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Tata and Bharti may combine consumer telecom business

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New Delhi, Oct 12 : Bharti Airtel and Tata on Thursday announced that they have entered into an understanding to merge Consumer Mobile Businesses (CMB) of Tata Teleservices Limited (TTSL) and Tata Teleservices Maharashtra Limited (TTML) into Bharti Airtel.

The acquisition is subject to requisite regulatory approvals, the statement said without revealing the acquisition amount.

The merger is being done on a debt-free cash-free basis, except for Bharti Airtel assuming a small portion of the unpaid spectrum liability of Tata’s towards DoT, which is to be paid on deferred basis, the joint-statement added.

As part of the agreement, Bharti Airtel will absorb Consumer Mobile Businesses (CMB) of TTSL and TTML across the country in 19 circles (17 under TTSL and two under TTML).

“This is a significant development towards further consolidation in the Indian mobile industry and reinforces our commitment to lead India’s digital revolution by offering world-class and affordable telecom services through a robust technology and solid spectrum portfolio,” said Bharti Airtel Chairman Sunil Bharti Mittal.

“On completion, the proposed acquisition will undergo seamless integration, both on the customer as well as the network side, and further strengthen our market position in several key circles. The customers of Tata will be able to enjoy India’s widest and fastest voice & data network, and bouquet of Airtel’s best-in-class products and services,” he said.

“The acquisition of additional spectrum made an attractive business proposition. It will further strengthen our already solid portfolio and create substantial long term value for our shareholders given the significant synergies,” Mittal added.

The Bharti Board, which met on Thursday afternoon, has approved this transaction. The Boards of Tata Sons, TTSL and TTML, too, have given their approval.

According to earlier reports, TTSL has seen its net worth fall by over Rs 11,600 crore in FY17, and losses increase from Rs 2,409 crore to Rs 4,617 crore year-on-year. Revenues, meanwhile were down 10 per cent to under Rs 10,000 crore.

“We believe today’s agreement is the best and most optimal solution for the Tata Group and its stakeholders. Finding the right home for our longstanding customers and our employees has been the priority for us. We have evaluated multiple options and are pleased to have this agreement with Bharti,” said N Chandrasekaran, Chairman, Tata Sons.

Goldman Sachs (India) Securities Private Limited is financial advisor to Tata.

The transaction will also provide Bharti Airtel with an indefeasible right to use (IRU) part of the existing fibre network of Tata.

Tata is also in initial stages of exploring combination of its Enterprise Business with Tata Communications and its Retail Fixed Line and Broadband business with Tata Sky. Any such transaction will be subject to respective boards and other requisite approvals, the statement added.

Tata will retain its stake in Viom, and will take care of the liabilities associated with it.

The proposed merger will include transfer of all the customers and assets of Tata CMB to Bharti Airtel, further aug’enting Bharti Airtel’s overall customer base and network. It will also enable Bharti Airtel to add 178.5 MHz spectrum (of which 71.3 MHz is liberalised) in the 850, 1800 an” 2100 MHz bands.

“This merger is pretty much in line with industry expectations. According to speculations, TTSL either needed to exit the industry or being merged with another entity. It is a w”n-win deal for both,” Rajan S Mathews, Director General, Cellular Operators’ Association of India (COAI) told IANS.

Bharti Airtel will get additional 40 million customers out of this deal.

“This deal will bring in more stability for Airtel. It will gain additional customers and also spectrum,” he added.

Mathews indicated that with this deal three big telecom players have emerged in the industry – Airtel-TTSL, Vodafone-Idea and Reliance Jio.

“While the fate of employees is not clear, the consideration that manpower planning will be done based on business lines is good. Tata Group has the appetite to absorb some employees in Tata Communication, Tata Sky and their other operating companies too. And possibly, they will enable the rest to move to other opportunities,” said Amresh Nandan, Research Director, Gartner.

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It’s best to steer clear of Bitcoins lest the bubble bursts

Either when the speculative run ends or governments decide to regulate, the Bitcoin dream run is bound to come to an end. It is best to steer clear of the dreaded eventuality.

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It is impossible to make sense of the Bitcoin-mania that has been making waves of late.

In just a span of one year, the crypto-currency has doubled four times. The price of one Bitcoin in early January was $1,000 (almost Rs 64,000). It rose to $2,000 by May. In August, it breached $4,000. By late November, it was $8,000 and, two weeks later, it had crossed $16,000. Nothing short of a bubble can explain such an astronomical run. In fact, most recently, the market valuation of Bitcoin in South Korean markets briefly surpassed that of JP Morgan, the world’s largest bank.

