ANALYSIS OF UFONE

SUBSIDIARY IN IRAN

International Islamic University Islamabad

Analysis of Ufone Subsidiary in Iran

Subject:

International Financial Management

Submitted to:
Ch. Mazhar Hussian
Submitted By:
Muhammad Badar Ud Duja
Muhammad Wasim
Wasim Aslam

(6230/FMS/MBA/F13)
(6256/FMS/MBA/F13)
(6248/FMS/MBA/F13)

ANALYSIS OF UFONE SUBSIDARY IN IRAN

Table of Contents
Executive Summary ........................................................................................................................... 4
CHAPTER NO: 1 ................................................................................................................................. 5
INTRODUCTION ............................................................................................................................. 5
About company ............................................................................................................................. 6
Company Profile: ........................................................................................................................... 7
Vision ........................................................................................................................................ 8
Mission ...................................................................................................................................... 8
Objective of The Study ................................................................................................................... 8
Need for Study .............................................................................................................................. 8
CHAPTER NO: 2 ................................................................................................................................. 9
Motives of DFI ............................................................................................................................... 9
Benefits of DFI ............................................................................................................................. 10
Subsequent Decisions of Direct Foreign Investment..................................................................... 11
Chapter No: 3 .................................................................................................................................. 12
ROLE OF HOST GOVERNMENT ..................................................................................................... 12
1.

Monopoly Theory of Advantage ....................................................................................... 12

2.

Product Life Cycle Theory ................................................................................................. 12

Chapter No: 4 .................................................................................................................................. 13

Technical Analysis........................................................................................................................ 13
Financial Analysis......................................................................................................................... 15
Calculations ..................................................................................................................................... 18
Calculations of Cash flows, NPV ................................................................................................... 19
CHAPTER NO :5 ............................................................................................................................... 20
Conclusion ................................................................................................................................... 20

ANALYSIS OF UFONE SUBSIDARY IN IRAN

ACKNOWLEDGEMENT:

First of all, we thanks to Allah Almighty, for giving us the strength and will to do work
on this project.
We take this opportunity to express our profound gratitude and deep regards to our
respectable teacher Sir Ch. Mazhar Hussain for his exemplary guidance, monitoring
and constant encouragement throughout the course of semester. The encouragement and
guidance given by him will help us in future life of study.
We also like to pay gratitude to our group members (M. Badar-ud-Duja, Muhammad
Wasim & Wasim Aslam) for their constant encouragement and participation without
which this project would not be possible.

ANALYSIS OF UFONE SUBSIDARY IN IRAN

Executive Summary
This report covers different aspects of International Diversification. It reflects our humble
efforts to capture the core process of International Diversification. The Structure consists of 4
different chapters which includes the introduction about the project, theoretical framework,
Analysis of the project and at the end the Conclusion summarizes the whole project.
In the first Section of Introduction we discuss that why the international diversification is
necessary and then we look about the feasibility of our project with the scenarios that is
prevailing in Iran. The policies and the intentions of the Ufone in the Pakistan is discussed that
encourages the company to diversify in Iran.
In the Second section we see about the theoretical framework. That what the Theories, Articles
say about the Multinational Company to diversify in different regions and in what basis to
diversify. It also helps to secure the exchange rate fluctuations. How a company take
subsequent decisions while making a foreign direct investment.
In the Third section we analyses the International Diversification of the Ufone Company. We
see about the management, future activities, problems of down play, calculated risk, cost of the
investment and the expected profit and loss. we use tool s & techniques of multinational capital
budgeting & then apply these techniques partially and evaluate the project on the basis of these
techniques.
In the Fourth section we conclude the whole project that what we have done in the analysis,
what is the theories and the introduction. We link all the sections and come to the final
acknowledgment that whether the project is feasible or not, profitable or not with context to
the Ufone subsidiary in Iran.

