Top Stories
DoT seeks SC nod to postpone spectrum auction to November
The Department of Telecommunications is trying to postpone the 2G spectrum to early November from the current August-end deadline and will now file an application with the Supreme Court for the same. An Empowered Group of Ministers headed by finance Minister P Chidambaram took the decision on the postponement.
Eight mobile operators are set to lose a total of 122 licences after the Supreme Court’s verdict earlier this year to cancel 2G licences issued under scam tainted ex-telecom minister A Raja, over irregularities in their allotment and allocation in 2008.
The companies who wish to win back their licences will have to participate in fresh auctions for spectrum.The Union Cabinet had last week finalized Rs.140bn for 5 MHz spectrum in 1800 MHz band and Rs. 182bn for 5 MHz spectrum in 800 MHz band as the base price.
The Supreme Court had earlier set the deadline for Aug 31 and directed the Telecom Regulatory Authority of India, or TRAI, to form the guidelines.TRAI had then proposed to increase the base price of the fresh auction of 2G airwaves to Rs.181.11bn from Rs.16.59bn that telecom companies paid in 2008. Telecom companies said the new prices would force consumers to pay much for mobile tariffs.
Bharti Airtel Q1 net profit at Rs. 7.62bn
Bharti Airtel has reported a net profit of Rs. 7.62bn for the fiscal first quarter of FY13 while net sales stood at Rs. 193.50bn.Bharti Airtel has reported EBITDA of Rs. 58.49bn for the quarter ended June 30, 2012.
Mobile revenues in India during the quarter were impacted by two significant changes : i) TRAI guidelines around processing fees restricted the sales of “combo packs” which offered bundled service propositions to augment customer value. ii) The service tax hike from 10.3% to 12.36%, effective 1st April 2012, causing all telecom services to become dearer by nearly 2%, with the entire additional levy being passed through to the exchequer.
In a statement, Sunil Bharti Mittal, Chairman & Managing Director, Bharti Airtel Limited, said:“Telecom revenues in India have been depressed due to hyper-competition and recent regulatory & tax developments. I am happy to note that, despite these adverse developments, Airtel has kept its focus on network expansion, market investments, superior customer experience and new product innovations. I am also pleased to see that India data pick-up is accelerating with over 38 million customers and mobile data revenues up 44%. On the African side, we are gaining market share, benefitting from the significant investments made in the last two years.”
In focus Stories
IIFL recommends 'Buy' on Bharti Airtel
IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends “Buy ” Bharti Airtel.
According to IIFL report, - Bharti’s Ebitda margin declined 300bps in 1QFY13 and revenue dropped QoQ inAfrica. Adjusted for service tax increase, cap in processing fee, and lower tower rental, India wireless Ebitda grew 2.6% QoQ, much better than the reported 9.4% decline.
Faster network roll-out and investment in 3G and mobile money resulted in higher costs in Africa but revenue did not grow due to macro-economic headwinds. However, Bharti’s relative performance is impressive (MTN’s 1HCY12 Nigeria revenue grew 2.7% HoH in US$), report stated.
IIFL said, "We cut our FY13/14 Ebitda estimates by 13%/16% due to macro headwinds in Africa and near-term competitive intensity in India. The load of high fixed costs of depreciation and amortisation translates this into 42%/46% EPS cut. The flip side is that, even a modest turn of the cycle will cause significant earnings growth."
"We value the India and South Asia businesses at a two-year forward EV/Ebitda of 6.5x. We trim our Africa forward multiple to 6x from 6.5x. This results in TP of Rs294. Maintain BUY," brokerage added.
The report was published by IIFL’s Institutional Equities Research desk.
Domestic News
Bharti Airtel crosses 200 million customer milestone in India
Bharti Airtel, a leading global telecommunications services provider with operations in over 20 countries across Asia and Africa, announced that it has crossed the 200 million customer mark in India. The 200 million customer mark in India includes Bharti Airtel customers across categories of 2G, 3G and 4G mobile; fixed line and DSL broadband, IPTV and DTH services. The company also offers a wide range of managed services for its enterprise, government and carrier customers.
