Skip to main navigation

Telecom operators and working capital management 2011 - Other regions show working capital deterioration - EY - Global

Telecom operators and working capital management 2011

Other regions show working capital deterioration

  • Share

Change in C2C and net trade WC to sales ratio by region, 2009–10

C2C Africa Middle East Asia Pacific Central and Eastern Europe China India Latin America Russia Overall
2010 2 5 16 -89 -43 9 -2 -15
2009 -7 8 17 -101 -46 13 1 -17
                 
C2C Africa Middle East Asia Pacific Central and Eastern Europe China India Latin America Russia Overall
2010 -3% -2% 1% -33% -17% 0% -4% -8%
2009 -6% -1% 1% -35% -19% 1% -3% -9%


Four regions — Africa–Middle East, China, India and Latin America — posted a year-on-year deterioration in WC performance, mostly on the back of weakness in payables.

In contrast with Europe and North America, operators in other regions as a whole reported a slight deterioration in WC performance in 2010 compared to 2009.

The net trade WC to sales ratio increased from –8.6% to –8.2%, with C2C up 4% over that period. Results, however, were varied among other regions (seven in total) and operators (41).

Change in WC metrics, 2009–10


Days 2010 Change 10/09
DSO 41 2%
DIO 6 10%
DPO 62 1%
C2C -15 4%
     
%sales 2010 2009
Net trade WC -8.2% -8.6%

Change in C2C and net trade WC to sales ratio by region, 2009–10


DPO per operator, 2010

Source: EY analysis, based on publicity available annual financial statements.

Last year’s weak WC performance was due to higher levels of receivables (DSO up 2%) and inventories (DIO up 10%).

In contrast, there was a slight improvement in payables performance (DPO up 1%). Levels of deferred income were down slightly from 4.2% to 4.1% of sales.

Four regions — Africa–Middle East, China, India and Latin America — posted a year-on-year deterioration in WC performance, mostly on the back of weakness in payables.

Variations in WC performance

Overall, other regions’ WC to sales ratio of –8% demonstrates stronger performance relative to both Europe and North America.

However, performance varied across other regions due to the characteristics of each market and variations in business models deployed by each operator composing each region. These factors included

  • Fixed-line/mobile and prepay/post-pay mix
  • Local payment practices
  • Payment methods and levels of capital expenditure

Topping WC performance (e.g., having the lowest levels of C2C) are China and India. At the bottom of the ranking lie Central and Eastern Europe and Latin America, affected by poor receivables performance.

Distribution of DSO and DPO performance across operatorsin other regions, 2010


DPO per operator, 2010

<< Previous | Next >>

Contents

Download \'Telecom_operators_and_working_capital_management_2011\' as a printable document

Related content


Contact

Back to top