ANALYSIS OF UFONE SUBSIDARY IN IRAN

CHAPTER NO: 1
INTRODUCTION
International diversification is basically to reduce the risk of an organization by
expanding in other Countries. By diversifying we mean that to invest in that country which is
inversely related to each other. If an organization is not performing well due to any reason like
political & cultural issues in one Country, the other Country that is not affected by these
situations, an organization can earn a reasonable revenue from that Country to overcomes the
negative impact of the conflict Country losses. So in this way companies can reduce the losses
and minimize the risk on a long term basis.
We are opening a Subsidiary in Iran, for this purpose we have to see the feasibility of the
project. We have concerned with many things which have a direct impact on our investment.
After the invasion of Iran by Iraq, the United States increased sanctions against Iran. In 1984,
sanctions were approved that prohibit weapons sales and all U.S. assistance to Iran. The Iran
Sanctions Act (ISA) that is the basis of the current sanctions against Iran is a revised version
of the Iran and Libya Sanctions Act (ILSA) that was signed on 5 August 1996. Iranian President
Hassan Rouhani is on a goodwill tour through Italy and France this week, trying to drum up
investment for his country's sanctions-battered economy. But Iran still faces challenges that
make it hard for companies to do business with Tehran. In a move that was loudly celebrated
in Iran, the United States and other countries earlier this month agreed to lift an economic
embargo that had been imposed in 2012 in an effort to curb Iran's nuclear program. The move
means that companies in Europe, Asia and elsewhere are free to invest in and trade with Iran.
And many seem interested in doing so.
What we know is that there are many firms in Europe that are eager to enter into Iranian
markets. There is no shortage of those. Many of them have already made initial trips to prepare
the ground for partnership or investment in Iran. But doing business in Iran presents special
challenges, and the reasons have to do with U.S. policy. While the U.S. government has agreed
to lift the nuclear sanctions against Iran, it continues to impose other sanctions over Iran's
human rights policies and support for terrorism. These sanctions bar American citizens and
companies from most forms of investment or trade with the country.
The U.S. financial sanctions "can still cause some problems and make some of the European
businesses and banks subject to U.S. economic punishment. Companies want to do business in
Iran because restriction are lifted by the European union so every company would want to
invest in Iran. The main reason is that the Exchange Rate and economic condition is expected
to grow. Ufone company want to open subsidiaries in Iran.
The project is also feasible because there is a strong relationship between people of both
countries, Pakistan and Iran. So there is huge number of people who want to make
communication between two countries, as there is no other comfortable telecommunication
service provider so it gives us an edge or a plus point. The call rate is cheaper as compared to
other telecommunication companies.

ANALYSIS OF UFONE SUBSIDARY IN IRAN

In our project we have decided that the company that we select would operate in a different
phase. In the first phase company would operate its operations in Tehran & Mashhad. The main
reason for that these two cities are highly populated and it will help to capture market share.
The significance of our project is that when the company enters in Iran that results in the
improvement of the life style of the residences. The local entrepreneurs should show interest
in it which results in increase in the trading or Business.
We see that the project is very much suitable as there is no strong Competition between
telecommunication companies. The present government of Iran protects the investor. we see
that the government is very much co-operative with the direct foreign investment because it
brings prosperity to their country and removes the uncertainty from the country.
The major goal of the Iran government is to bring sustainability with productive infrastructure
that helps in private sector expansion. As we know that the risk is high the return will also high.
The right policy is very much important for the financial growth of the country. The plus point
is that the government and the donors are willing to promote private sector that reduces the
uncertainty in the country.

About company
Ufone is the second largest cellular network in Pakistan. The head office of the Ufone
is located in 13-B, F-7 Markaz Islamabad, Pakistan. Every Organizational whether its
multinational, private business or Govt. Offices depend on its people. Telecom industry is
growing in Pakistan with new companies is getting license the competition is though as a result
is the consumer is getting benefits and enjoy low call rates. With a population of 20 million in
Pakistan, Ufone is one of the best telecommunication networks that generate revenue. Ufone
Company commenced its operations under the brand name of Ufone from Islamabad
on January 29 2001. Ufone Provide two kinds of Services that is Ufone Prepay and Post pay.
In post-paid they provide a lot of packages such as U-loan, U-share. Public Demand etc. in
post-paid they provide a Black berry, payment choice, value added service etc.
Ufone has always played a vital role in the development of cellular market in Pakistan. It has
been a step ahead in introducing an innovative product in the market. Ufone adopted the policy
of simplified tariffs with no hidden charges. Ufone targeted the middle class, by introducing
low rates. Ufone has network coverage in more than 5885 locations and across all major
highways of the country. Mobil ink has 910,000 subscribers and Ufone has 565,000
subscribers. According to the latest marker survey, there is a 70.64% annual growth in
this sector. So when Ufone will change their technology the market is open for them because
their prices are low and they are catering to middle and lower middle class which has quite big
ratio in Pakistan.
Furthermore, Im going to research on Ufone, the research situation is the consumer satisfaction
is going to increase due to its Price, Quality and Coverage. Consumer satisfaction is dependent
variable and Price, Quality and Coverage are independent variables. I am using the Primary
and Secondary data for research on Ufone.

