Financial Analysis and Management of Celcom and Maxis

Running head: FINANCIAL ANALYSIS AND MANAGEMENT
Financial analysis and management
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1FINANCIAL ANALYSIS AND MANAGEMENT
Table of Contents
1.0 Introduction...........................................................................................................................2
2.0 Background of Celcom.........................................................................................................2
2.1 Nature of the core business...............................................................................................2
2.2 Future Outlook..................................................................................................................3
2.3 Key challenges..................................................................................................................3
3.0 Relative position in industry.................................................................................................3
4.0 Ratio analysis for measuring financial performance............................................................4
4.1 Background for ratio analysis...........................................................................................4
4.2 Rational for selecting Celcom and Maxis.........................................................................4
4.3 Profitability analysis.........................................................................................................4
4.3.1 Background................................................................................................................4
4.3.2 Profitability ratio table...............................................................................................5
4.3.3 Line graph..................................................................................................................5
4.3.4 Interpretation..............................................................................................................6
4.4 Liquidity analysis..............................................................................................................7
4.4.1 Background................................................................................................................7
4.4.2 Liquidity ratio table....................................................................................................7
4.4.3 Line graph..................................................................................................................8
4.4.4 Interpretations............................................................................................................8

2FINANCIAL ANALYSIS AND MANAGEMENT
4.5 Efficiency ratio..................................................................................................................9
4.5.1 Background................................................................................................................9
4.5.2 Efficiency ratio table................................................................................................10
4.5.3 Line graph................................................................................................................10
4.5.4 Interpretation............................................................................................................11
4.6 Solvency ratio.................................................................................................................11
4.6.1 Background..............................................................................................................11
4.6.2 Solvency ratio table..................................................................................................12
4.6.3 Line graph................................................................................................................12
4.6.4 Interpretation............................................................................................................13
4.7 Investor’s analysis...........................................................................................................14
4.7.1 Background..............................................................................................................14
4.7.2 Investor’s analysis ratio table...................................................................................14
4.7.3 Line graph................................................................................................................15
4.7.4 Interpretation............................................................................................................15
5.0 Identification of the operational and strategic issues and recommendation.......................16
5.1 Analysis of revenue.........................................................................................................16
5.1.1 Strategic issues.........................................................................................................17
5.1.2 Recommendation.....................................................................................................17
5.2 Gearing analysis..............................................................................................................17
5.2.1 Issues........................................................................................................................17
5.2.3 Recommendation.....................................................................................................17

3FINANCIAL ANALYSIS AND MANAGEMENT
5.3 Analysis of expenses.......................................................................................................17
5.3.1 Issues........................................................................................................................18
5.3.2 Recommendation.....................................................................................................18
5.4 Efficiency analysis..........................................................................................................18
5.4.1 Issues........................................................................................................................18
5.4.2 Recommendation.....................................................................................................19
6.0 Limitation of analysis.........................................................................................................19
6.1 Limitation of ratio analysis.............................................................................................19
6.2 Recommendation............................................................................................................19
References.................................................................................................................................20

4FINANCIAL ANALYSIS AND MANAGEMENT
1.0 Introduction
The report will focus on analysing the financial performance of Celcom
telecommunication as against the performance of Maxis for the past 5 years. The report will
concentrate on measuring various financial ratios for both the companies to analyse their
performance and position. It will further evaluate the strategic and operational issues of
Celcom.
Celcom started its operation as the STM Cellular Communication in the year 1988
along with Telekom Malaysia and Fleet Group. The company is the subsidiary of Axiata
Group Berhad. It was incorporated as private company on 12th June 1992 in Malaysia
(Celcom.com.my 2018).
On the other hand the competitor of Celcom that is Maxis Berhad is the investment
holding company that is based in Malaysia and is engaged in managing its operation in
telecommunication industry. Principally the company is engaged in telecommunication
provision, selling of devices and providing digital services. Major business activities of the
company include includes supply of post-paid and prepaid mobile services, providing network
facilities, fixed line services and various other digital, converged and related services.
Advanced Wireless Technologies Sdn. Bhd is the main subsidiary of Maxis Berhad that
operates the national network for public switched and provides applications and internet
services (Maxis 2018).
2.0 Background of Celcom
2.1 Nature of the core business
It delivers telecommunication services that include network services for fiber and
cellular optic transmission, data and voice transmission services through fixed and cellular

5FINANCIAL ANALYSIS AND MANAGEMENT
systems and the paging services. It also provides the training services regarding dealing under
marketable securities (Amba 2014). Further it provides unified messaging services that enable
the users to see fax message through Air Cash services and Web that allows instant access to
the money through the mobile phones of client
2.2 Future Outlook
The company has made good progress with regard to revamp of digital customer’s
experience. Further, the retail outlet will give the customers new experience and they will be
connected in better way (Brigham et al. 2016). In near future the company is also planning to
relocate few of its existing stores to more attractive commercial locations that will make more
convenient access for the customers.
2.3 Key challenges
Telecommunication companies in Malaysia are increasing day by day and the
telecommunication market is dominated by major companies like Tune Talk and Umobile.
The market in telecommunication sector is becoming oligopoly due to higher level of
competition. To maintain the position under the telecommunication market the companies like
Celcom and Maxis are required to analyse the possible reaction of competitors to set their
strategies regarding advertising, output and pricing decisions (Arokiasamy and Abdullah
2013).
3.0 Relative position in industry
If the industry position of Celcom is compared with Maxis it can be observed that with
regard to market share Maxis is the leader and is followed by Celcom. In last 5 years
Malaysia’s telecommunication industry is led by companies like Celcom and Maxis. Their
services helped the people significantly to make their lives simple and easier (Hossain and
Suchy 2013).