An Analysis of the Capital Structure of the Telecommunication Industry in Russia

The topic of the VKR is "An Analysys of the capital structure of the companies of telecommunication industry in Russia". From 1999 till nowadays, the telecommunication sector in Russia is in a stage of active development. Cell phones have evolved from a simple means of communication into a full-fledged attribute of everyday life, helping us to carry out cellular and video communications, banking operations and other previously inaccessible activities. Therefore, there is a great potential to the further market growth and competition strengthening. The active development of companies in this industry make the study highly relevant, since the identification of the determinants of the capital structure and the nature of their relationship with the profitability of the company is crucial for making tactical and strategic decisions on financing the company. As it was already stated, the purpose of this study is to evaluate the impact of indicators, which characterize the sources of capital, on the activities of Russian Telecommunications companies. To accomplish it we had to analyze the capital structure and its relationship with performance indicators of companies; formulate research hypotheses based on the analyzed literature, collect data and make the descriptive analysis, test empirically the set of hypotheses and justify the relationship between the choice of capital structure by telecommunication companies and their performance. In modern economic theory, there are two main types of capital structure models: statistical and dynamic. The latter, in particular, include the signal theory, the theory of hierarchies and the theory of agent costs.To test the hypotheses, four regression models with correction to multicollinearity, heteroscedasticity and autocorrelation were built, where the dependent variables were returns on assets and on equity. According to the results, it was demonstrated that the capital structure of telecommunication sector companies in the Russian Federation is most successfully described by the theory of agent costs, while the signal theory is poorly applicable.