The Bitcoin bubble is quite reminiscent of the myriad bubbles in global economic history beginning with the infamous Tulipmania of the 1600s. The tulip bulb bubble occurred in Holland during early 1600s when competing for the rarest tulip bulbs became a status symbol and speculation eventually drove its price to the extremes. At its peak, the price of tulip bulbs rose as much as 1,100 percent in a month. All of this came to an abrupt end in 1637 when prices dropped to an extent that bulbs began trading at a fraction of what they once had, miring many in financial ruin. All bubbles end in a similar fashion. Only the extent differs.

Olivier Blanchard and Mark Watson, in their 1982 paper “Bubbles, Rational Expectations and Financial Markets”, explain why assets like gold, just like Bitcoins, are prone to evolve into bubbles. First, gold acts as a hedge against inflation. This, however, is not true in the case of Bitcoins. The second reason that Blanchard and Watson give for a regular gold frenzy is that people base their choices on whether or not to hold an asset based on past returns rather than market fundamentals. Therefore, investors who witness a rise in asset prices believe that they can hold on to it themselves as long as it appreciates and get out of the market before the market crashes.

The latter reason holds true in the case of Bitcoins, which are largely being driven by such speculation. Even though the Blockchain technology behind the currency is revolutionary and could very well be the Next-Big-Thing, it does not explain the astronomical 16-fold rise that it has displayed this year. It would make sense if this trend were occurring in light of a broader loss in confidence in fiat money. But this is clearly not the case in the current global economic scenario, which finally seems to be picking up.

It can also be argued that since central banks have been practicing easy monetary policy since the crisis to revive economic activity, asset prices have displayed an upward trend. Therefore, in a market where stocks, bonds and other such assets are overvalued, Bitcoin is not an exception. Its rise can be merely a hedge against oncoming interest rate hikes. But, that does not explain why the rise in gold prices has not been similar. In fact, the rise in gold prices has been lower than that in stocks.

There is an additional aspect of the Bitcoin that might explain its widespread appeal: the anonymity involved in its transactions. Bitcoin transactions can be made securely without revealing one’s identity, which makes it easy to bypass the government eye altogether. If true, the rise of Bitcoins could point to a disturbing trend of breakdown of global institutions. The Bitcoin craze can be seen in conjunction with a spate of shocking election outcomes that have been witnessed globally which reflect a larger loss in confidence in institutions that have guided growth.

However, in such a case, the longevity of the currency will be dependent on the government’s appetite to allow such transactions. It is hard to imagine governments allowing large-scale anonymous transactions that evade any taxation and enable criminal activity. China has already banned the currency. On the other hand, Japan has made it legal tender in an attempt to become the global centre of fintech. The jury is still out on what course governments across the globe will take. American economist and chess Grandmasster Kenneth Rogoff put it best recently when he said: “The long history of currency tells us that what the private sector innovates, the state eventually regulates and appropriates.”

Either when the speculative run ends or governments decide to regulate, the Bitcoin dream run is bound to come to an end. It is best to steer clear of the dreaded eventuality.

By : Dr. Amit KAPOOR

(Dr. Amit KAPOOR is chair, Institute for Competitiveness, India. The views expressed are personal. He can be contacted at [email protected] Chirag Yadav, senior researcher, Institute for Competitiveness, India has contributed to the article)

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November inflation at 4.88% crosses RBI’s median mark

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New Delhi,, Dec 12: A sharp spurt in food and fuel prices pushed India’s annual retail inflation in November over the RBI’s median level of 4 per cent mark, official data showed on Tuesday.

According to the data from the Ministry of Statistics & Programme Implementation, October’s consumer price index (CPI) inflation rose during the month to 4.88 per cent from 3.58 per cent reported for October.

IANS

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Unitech seeks stay of NCLT order allowing government takeover

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New Delhi, Dec 12: Real estate major Unitech on Tuesday sought the suspension of an NCLT order allowing the government’s takeover of the company.

The company told the Supreme Court that the National Company Law Tribunal (NCLT) “could not pass such an order” and asked for the stay on the tribunal order allowing appointment of 10 directors on the company’s board.

Senior counsel Mukul Rohatgi told Chief Justice Dipak Misra, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud that the top court in its October 30 order had said that no coercive steps would be taken against Unitech.

Giving time till Wednesday to Additional Solicitor General Tushar Mehta to take instructions on the plea by Unitech, Chief Justice Misra observed that the government should have taken the leave (permission) of the court before embarking on taking over the company management.

IANS

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