Commenting on the occasion, Sanjay Kapoor (CEO – India & South Asia, Bharti Airtel) said, “Bharti Airtel’s success story in India has been nothing short of exceptional. Over the years – we are proud to have been at the forefront of India’s telecom revolution and adapted our business to deliver on the market’s fast evolving customer needs. In this journey, while our first 14 years of operations saw a 100 million customers joining the Bharti Airtel family, it is remarkable that our next 100 million came from the last three years alone. As a company with the vision of enriching lives, this remarkable leap to the 200 million milestone is testimonial of the customer trust we have won despite a hyper competitive market scenario – be it for voice telephony, data services or DTH. This feat places us among the best telcos in the world and we are thankful to our customers, employees, partners and other stakeholders for entrusting their faith in Airtel along the years”.
PM to announce ‘Har Hath Mein Phone’ scheme on Aug 15
On August 15, Independence Day, Prime Minister Manmohan Singh is expected to announce a new scheme to provide 6 million below poverty line (BPL) households with a mobile connection and free local talk time of 200 minutes. The scheme is titled ‘Har Hath Mein Phone’ and is expected to cost the government Rs.70bn.
Post-launch, the UPA government is planning to sell the scheme as an empowering tool initiated by them. The government is hoping that the scheme will help them to connect with the beneficiaries, which are a sizeable voting population and plays an important role in elections.
From the Rs.70bn, half the funds are expected to be generated from the bidder who gets the right to provide the service, and the remaining funds will be pumped in through the telecom department's universal service obligation (USO) funds.
Opposition party BJP described the scheme as a desperate attempt to seek favour among voters ahead of the general elections in 2014. "First, electricity should be provided to people in villages. Without electricity, what is the use of free mobile phones?" asked BJP leader Balbir Punj, reports said.
India's new spectrum pricing to drive M&A, Higher Tariffs: Fitch
India's new spectrum pricing will drive consolidation in the telecom sector and lead to higher industry tariffs, Fitch Ratings says. The agency continues to have a Negative Outlook on the sector, due to ongoing regulatory uncertainty.
India's Union Cabinet last week decided to set the reserve prices for 5Mhz of second-generation GSM and CDMA spectrum at USD2.5bn and USD3.2bn, respectively. The price of USD509m per Mhz in the 2G bandwidth (1800Mhz), which is used essentially for voice and text, is one of the most expensive in Asia-Pacific. The 2G spectrum is offered at a nominal price, or with no upfront-fees on a "first come first served" basis, by Indonesia, the Philippines, Thailand and South Korea.
We expect that many of the telcos whose licences were cancelled by India's Supreme Court in February 2012 will not participate in the re-auction, as most telcos have a stretched balance sheet. Furthermore, the cabinet decision did not provide any relief on spectrum usage charges (SUC), which were left unchanged at the existing levels of 3%-8% of adjusted gross revenues.
RCOM seeks shareholders' nod to boost authorised share capital
Reliance Communications is seeking shareholders' approval to increase its authorised share capital to Rs25 bn from 15 bn currently, according to reports.
Reports stated that the may be required to generate long term resources by issuing securities.
The company will also seek approval of shareholders to issue securities to qualified institutional buyers in its annual general meeting, scheduled for September 4, says report.
Reliance Capital Asset Management launches unique mobile based services for investors
Reliance Capital Asset Management (RCAM), part of Reliance Capital Limited announced the launch of unique mobile based investment initiative that allows investments in mutual funds using mobile phones.
This was announced by Mr. Sundeep Sikka, CEO, RCAM, here today. The initiative has been launched in partnership with HSBC.
RCAM is the first Asset Management Company (AMC) to offer the Interbank Mobile Payment Service (IMPS) platform to investors for making investments in mutual funds.
“We have always focused on innovation to improve customer service and convenience. With this mobile platform, we are offering our customers an additional mode of payment, which is convenient to use. Investors can invest in units of Reliance Mutual Fund with this platform by using compatible mobile handsets through IMPS enabled banks,’’ said Mr. Sikka.
Delhi HC permits Uninor to seek bidders for assets
The Delhi High Court today passed the ruling that Uninor, the joint venture between India’s Unitech and Norway’s Telenor can invite bids from interested players for a planned auction of its assets, reports said.
Uninor had earlier invited potential bidders to express interest by Aug 6 for the company’s assets. It also said that its majority stakeholder, Telenor, was willing to bid in the auction.