ANALYSIS OF UFONE SUBSIDARY IN IRAN

Company Profile:
Pakistan Telecommunication Company Limited PTCL that started its operations in
January 2001 under the brand name 'Ufone'. As a result of PTCL's privatization, Ufone became
a part of the Emirates Telecommunication Corporation Group Etisalat in 2006.
Since its inception, Ufone has focused on the people of Pakistan, empowering them with the
most relevant communication modes and services that enable them to do a lot more than just
talk, at a price that suits them the most. Along with the claim of lowest call rates, clear sound
and best network, Ufone offers its customers simplified tariffs with no hidden charges. With a
strong and uniquely humorous communication direction that has now become Ufone's
signature across all advertising media, Ufone gives its customers many reasons to smile.
This customer focus and best offering has allowed Ufone has built a subscriber base of over 24
million in less than a decade. Ufone has network coverage in 10,000 locations and across all
major highways of Pakistan. Ufone currently caters for International Roaming to more
than 288 live operators in more than 160 countries. Ufone also offers Pakistan's fastest
growing 3G network, and BlackBerry Roaming coverage available with more than 200 Live
Operators across 122 countries. Ufone has also become a focused and intensive leader in VAS,
constantly introducing innovative services, which have been the first of their kind in the
Pakistani cellular network.
As the world of telecommunications advances, Ufone promises its customers to stay ahead,
developing and evolving, to go beyond their expectations, because at Ufone, it's all about U

ANALYSIS OF UFONE SUBSIDARY IN IRAN

Vision
To be the leading telecommunication service provider in Pakistan by offering innovate
communication solutions for our customer while exceeding shareholder value and enjoy
expectation.

Mission
Our mission is to provide best service with the best coverage that would eventually generate
profit for the company and its stakeholder.

Objective of The Study

Purpose of Subsidiary (D.F.I)
Nature of Risk and Uncertainty
Capital Budgeting about Company
Value of currency with comparison Dollar Iran.

Need for Study

We want to Study of Management Plan
We want to Study of future activities
We want to study the expected Profit/ Loss .
We want to study about Calculative Risk
We want to study the Cost of the investment.
We want to study the Agency problem (Down Play) anti sentiments.

ANALYSIS OF UFONE SUBSIDARY IN IRAN

CHAPTER NO: 2

Motives of DFI
The first objective of Multinational Company is to have international diversification,
by adding more and more projects in their portfolio. With it risk is lessen as majority of the
MNC have their subsidiaries with negative co-relations with each other. As if there is worst
situation in one Era Company can compensate it from the other era.
A) Revenue Related Motives:
The basic purpose of Diversification is to improve profitability in term of increase in
Revenue or decrease in cost. One of the basic compulsion of MNC is to maximize the
shareholders wealth due to which it has to move towards those countries where they may find
cheap labour, land, capital and building I.e., cheap factor of production.
The major motive of foreign direct investment is.

Attract new sources of demand

enter-market where superior profits are possible

Exploit monopolistic advantages

Reaction to trade restrictions, and

Diversify internationally.

B) Cost Related Motives:

The international project reduces the firms cost and overall risk of the company. The
major aspect of international diversification is selecting foreign projects whose performance
levels are not highly co-related with the help of it various international projects do not
experience poor performance all in one time. The major motive of cost related direct foreign
investment is.

