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Rakesh Mittal lays out telcos’ pains, says market still sustainable

Mittal also said that telcos require higher quantity of spectrum. “It is extremely difficult to layout fibre. M&As (mergers and acquisitions) are not very fast and swift,” he added.

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Rakesh Bharti Mittal
Bharti Enterprises Vice-Chairman Rakesh Bharti Mittal

New Delhi, Oct 14 : Sharing the dais with Communications Minister Ravi Shankar Prasad, Bharti Enterprises Vice-Chairman Rakesh Bharti Mittal on Monday outlined the issues plaguing the Telecom sector and said high capital expenditure and right of way (RoW) issues created hurdles for the market players.

He, however, said that despite the “pain”, the market is very sustainable with three players who have equal market share. Mittal was speaking at the inaugural session of India Mobile Congress 2019 (IMC).

The Bharti Enterprise executive noted that annual capital expenditure (capex) by telecom operators in India is around 34 per cent of company’s revenue, compared to the global average if 20 per cent.

Bharti Enterprises is the parent company of telecom major Bharti Airtel.

“Around 34 per cent is spent on capex (by telcos in India). Airtel itself spent 40 per cent of its revenue last year,” Mittal said.

He also spoke of spectrum prices, and observed that the current base prices of spectrum by the Telecom Regulatory Authority of India (TRAI) are significantly higher than global prices.

Mittal also said that telcos require higher quantity of spectrum. “It is extremely difficult to layout fibre. M&As (mergers and acquisitions) are not very fast and swift,” he added.

On rights of way (RoW), he said that getting right of way clearance is still cumbersome.

Urging the government to make a better regulatory environment and bring more ease of doing business, Mittal noted that the industry players also have responsibilities, on their part and should commit and invest in next-generation technology and also work towards reduction in capex.

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Realme takes on Xiaomi, tells market leader to ‘behave’

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Realme X and Realme 3i

New Delhi, Jan 28 : Taking on Chinese smartphone maker Xiaomi after being called a ‘copy-cat brand’ in the Indian smartphone market, rival Realme’s CEO Madhav Sheth took to Twitter on Tuesday, saying “a real innovative brand and market leader won’t behave like that”.

Replying to an earlier tweet by Manu Kumar Jain, Xiaomi Vice President and Xiaomi India Managing Director which blamed Realme for being a “copy-cat brand,” Sheth tweeted: “A real innovative brand and market leader won’t behave like that. Basic dignity and ethics should be maintained no matter how insecure you are of your competitor’s growth”.

The tug-of-war on Twitter began last week, with Jain tweeting: “Funny! A copy-cat brand mocks us. Later this brand brings ads & some ppl start blaming us. Most brands push ads but only Xiaomi is bashed. Because we’ve been transparent about our business model. If any journalist wants to understand our internet business, I’m happy to talk!”

When contacted, Sheth told IANS: “It does not suit brands to lower their corporate ethics and get into mud-slinging on social media as it only harms the overall industry sentiments. We are here to provide our users best of the experiences and Realme would rather focus on that,” said Sheth.

In May last year, both the smartphone bosses took to Twitter, starting with Jain’s Twitter outburst against Realme where he hit out at Realme 3 Pro that features Qualcomm Snapdragon 710, saying this is older than Snapdragon 675 used in Xiaomi’s latest device Redmi Note 7 Pro.

Sheth reacted, saying Xiaomi is “insecure” of its success in the country. “Someone is afraid,” he had tweeted.

For the calendar year 2019, Xiaomi garnered 28 per cent market share while Realme – growing at massive 255 per cent – registered 10 per cent market share while arriving on the scene in the country barely over an year ago.

“We will focus on making #realme the best in 2020. Rest is their choice, we don’t bother,” Sheth tweeted.

According to him, Realme’s growth has not declined in the country.

“In Q4, we always control supplies after the bumper online festive season as being an online brand, whatever we bring to the country, we sell and do not dump devices in warehouses. We know the demand and react accordingly.

“We had a super festive season sales and shipped less in the rest of the months in Q4 keeping the online demand in consideration. The 255 per cent growth for 2019 is a proof that Indians are in love with Realme devices and have a high respect for the brand,” Sheth told IANS.

Interestingly, Xiaomi’s sub-brand POCO is launching its second device as “POCO X2” next month while Realme launched X2 and X2 Pro devices late last year.

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TARP-like govt fund likely in Budget for NBFC relief

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Narendra Modi

New Delhi, Jan 28 The government is likely to unveil in the Union Budget a Troubled Assets Relief Programme (TARP) similar to what the US initiated during the Lehman financial crisis in 2008.

Under the proposed scheme, the troubled or stressed assets of the non banking finance companies (NBFCs) will be bought by a government fund to revive the sector.

A high level review meeting was held on Monday, chaired by Prime Minister Narendra Modi. A final decision will be taken on the matter.

The US government had initiated the TARP at the height of the Wall Street financial crisis of 2008.

The US Treasury Department created the TARP fund to stabilize the financial system and restore economic growth. TARP was rolled out to accomplish targets by purchasing troubled companies’ assets and stock.

