Cash on the line: Telecom operators and working capital management
Other regions show diverging trends
In the other eight regions and countries covered by our survey (consisting of Africa and the Middle East, Asia-Pacific, Central and Eastern Europe, China, India, Japan, Latin America and Russia), there were diverging trends in the net trade WC performance reported by operators in 2012 compared to 2011.
Net trade WC results worsened in three regions (India, Japan and Russia) and improved in Asia-Pacific. Performance remained unchanged in Africa and Middle East, China and Latin America.
These results for 2012 mean that the net trade WC performance has deteriorated in Africa and Middle East, Central and Eastern Europe, India, Japan and Russia since 2007, while improving in Asia-Pacific, China and Latin America.
Variations in WC performance
Performance in individual regions and countries varies considerably, reflecting the characteristics of each market and the different business models deployed by operators. Key factors to consider include:
- Fixed-line/mobile and pre-pay/post-pay mix
- Local payment practices and methods
- Levels of capital expenditure in each marketplace
Of the other eight regions and countries, China and India exhibit the lowest levels of net trade WC in relation to sales. Russia also displays a strong net trade WC performance.
By contrast, Japan scores particularly poorly due to a high DSO and low levels of advance billing. With regard to Africa and Middle East, Asia-Pacific, Central and Eastern Europe, and Latin America, the net trade WC to sales ratio ranges between –4% and 2%.