Mergers And Acquisitions In Telecom Services Accounting Essay

Amalgamations and acquisitions ( MandA ) have been used as instruments for house growing for many old ages. In recent old ages amalgamations & A ; acquisitions are progressively going a tendency in the corporate universe but in 2008 the volume of amalgamations & A ; acquisitions hit a three twelvemonth low, numbering 2.89 trillion dollars harmonizing to Thompson Financial Reports ( www.doingbusiness.ro/en )

A amalgamation can be defined as “ a combination of two companies to organize a new company, while an acquisition is the purchase of one company by another with no new company being formed ” ( www.Investopedia.com ) .

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Telecommunication industrydeals with variousforms of communicating mediums such as nomadic phones, fixed line phones, every bit good as Internet and broadband services. In developing states amalgamations and acquisitions are going popular because it ‘s the easiest and fastest manner to growing. Sri Lanka is a underdeveloped state ; the competition is terrible at that place among telecom companies. To get the better of this Sri Lanka Telecom ( SLT ) which is a fixed line operator acquired Mobitel, Mobile phone web operator in 2002.

Sri Lanka Telecom Corporation formed in 1991, DLT converted. Sri Lanka Telecom is the largest telecom service supplier with an one-year turnover of Rs 40 billion. It ‘s one of the most cherished bluish bit companies in the state. The major portion holder of the company is the authorities of Sri Lanka with 49.5 % and Global Telecommunications Holdings N.V of Netherlands owns 44.9 % interest in Sri Lanka Telecom whilst the balance portions are staying with the general populace. Sri Lanka Telecom now to the full owns six subordinates. The vision of SLT is to take Sri Lanka to go the hub of telecommunications in South Asia and the mission is to expect and carry through the communications demands of all sectors of the state, in a service oriented work moral principle which will supply entire client satisfaction through the most modern telecommunication installations.

Mobitel is one of the taking nomadic service suppliers in Sri Lanka. Since the acquisition of Mobitel by Sri Lanka Telecom in 2002, it has grown in bounds and springs and is now with equality engineering in latest telecommunications industry in the state. Mobitel is the first Mobile operator to establish ace 3.5G HSPA engineering in South Asia ( www.mobitel.lk ) . The vision of Mobitel is to take Sri Lanka towards an info-com and cognition rich society through our service offerings & A ; the mission to care, portion & A ; present

Research Aim

There were batch of amalgamations and acquisition in the telecom service industry. Acquisition of Mobitel by Sri Lanka Telecom was a critical acquisition for both companies. The purpose of this undertaking is to measure the factors impacting amalgamations and acquisitions in the telecom industry.

Research Aims

  1. To place chief grounds for amalgamations and acquisition in telecom service industry.
  2. Persons view on earlier amalgamations and acquisition in telecommunication services.
  3. To reason, critically evaluate fiscal and non fiscal public presentation information, weather acquisition of Mobitel by Sri Lanka Telecom was successful.

Once the above aims have been answered, it will supply a complete and existent cognition background for me to critically measure the amalgamations & A ; acquisitions in telecom industry.

2. Literature reappraisal

This chapter will analyze the current literature on amalgamations and acquisition. This will supply apprehensible and short statement of theories and positions on the issues associating to amalgamations & A ; acquisitions in the telecom services industry. Links will be made with the purposes and aims of the research undertaking.

Telecommunications industry is one of the most feasible and rapidly developing industries and it is regarded as an indispensable component of the world-wide public-service corporation and services sector

The figure of amalgamations and acquisitions in telecom Sector has been increasing significantly. Amalgamations can be three types viz. horizontal, perpendicular and pudding stone. The amalgamations and acquisitions in telecom Sector are regarded as horizontal amalgamations merely because of the ground that the entities traveling formergeror acquisition are runing in the same industry, which istelecommunications industry. Acquisition is by and large seen as portion of the procedure of growing of the house but it may besides be a agency of rationalizing the construction of worsening industries.

Amalgamations and acquisitions can be divided into three phases: the pre-merger phase, the existent trade phase and the post-merger phase. Merger or Acquisition has been regarded as the consequence of the success of pre-merger determination devising and post-merger execution ( Pablo, 1994 ) . The expected benefit of the amalgamations & A ; acquisitions will merely be achieved if the post-merger integrating activities are given precedence based on their potency for value creative activity as sketched during the pre-merger phase ( Chanmugam, 2005 ) .