September of 2008 saw a worldwide freeze as global credit markets came to a near standstill as several major financial institutions, such as Fannie Mae, Freddie Mac, and American International Group (AIG), experienced severe financial stress and others, like Lehman Brothers went bankrupt due to the effects of the sub-prime mortgage crisis that had begun the previous year.

Investment companies Goldman Sachs and Morgan Stanley became commercial banks, in an attempt to stabilize their capital situations.

The US government bought stock in eight banks: Bank of America/Merrill Lynch, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley, State Street, and Wells Fargo.

In India, since last year, the NBFC sector has been under severe stress driven by problems in real estate loans, economic slowdown which led to defaults. The crisis in IL&FS has led to shock waves in the financial sector.

The so-called shadow banks have missed payments and defaulted, among the biggest cases being DHFL.

There have been calls by central bank intervention but RBI has refrained from specific company wise bailouts.

The NBFC domino also caused stress in mutual funds which had exposure to these debt instruments. Consumer lending has been hurt by the NBFC stress and is seen among the major reason for lower consumption aggravating the economic woes.

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Air India seeks bidders with net worth of Rs 3,500 cr

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Hardeep Puri

New Delhi, Jan 27 : Bidders for the national carrier, Air India will need to have a minimum net worth of Rs 3,500 crore — whether as sole bidder or a consortium.

The government on Monday kicked off the strategic disinvestment of Air India with Ernst & Young, transaction advisor issuing an expression of interest by the Government of India (GOI) for advising and managing the proposed strategic disinvestment of Air India Limited (AI) by way of transfer of management control and sale of 100 per cent equity share capital of AI held by GOI.

AI inter alia holds 100 per cent equity share capital of Air India Express Limited (“AIXL”) and 50 per cent equity share capital of Air India SATS Airport Services Private Limited (“AISATS”) (together with AI and AIXL referred to as “Companies”).

The Expression Of Interest (EOI) prescribes the financial capability conditions for the interested bidders. For submitting the EOI and for being considered for subsequent qualification for Stage II of the Proposed Transaction, the IB (whether a sole bidder or a Consortium) will have to satisfy the criteria of having a minimum net worth of Rs 35,000 million or Rs 3,500 crore.

Net worth means the aggregate value of the paid-up equity share capital and all reserves created out of the profits and securities premium account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet.

The EOI also stipulates a minimum stake requirement in the consortium and company. Each member of the Consortium shall hold at least 10 per cent interest in the Consortium and at least 10 per cent equity share capital of the company (special purpose vehicle) to be promoted by the members of the Consortium for acquiring the GOI stake being disinvested in Air India.

The lead Member shall hold at least 26 per cent interest in the Consortium and at least 26 per cent of equity share capital of the company (special purpose vehicle) to be promoted by the members of the Consortium for acquiring the GOI stake being disinvested in Air India.

The net worth of each participating member (on their own or through its Affiliate) should be equal to or more than 10 per cent of the Net Worth/ACI requirement for the Consortium (i.e. 10 per cent of INR 35,000 million). However, if the member of the Consortium is a Scheduled Airline Operator in India, the condition to meet minimum share of Net Worth requirement shall not apply to such member provided interest (in Consortium) and equity shareholding of such member in the company (special purpose vehicle promoted by the members of the Consortium for acquiring the Company) is restricted to maximum of 51 per cent.

Where a sole bidder or a Consortium has submitted the EOI, it is expected that there shall not be any changes in the members of the Consortium or sole bidder will not form a Consortium except in specific conditions.

Any change prior to the EOI Deadline is permissible by withdrawing the EOI and submitting a fresh EOI before the EOI Deadline. However, no change in composition of Consortium will be permitted after the EOI deadline till the shortlisting of the Interested Bidders (IBs).

If after shortlisting of IBs, a Consortium bidder desires a change in the Consortium or a sole bidder desires to form a Consortium by inducting new members, it shall have to apply for approval for such change to the TA no later than 21 days from the date of issue of the Request For Proposal (RFP). Endeavour shall be made to provide approval or disapproval for such a change no later than 21 days from the date of receipt of such application by the TA.

The EOI has also laid down the lock-in provisions applicable for the proposed transaction. For a period of one year from the date of the closing of the Proposed Transaction, the Confirmed Selected Bidder (and/or the special purpose vehicle in case investment in AI is made through a special purpose vehicle) shall not, directly or indirectly, transfer any equity securities of AI held by it, including the legal or beneficial ownership thereof with or without any of its rights or obligations under the definitive documents, to any person.

The Confirmed Selected Bidder shall not, directly or indirectly, transfer any equity securities of the special purpose vehicle (in case investment in AI is made through a special purpose vehicle) held by them, including the legal or beneficial ownership thereof with or without any of its rights or obligations under the definitive documents, to any person.

AI shall not, directly or indirectly, transfer any equity securities of AIXL and AI-SATS held by it, including the legal or beneficial ownership thereof with or without any of its rights or obligations under the definitive documents, to any person.

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