ANALYSIS OF UFONE SUBSIDARY IN IRAN

Fully benefit from economies of scale

Using foreign factor of productions

Using foreign raw materials

Exchange rate movement

Benefits of DFI
International diversification gives the benefit to the company of securing exchange rate
fluctuation. They choose such type of countries where they may find cheap cost of investment
and less risk of loss. Companies take such type of decisions after analysing and thinking a lot
about, whether the company should expand their operations, should company moves towards
that specific country should all the earnings should be remitted to the parent company or
subsidiary should use it by itself.
Here the company also looks towards the rules of the host government related to the direct
foreign investment related to their sector in which they are going to invest.
Corporation often reaches to a stage where the companys growth reaches at its maximum limit
in its home country due to multiple factors such as intense competition or its market share
reached at its potential peak. So company tries to move out of the Country where they see
potential demand in which the list of less developing countries comes first of all in front of
their eyes. Such as Iran. Although in the beginning MNC may faces multiple barriers in term
of its progress in that country. But with a passage of time by giving best quality services or
products company easily makes its place in the market of that specific country.
One of the biggest problems that multinational faces are control of their cost. For this purpose,
they tried to obtain economies of scale. The potential benefit from DFI very with the countries
such as region of Asia v/s region of Europe as problem in one region may affect their earnings,
on the other hand the earning of the other region will support that company and risk will be
minimized.

ANALYSIS OF UFONE SUBSIDARY IN IRAN 10

Subsequent Decisions of Direct Foreign Investment

Once DFI takes place few decisions are necessary to determine about the further
expansion in the given location. When the project earns the MNC must decide whether funds
should be remitted to the parent company or should remain to the subsidiary. If subsidiary is in
need of money the funds should be more beneficial for subsidiary and it should be used by it,
not to the parent. Of-Course certain percentage of the funds will be needed to maintain
operations but the remaining funds should be send to the parent or sent to any other subsidiary
or re-invest for expansion purposes. The appropriate decision depends on the economic
conditions in the subsidiaries country and the parents country and restrictions imposed by the
host government.

ANALYSIS OF UFONE SUBSIDARY IN IRAN 11

Chapter No: 3
ROLE OF HOST GOVERNMENT
Government can play an important role related to the DFI through the following tools.

Incentives to encourage DFI

Barriers to DFI

Protective Barrier

Industry Barrier

Red Tape Barrier

Environmental barriers

Political Instability

Ethical differences, and

Regulatory Barriers

Some governments allow international acquisition but imposed special requirements such as
acquiring local firm or does not threaten the local market share of the local companies. The
MNC may even be required to retain all the employees of the target firm so that unemployment
and general economic conditions should not be disturbed or adversely affected.
The purpose of this section is to identify the role of theories in direct foreign investment.

1. Monopoly Theory of Advantage

According to it MNC possess Monopolistic Advantage over the local firms of
Host Country. The firm Enjoys Monopolistic Advantage due to Superior Knowledge
and Advance technology. (intangible skills, technologic processes unique product
differentiation).
2. Product Life Cycle Theory
According to it first of all company operates in home country then export its
products after that it itself moves to that specific country and then have competition
there.
ANALYSIS OF UFONE SUBSIDARY IN IRAN 12

Chapter No: 4
Technical Analysis
In this we basically analyse the feasibility of our project weather the diversification of
the Ufone service is feasible or not so; at first we want to know that how the management team
that would works for a Ufone organization in Iran. Managers hold an ample importance while
managing and taking decisions. The management launch Communication system in such a way
that can reduce per minute cost and provide better quality services in everywhere of Country.
Managers have certain responsibilities and duties as a tool for management plan coordinator.
The certain responsibilities of the management team that we have observed are the following.
1. To ensure the participation in the Telecommunication Management plan for the
progress of an organization.
2. To ensure that to provide the proper addresses and the contact information of the
coordinators, business relations that is essential for the company to achieve long term
objectives.
3. Ensuring the soundness of the information regarding coordination that is regulated from
the town to the related or desired terminal sites.
4. To conduct different surveys within or outside the organization to measure the
employee performance
5. Basically to analyse the situation and prepare annual report that is necessary to achieve
an organizational goal.
6. Ufone regularly arranging different workshops for the soundness of the operations.
7. They are very much concerned with the risk that is prevailing in Iran.

