generating capability.

In this article, the selected telecom companies’ performance is evaluated applying numerical taxonomy approach. The numerical taxonomy analysis is a ranking method which ranks target subjects utilizing

a sum of indices. In this case, the financial ratios have been used as a tool for measuring the performance of selected companies. The objective of this method is to measure the financial performance of the telecom companies and their relative significance of how well these ratios have been managed by select companies in telecom business.