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Judge rules for AT&T in landmark merger with Time Warner

The merger received a lot of attention in the industry and beyond. While it’s hardly new for mergers to receive regulatory scrutiny, this acquisition involved two companies with little direct overlap in their businesses. Cable company Comcast has combined with NBCUniversal while Verizon acquired the Internet assets of Yahoo and others.

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Dallas’ AT&T Inc. (NYSE: T) is poised to add one of the largest media companies in the nation after a federal court ruled in favor of its long-sought acquisition of Time Warner Inc. (NYSE: TWX).

U.S. District Court Judge Richard Leon Tuesday rejected the federal government’s petition to block the merger, giving the green light to the $85 billion deal, according to CNBC. The judge also didn’t impose any conditions on the merger’s approval, CNBC said.

For AT&T, the deal is crucial, transforming the company still known for the humble telephone into a major media player, adding to its businesses that include broadband, wireless and DIRECTV. Now, Dallas is home to the parent company that oversees major properties such as HBO, Warner Bros. and Turner. Together, the companies can take on the rapidly changing industry with the new players such as Amazon.com and Netflix.

Shares of AT&T fell in after-market trading. As of 3:54 p.m. Dallas time, the stock was down about 1 percent.

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Global cues lift equity indices; Sensex ends over 200 points higher

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Mumbai, June 20: Broadly positive global cues lifted the key Indian equity indices on Wednesday, with the barometer Sensex of the BSE closing with gains of more than 200 points.

According to analysts, banking, metal and auto stocks witnessed healthy buying activity.

At 3.30 p.m., the wider Nifty50 of the National Stock Exchange (NSE) provisionally closed at 10,772.05 points, up 61.60 points or 0.58 per cent from the previous close of 10,710.45 points.

Similarly, the Bombay Stock Exchange (BSE) Sensex, which had opened at 35,329.61 points, closed at 35,547.33 points (3.30 p.m.) — up 260.59 points or 0.74 per cent — from its previous session’s close of 35,286.74 points.

The Sensex touched a high of 35,571.37 points and a low of 35,329.51 points.

The top gainers on the Sensex were Reliance Industries, IndusInd Bank, Vedanta, Tata Steel and Yes Bank whereas ONGC, Coal India, ITC, Wipro and Larsen and Toubro (L&T) were the major losers.

On the NSE, Reliance Industries, IndusInd Bank and Tata Steel were the highest gainers while UPL, Hindustan Petroleum and Indian Oil Corp lost the most.

IANS

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Analysis

A view through an infrastructure investor’s prism

Active policies to address the three issues revolving around the value, scarcity and contract enforcement that investors utilise to determine both investments and the required rate of return can help make policies useful.

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Perspectives on infrastructure assets vary widely: While investors focus on investment returns, policymakers analyse both financial and socio-economic benefits. It would be worthwhile for policymakers to view things through an investor’s investment prism because an understanding of the critical factors that shape investment decisions will help frame better policies to expedite Indian infrastructure creation.

The “raw value” of an infrastructure project is what a potential investor evaluates first. For example, in a renewable energy wind project, the wind potential of a site is what an investor evaluates. For a transportation project, the investor evaluates the potential passenger traffic. This so-called “raw value” is a huge determinant of the financial viability of a project.

Segregating infrastructure sectors and projects by such “raw value” can help government and industry alike to work towards directing infrastructure capital more optimally. Additionally, such analysis helps in framing policies for those sectors that deliver very substantial social and economic value but are not financially viable on their own.

A robust framework that helps determine “raw value” can aid all the stakeholders, especially the government, to work with investors and multilateral trade agencies to find financing solutions for such socially and economically relevant projects. Eventually, India needs to create an information repository of sorts that provides the global investor base information and access by asset type and investment potential.

Once the “raw value” of a project is determined, an investor tries to gauge what is called its “scarcity value”. Take, for instance, transportation projects. If the transportation potential of connecting City “A” with City “B” is attractive, then is building an airport to connect the two cities the most optimal infrastructure asset? That is, in spite of the traffic potential, is an airport a “scarce” enough asset to deliver attractive returns?