Firstly, the top managers are involved in the management. Top managers are likely to be from
China or from Pakistan as well and with the passage of time they hire the educated employees
from the Iran residences and trained them according to the needs of an organization which
helps in ensuring good response from that country. We also observed that they are very keen
to make different strategies that are essentially necessary for the organization that if the certain
ANALYSIS OF UFONE SUBSIDARY IN IRAN 13

plan fails then in that situation how the company will react and respond to the alternative plan.
Direct foreign investment basically same because the ultimate objective is to earn profit and to
minimize the uncertain risk. Managers are well aware of the motive of an organization and they
are making policies according to their desired motives. They are thinking the different routes
to operate in Iran on a step expansion basis. They also focus to give authority to the branch
level managers to handle their issues but under the monitoring of a centralized management.
Now we are analysing the future activities of a Ufone company. Ufone must have to focus the
improved and forthcoming technology that is essential for the satisfaction of the customers or
to fulfil the needs of a customer. They are very keen to improve its products and services with
the changing requirements. They have to improve its operations in near future according to the
forecasting. They have to designed different policies that are essential for the success in Iran.
To open a subsidiary in Iran is generally a future activity for the Ufone. As it is an new era they
have to be very much updated to build an good will in Iran by making a standard service and
to deliver them as well.
To attract the new era they are decided that first the operation should be on a testing basis that
they provide free communication service in Tehran & Mashhad. As soon the company
Progresses then they decided to open a big Service Network in Iran with the passage of time.
As the progress continues Ufone would expand in overall Iran to occupy the whole market as
there is no other alternative communication service provider so it is an opportunity for an
organization. Ufone is taking high risk to earn high from that sector so it is trying to achieve
monopolistic advantage there with the cooperation of the Local Government.
As we know that now it is only interested in proving communication services in Iran but after
sometime they are looking forward to provide the internet services like 3G & 4G and also fast
Networking Speed with the help of Optical Fiber. With the co-operation with the Local
Government they are also thinking to build communication network in Iran to ensure the
quality networking service in every town of the country.
There is always a chance of conflict arises between the management and the shareholders
because the shareholders were always love to get benefit or concerned with increasing the
wealth. They always want that the management should act according to their desires when this
doesnt happen the conflict may arise between management and the shareholders. Sometimes
ANALYSIS OF UFONE SUBSIDARY IN IRAN 14

the managers act intentionally against the shareholders which will be reduced through by
providing different performance based incentives to the management. Ufone is very much keen
and up to date with the market information and would provide different incentives to the
managers with the passage of time.
Another important sentiment is to face with the problem of down play. As the people are mostly
believe on the rumours and the liking and disliking of the community also matters a lot on the
outcome of the Company and it is the hurdle as well in the progress of the company.
If the people start believing that the Muslims should not be used the non-Muslim items products
and services and if such scenario arises then it is very difficult for the company to continue its
operations. Different policies and strategies were needed to be established to overcome such a
factors. Ufone have to build and established a good reputation that would exit the evil rumours
from the minds of the mobile customer which would help them to communicate freely. By
making good reputation in the market people would know about the truth and disbelieving the
evil rumours that if someone tried to create is-conception regarding the company.

Financial Analysis
Profit and loss is the main element the Ufone is concerned with. As the market is new
and it is a great opportunity for the firm to get a monopolistic advantage there. Profit and loss
statement is basically an income statement that shows the profitability of an organization. It
shows that what an expected profit is for a given period. The period may be monthly, quarterly
or yearly as well. The profit and loss would be splinted in two sections the revenue and the
expenses. As it is an expected profit and is totally based on assumptions so we foresee that the
people of the Iran are consistently searching for a comfortable communication service provider
which is a plus sign that the customers are always there and by providing those services they
can get high revenues. The investors are always concerned with the return when the return is
high they can show intent to invest more in the Ufone. As the expenses were estimated to be
low because of cheap labour, land, capital the cost they bear as an exchange rate is also low
which helps ultimately reducing the expenses of an organization and increases the revenues.