Why some amalgamations and acquisitions frequently meet to neglect outlooks. A figure of surveies showed the common ground for amalgamations and acquisitions failure are ; over appraisal of synergism, the slow gait of station amalgamation integrating and a hapless scheme ( Donald, 2003 ) . The deficiency of post-merger success progressively being attributed to human factors ( Covin, 1996 ) , the directors rely on traditional narratives such as speedy amalgamation will forestall lost productiveness, a new and improved corporate civilization will automatically be established instead than facts in doing amalgamations & A ; acquisitions determinations.

( Gaughan, 2002 ) Firms merge or get in order to turn rapidly, hopes to pattern economic additions as a consequence of economic systems of graduated table. A larger house as a consequence have better entree to capital markets which will ensue in lower cost of capital. ( Brian & A ; Mike, 1987 ) Financial additions may be achieved by redeploying extra hard currency or cut downing hazard through variegation, so that the fiscal public presentation and stableness of the new house is improved

In bulk of developed and developing states around the universe, amalgamations and acquisitions in the telecommunications sector have become a necessity ( www.economywatch.com ) . This sort of amalgamations & A ; acquisitions will besides make occupation chances. As major portion of SLT is owned by the authorities of Sri Lanka the motivation behind the acquisition may be creative activity of occupations.

Amalgamations and acquisitions have negative effects every bit good ; major consequence is the monopolisation of telecommunication merchandises and services which leads to several other negative effects for the consumers. However authorities of those states take appropriate stairss to command these jobs.

The acquisition of an bing company might hold a negative consequence on the concern ‘s repute within that market, if the acquisition was non done professionally with due diligence ( Warren & A ; Julio, 1990 ) . Due diligence is a 3rd party scrutiny of the dealing it examines operations, financials, revenue enhancement affairs and plus rating. Information obtained during due diligence can bring out possible trade surfs such as direction capablenesss and inducements, weak hard currency flows, weak strategic place etc. The cost of an acquisition will be high normally and have to pay all at one time. The contractors and the providers may hold to be renegotiated ( Warren & A ; Julio, 1990 ) .

Mergers & A ; acquisitions activities tend to better aggregative stockholder value. Shareholder value analysis is a technique for set uping value creative activity by dismissing future hard currency flows utilizing cost of capital. This is done by gauging the entire net value of a company and dividing by the value of portions. Mergers & A ; acquisitions activities are likely to increase the portion monetary values if the discounted hard currency flows exceed the cost of acquisition ( Keenan, 1982 ) . However, successful acquisitions can neglect when the direction does non pass on with portion holders sing the value, the value may ne’er acquire manifested in the company ‘s stock monetary value.

3. Research Methodology

This chapter focuses on research methods and research design used for this undertaking. Research design provides a model for the aggregation and analysis of informations ( Bryman & A ; Bell, 2007 ) . Research methods are a set of processs and techniques for assemblage and analyzing informations ( Strauss & A ; Corbin, 1998 ) . It can affect specific instrument, such as a ego completion questionnaire or a structured interview, or a participant observation.

I decided to roll up both primary and secondary informations utilizing quantitative and qualitative attacks. Quantitative method involves analysis of numerical informations on the other manus qualitative information consists of verbal and more in deepness information

Primary Research

In this undertaking questionnaire will be given to 40 staffs working at both Sri Lanka Telecom and Mobitel caput offices in Sri Lanka. I will utilize an external agent to administer the questionnaire. The questionnaire will concentrate on what factors made both companies to affect in the acquisition and factors contributed to success of Mobitel after acquisition.

Secondary Research

The research subject is chiefly derived from secondary research. Secondary information consists both quantitative and qualitative. Secondary information consists of beginnings of informations and other information collected by others and archived in other signifier these beginnings include diaries, newspaper articles, book, databases etc ( David & A ; Michael, 1993 ) . The advantage of utilizing the secondary information is clip efficient and cost efficient and besides about ever the starting point for primary research. Academic informations can be obtained from electronic databases, diaries, books and academic magazines such as The Economist through library web site. However comparing diaries and articles are non easy due to limited recent surveies gettable. As the secondary day of the month collected by others for their ain intent, so the chief points will be different or non be included ( Bryman & A ; Bell, 2007 )

Research Doctrine

Research Philosophy reflects the manner in which the research worker perceives the universe ( Saunders, 2006 ) . There are three different facets of research doctrine positivism, Interpretivism and pragmatism. This research will be on positivism position as old research and theories are to be used in order to obtain farther cognition on amalgamations and acquisitions

Research Approach

There are two different research attacks can be used when carry oning a research, Deductive and Inductive attack. Deductive attack uses bing theories to develop a hypothesis and so creates a research scheme in order to prove this hypothesis. Inductive attack which entails the aggregation of informations and develops a theory based on informations analysis ( Saunders, 2006 ) . Deductive attack suits best for this research because it has entree to figure of literature. The research worker can associate the informations collected with old theories.