The investor will gauge whether the airport is likely to face competition from a competing train network or a highway. Being cognizant of the long-dated nature of infrastructure assets is important. Hence investors will have to gauge the “scarcity value” of the asset to determine the attractiveness of the asset over the long investment horizon and, therefore, eventually decide on their willingness to invest in the asset.

It is essential for the government to find a balance between allowing investors to make returns commensurate with the risk taken and allowing the public to have access to a well-priced and high-quality infrastructure asset. The twin objectives of consistency and transparency in policy are crucial in this regard.

The government’s ability to formulate and communicate the strategy effectively regarding not just sectors but individual assets is vital. To indeed expedite infrastructure creation, granular policy across industries will be needed, more so for much-needed greenfield infrastructure projects.

Apart from “raw value” and “scarcity value”, an investor considers a third factor: The quality of the underlying contracts signed for the asset. Investors look for high-quality counter-parties with whom to sign contracts. More importantly, the government’s ability to deliver a robust legal system for contract-enforcement, as also a more efficient system for conflict-resolution, will attract more significant investments.

Lowering the risk perception for Indian infrastructure assets is essential not merely to attract more investments but also to attract investments at lower financing costs. Reducing the cost of capital is going to be a significant driver of infrastructure projects through their improved financial viability.

Another area that merits attention is the possibility of the government working even more closely with Export Credit Agencies of various countries to offer foreign exchange hedges, while “importing infrastructure investments”. Solutions that not only reduce the legal risk in investments but also partially eliminate the foreign exchange risk can help boost investments significantly.

Active policies to address the three issues revolving around the value, scarcity and contract enforcement that investors utilise to determine both investments and the required rate of return can help make policies useful.

Policy frameworks can potentially be refined using these three key factors that shape investment decisions. Most importantly, one does not need to improve concurrently on all three fronts for all infrastructure sectors; incremental improvement on one element can provide a significant fillip to infrastructure investments.

(Taponeel Mukherjee heads Development Tracks, an infrastructure advisory firm. Views expressed are personal. He can contacted at [email protected] or @Taponeel on Twitter)

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General Electric dropped from Dow after over 100 years

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New York, June 20 (IANS) General Electric (G.E.), the last original member of the Dow Jones Industrial Average, was dropped from the blue-chip index for the first time in 110 years and replaced by the Walgreens Boots Alliance drugstore chain.

The Tuesday night decision was a fresh blow to General Electric, the iconic maker of light bulbs and jet engines, which has stumbled badly in recent years, reports The New York Times.

Last year, John L. Flannery, the company’s new chief executive, warned that the power-generation unit was reeling.

G.E. cut its dividend for only the second time since the Great Depression.

In January, G.E. surprised investors by taking a big charge and setting aside $15 billion over seven years to pay for obligations held by GE Capital, the company’s financial services unit, mainly on long-term care insurance policies.

Over the last year, G.E.’s shares have fallen 55 per cent, compared with a 15 per cent gain for the Dow.

G.E., which closed on Tuesday at $12.95, has the lowest share price of any of the index’s 30 components.

S.&P. Dow Jones Indices – which owns the Dow – suggested that the slide in G.E.’s stock price contributed to the decision to remove the company from the index, where it had been a member continuously since November 7, 1907.

The Dow is a price-weighted index, which means higher priced stocks have a greater influence on its direction.

“The low price of G.E. shares means the company has a weight in the index of less than one-half of one percentage point,” The New York Times quoted David Blitzer, chairman of the index committee at S.&P. Dow Jones Indices, as saying.

“Walgreens Boots Alliance’s share price is higher, and it will contribute more meaningfully to the index.”

The move also is freighted with economic symbolism, according to Blitzer.

With the inclusion of Walgreens Boots, the index “will be more representative of the consumer and health care sectors of the US economy”, he added.

Following G.E.’s departure from the index, the company with the longest presence in the Dow will be Exxon Mobil, whose corporate predecessor, Standard Oil of New Jersey, joined the Dow in 1928, according to S.&P. Dow Jones Indices.

Alphabet, Amazon, Apple, Facebook and Microsoft are the five most valuable companies in the US today.

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