ANALYSIS OF UFONE SUBSIDARY IN IRAN 15

It is very difficult to compare Pakistan against the Iran because both the countries have the
utmost same culture values and beliefs. Yes, it is true that geographic boundaries make a huge
difference. In Pakistan the project is started likely to be same in Iran. As the operation started
the Ufone service earns a profit on a regular basis due to its standard operations and services
and now Ufone holds a good Goodwill in the Pakistan, the same strategy with certain changes
is going to be implemented in Iran.
Ufone organization is a Pakistani company and is blessed with very specialized people, when
the company is expended globally the risk and the uncertainty involved with it also increases
significantly. However, company is dealt with various risks in a daily routine manner it is not
easy to handle or to calculate or to identify the corporate level risks. Various calculated risks
can be done through risk management control plan. The purpose of calculated risk is to
maximize the firms value under the changing global environment.
Some Calculated Risks involved the following
1. Firstly, we are opening in that city which is safe and the Capital of Iran.
2. SIMS and brochure will be given to small retailer to promote their service.
3. Towers would be established in near to the cantt areas.
4. Some protection from the Government to the certain areas. Mobility of security along
with the Networking service.
There are certain risks some are systematic and some are unsystematic risks. Systemic risks
are those which are basically uncontrollable and unavoidable like natural disasters, political
instability and terrorism while on the other hand unsystematic risks are those which are
controllable and the return is higher for the organization if the Ufone is taking high
Unsystematic risk. Cash flows are important to build the risk of a project.
Now we would also like to analyse the cost of investment that a firm has to bear while investing
in Iran. 1 US $ is equal to 30350 Iranian Rial currency so as the figure shows that if the Ufone
is invested now in Iran the cost that the company should have to bear is less now because at
the current scenario the currency is weak but have very much expectations that the currency
would appreciate in near future very soon because of the lifted trade restriction by the European
Union.

ANALYSIS OF UFONE SUBSIDARY IN IRAN 16

They are investing now because when the subsidiary remits the money back to the parent
company it will be in a greater value. They will invest in a lessor amount of dollars but will get
huge returns. The government of Iran provides different incentives to us according to their
policy that they would provide tax free land and the there are no electricity charges for the new
administrations. It will ultimately reduce the Cost of investment.

ANALYSIS OF UFONE SUBSIDARY IN IRAN 17

Calculations
1 Iranian Rial = 0.000032948 US Dollars
1 US Dollar = 30,350 Iranian Rial
Description
Operation Land
Operation Building
Franchise
Equipment
Working Capital
Misc. Cost
Administrative
Rent
Installation Charges
Total

Equity = 0.75

Estimited Cost (Million)

4700
6480
2560
57000
26200
8998
9720
25000
22430
163088

Cost USD (Million)

0.0891
0.21384
0.08448
1.881
0.8646
0.296934
0.32076
0.825
0.74019
5.315904

Debt = 0.25

Description
Amount
Weight
Cost

Debt ( In Million)

Equity (In Million)

40772
122316
0.25
0.75
0.1
0.12

Total Investment = 40,772+122,316 = 163,088(M)

WACC = WeKe+WdKd
WACC = (0.75*0.12) + (0.25*0.10)
WACC = 0.115
WACC = 11.5%

ANALYSIS OF UFONE SUBSIDARY IN IRAN 18

Calculations of Cash flows, NPV

Initial Investment is $ 5.315 (M) or Iranian Rial163,088 (M)
Description

2016

2017

2018

2019

2020

2021

2022

Revenue

22,000

27,000

32,000

40,000

49,000

53,000

57,000

(Variable Cost)
(Other Variable
Cost)