Research scheme

The research scheme should enable the research worker to reply the research inquiry and run into the research aim ( Saunders, 2006 ) . I decided to roll up primary informations through the usage of questionnaires which is speedy and inexpensive. The research worker will utilize unfastened and closed inquiry. . It enables the research worker to roll up both descriptive and explorative findings. The consequences from near ended inquiries will be speedy and to analyze and open ended inquiries will allow the respondents to province their positions. Primary research can present as justification for any secondary research found.

Another method of primary research is interviews although from interview more in-depth descriptive responses are possible. However, I decided non to utilize this method due to be and clip restrictions and besides the research worker felt the usage of interviews may hold resulted in more colored consequences.

Restrictions

The clip factor is the restriction for this research because planing and administering the questionnaires will take clip as I distribute questionnaires through a 3rd party and the response rate may be low. Receiving all consequences besides clip devouring. There will be trouble in happening information which happened long clip ago and the consequences of this methodological analysis would be different if completed in a different economic clip.

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Proposal Due

Background

Literature Review

Questionnaire Design

Questionnaires

Secondary Research

Data Presentation

Datas Analysis

Discussion

Decision

Finalizing

Submission

4. Undertaking Timetable

5. Mentions

Books

  • Bryman, A and Bell, E ( 2007 ) , Business Research Methods, 2nd Edition, Oxford University Press
  • David, W. S and Michael, A.K ( 1993 ) , Secondary Research: Information Beginnings and Methods, 2nd Edition. Sage Publication
  • Donald, D ( 2003 ) , Mergers, Acquisition and Other Restructuring Activities, 2nd edition, Academic Press
  • Brian, C and Mike, W ( 1987 ) , The Logic of Amalgamations: The Competitive Market in Corporate Control in Theory and Practice, The Institute of Economic Affairs
  • Keenan, M and White, L.J ( 1982 ) , Mergers and Acquisitions ; Current jobs in position, Lexington Books
  • Saunders, M ( 2006 ) , Research Methods for Business Students, 4th edition, FT Prentice Hall
  • Porter, M.E ( 1985 ) , Competitive analysis. New York: Free Press, 1985

Web sites

  • John, O ( 2006 ) Mergers & A ; Acquisition ( www.associatedcontent.com/article/86755/mergers_acquisitions.html? cat=3 )
  • www.investopedia.com/university/mergers/mergers1.asp
  • www.economywatch.com/mergers-acquisitions/international/telecom-sector.html
  • www.mobitel.lk
  • www.slt.lk
  • hypertext transfer protocol: //www.doingbusiness.ro/en/business-news/9749-biggest-mergers-and-acquisitions-in-2008.html

Diaries

  • Strauss, A. L. & A ; Corbin, J. ( 1998 ) Basics of qualitative research: techniques and processs for developing grounded theory, 2nd edition, Sage.
  • Analyzing Amalgamations and Acquisitions ( 2009 ) , Cornell Hospitality Quarterly.2009 ; Vol 50, 138-141
  • Yaakov Weber, 1996Corporate Cultural Fit and Performance in Mergers and Acquisitions, Human Relations, Vol. 49, No. 9, 1181-1202 hypertext transfer protocol: //hum.sagepub.com/cgi/content/abstract/49/9/1181
  • Warren, D and Julio Herrera ( 1990 ) , International Mergers and Acquisitions, The Journal of Business Strategy, July/August
  • Gaughan, P. A ( 2002 ) , Mergers, Acquisitions and Corporate Restructuring, 3rd Edition. New York: John Wiley & A ; Sons, Inc.
  • Chanmugam, R. , Shill, W. , Mann, D. , Ficery, K and Pursche, B ( 2005 ) , The intelligent clean room: Ensuring value gaining control in amalgamations and acquisitions, Journal of Business Strategy 26 ( 3 ) : 43-49.
  • Pablo, A. L. 1994. Determinants of acquisition integrating degree: A decision-making position. Academy of Management Journal 37 ( 4 ) : 803-36.
  • An Probe of Post-Acquisition Satisfaction with the Merger Covin et Al. Journal of Applied Behavioral Science.1996 ; 32: 125-142 hypertext transfer protocol: //jab.sagepub.com/cgi/content/abstract/32/2/125
  • Warren D. Kissin and Julio Herrera ( 1990 ) , International Mergers and Acquisitions, Financial Strategy, July/August 1990
  • Randy MacDonald ( 2005 ) , A templet for portion holder value creative activity on M & A ; A ‘s, Emerald Group Publishing Limited, Vol 21 NO. 5 2005, pp. 3-10

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