Uninor had set a minimum price of Rs.40bn for the India telecom business and said Telenor would pay Rs 41.9bn in case no other bidder evinces interest by Aug 6.
The company said this process will ensure that the value of Uninor’s business is secured beyond Sep 7, as the winning bidder would have the ability to continue Uninor’s business as a going concern beyond Sep 7.
Reserve price for 2G spectrum excessively high: Sistema Shyam
“Given the realistic sectoral environment and market dynamics, I believe that the reserve price for spectrum as approved by the cabinet is excessively high. There is no rationale to support why the 800 Mhz CDMA spectrum should be priced 1.3 times more than the GSM 1800 Mhz spectrum. It is significant to note that the GSM spectrum being put up for auction is liberalized whereas the 800 Mhz CDMA spectrum continues to be non liberalized. The Honorable Supreme Court in its 2ndFebruary 2012 order had directed that true market price of the spectrum should be discovered through auction. Hence, the reserve price for spectrum should be Rs. 16.58bn and any change in this pricing contradicts the spirit of the same order.
Sistema Shyam TeleServices Ltd(SSTL) has consistently maintained that being a pure play CDMA operator, its legal case is significantly different compared to other mobile operators. To protect the interest of more than 16 million customers, 3500 employees, universe of 300,000 retailers and investments of over USD 3.1 billion, SSTL has filed a curative petition before the Honorable Supreme Court. I am hopeful that the highest court of the land will look into the merits of SSTL's case and will give us justice.”
Vsevolod Rozanov, President and CEO, Sistema Shyam TeleServices Ltd
Bharti Infratel mulls listing...Bharti Airtel may sell up to 10%
Telecom revenues depressed due to hyper-competition: Sunil Bharti Mittal
Nokia unveils two new smartphones in Asha series
Huawei launches HiLink in India
C-DOT celebrates 25 years of Telecom Revolution in Rural India
iBall ropes in Kareena Kapoor as brand ambassador for its mobile phone range
Global News
Samsung not mulling takeover of troubled RIM
South Korea's Samsung Electronics Co has not considered acquiring Research In Motion (RIM) or licensing the struggling BlackBerry phone maker's new mobile operating system, according to reports.
Reports state that a lack of support from potential partners such as Samsung could mean more trouble for RIM, which is seeking various options to turn around its sagging fortunes.
There are reports that RIM plans to use its new operating system, known as BB10, in a next-generation line of BlackBerry smart phones expected to launch early next year.
Shares of RIM had risen by over 5% early on Wednesday after a leading analyst said that the Canadian company may license the BlackBerry 10 operating system to Samsung.
RIM's shares are down a whopping 80% since the beginning of 2011.
AT&T, union extend deal for 22,000 workers: reports
AT&T Inc and the Communication Workers of America agreed to a five-day contract extension for 22,000 employees and said talks are continuing, according to reports.
Reports stated that the negotiations affect wireline employees in Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.
Digia to acquire Qt from Nokia
Digia, the software powerhouse listed on the NASDAQ OMX Helsinki exchange (DIG1V), today announced that it has signed an agreement to acquire Qt software technologies and Qt business from Nokia. Following the acquisition Digia becomes responsible for all the Qt activities formerly carried out by Nokia. These include product development, as well as the commercial and open source licensing and service business. Following the acquisition, Digia plans to quickly enable Qt on Android, iOS and Windows 8 platforms.
One of Digia’s key objectives with this acquisition is to improve its position within the Qt ecosystem by further strengthening Qt’s R&D capabilities and expanding its reach on many more platforms than ever before. Since Digia acquired the Qt Commercial licensing business from Nokia in March 2011, the operation has continued to be successful and has grown substantially. Digia forecasts the acquisition’s impact on its 2012 revenues to be positive. In the following years, Digia forecasts the Qt business to grow. As part of the transaction, a maximum of 125 Qt people from Nokia will transfer to Digia, mostly based in Oslo, Norway and Berlin, Germany. This business transaction will significantly strengthen Digia’s product business and supports Digia's strategic objective to grow internationally.
ZTE and Swisscom launch Grand X in Switzerland
Mobile search drives almost 30% of Region's Mobile Traffic: Adobe APAC
Karbonn Mobiles is title sponsor of Champions League T20
GlacialTech unveils brand new R15 Igloo pad series