11000

13500

16000

20000

24500

26500

28500

1760

2160

2560

3200

3920

4240

4560

5000

5000

5000

5000

5000

5000

5000

13591.5

13591.5

13591.5

13591.5

13591.5

13591.5

13591.5

EBIT

-9,352

-7,252

-5,152

-1,792

1,989

3,669

5,349

(Interest)@10%

4077.2

4077.2

4077.2

4077.2

4077.2

4077.2

4077.2

-13,429

-11,329

-9,229

-5,869

-2,089

-409

1,271

-3357.175

-2832.175

-2307.175

-1467.175

-522.175

-102.175

317.825

Earning After Taxes

-10,072

-8,497

-6,922

-4,402

-1,567

-307

953

Depreciation
100% Remit Cash
Flow
(With Holding
Taxes)@25%
After Taxes Remit to
Parent

13591.5

13591.5

13591.5

13591.5

13591.5

13591.5

13591.5

3,520

5,095

6,670

9,190

12,025

13,285

14,545

879.99375 1273.74375

1667.49375

2297.4938

3006.24375

3321.24375

3636.24375

(Fixed Cost)
(Depreciation)@15%

EBT
(Taxes)@25%

2,640

3,821

5,002

6,892

9,019

9,964

10,909

2,640

3,821

5,002

6,892

9,019

9,964

10,909

104.65

104.65

104.65

Salvage Value
Cash Remit to
Parent
* convert Exchange
Rate@ 104.65
Cash Received by
Parent

104.65

104.65

104.65

104.65

276274.038

399891.85

523509.6628

721298.16

943810.2253 1042704.475

1141598.725

PV

247779.406

321656.86

377659.2271

466675.88

547659.1415 542640.2864

532830.9011

Cumulative NPV

51396.9938 373053.854

750713.0814

1217389

1765048.104 2307688.391

2840519.292

Total

(111691.006) 261362.848 1012075.929 2229464.9 3994512.997 6302201.388 9142720.679

ANALYSIS OF UFONE SUBSIDARY IN IRAN 19

CHAPTER NO :5
Conclusion
In a nut shell, we have decided to open a subsidiary in Iran just due to the reasons that
we have found Iran as a profitable place for us in order to generate profit, for the parent
company. As it is crystal clear that there is no other service provider like us who is working
there at the moment. We will be considered as the initiate there in this field and we will take
the full benefit of the first mover strategy. Government will also support us as by watching us
different other multinational companies will also get confidence to invest in Iran.
We will be in a position for a long time to create monopoly and to get full advantage in terms
of revenue as well as good will be created which will help us in long term, once confidence
will be created of the costumers it will prove to be very much help full for us. Furthermore, on
the other side we will get benefit of other opportunities as well such as construction of some
basic infrastructure such as Telecommunication network etc.
With the passage of time we will increase our operations to other cities as well due to us their
poverty will decrease people will become loyal to us. As our corporate social responsibility
will try to set up health care unit as well. Due to the international diversification and the
addition of one more project in our portfolio our risk will be minimized and revenue will get a
boost. Company will also get benefit in such a way that the renitences what the parent would
receive would be more as compared to the amount of investment.
The project is feasible because we have seen many factors that can affect our project like the
instable conditions of the Iran. But of course there are certain elements and incentives that
encourage us to invest in Iran. When we have discussed about the management in our project
the management team and the policies of the management are very enthusiastic and energetic.
They planned their future activities and are very stick to their policies and monitor consistently
about the performance.
They consistently monitor the actual performance with the planned performance. As there is
no other current such a god service provider in Iran it is expected to be that the market is very
attractive and the people would definitely like to show interest which helps us to progress
ANALYSIS OF UFONE SUBSIDARY IN IRAN 20

affectively and also increase the revenues profit of the organization. As they are very
professional peoples they do not take risk blindly but take risk by calculating different factors
and then take which best suits the organization with maximum return.
They always up to date with the factors and take multiple decisions for the benefit of an
organization. As in the present situation the exchange rate is comparatively low and is expected
to be increased with the passage of time so the cost of investment is low and also because of
the cheap labour available.
One of the major problem that the company would face is the factor of downplay and the antisentiments that would prevail in Iran due to trade restriction by European Union. But company
have made different policies to overcome such a situation as well. It is dealing in other nations
as well so if the project fails the company would minimize risk from the other profitable
nations.

ANALYSIS OF UFONE SUBSIDARY IN IRAN 21