Spectrum auction redraws India’s telecom landscape

 

 
New Delhi/Singapore: The spectrum auction that concluded on 13 February not only raised much needed funds for the government, but also set the stage for a redrawing of the competitive landscape in India’s telecom industry.

The 10-day auction of airwaves, India’s fourth, ended with the government attracting bids for Rs.61,126 crore, of which it will garner Rs.18,296 crore in the fiscal year ending 31 March.  

The United Progressive Alliance (UPA) government, which will head into a tough electoral battle this year, was successful in selling almost 80% of the more than 400 units of airwaves in the 1,800MHz band for Rs.37,537 crore, across the country, and all the 46MHz of 900MHz in the three metro markets of Delhi, Mumbai and Kolkata, for Rs.23,589 crore.

Telecom companies will pay 25% and 33% of the bid amount upfront in the 900MHz band and 1,800MHz band, respectively, and the rest in 10 annual instalments after a two-year moratorium

The remaining 3% of the money will come from Telewings Communications Pvt. Ltd, the local unit of Norway’s Telenor ASA, which bagged additional airwaves in its six existing areas of operations and added Assam. Reliance Communications Ltd and Aircel Ltd also won some spectrum.  

The bulk of the money is being paid to acquire 1,800MHz spectrum. Currently, this frequency is being used by telcos to provide 2G services— vanilla voice and basic data services.

The auction behaviour by the three leading incumbents—Bharti, Vodafone and Idea—indicates a strategy shift as they seek to counter Reliance Jio’s upcoming fourth-generation (4G) or Long Term Evolution (LTE) services launch by offering high-end data services on the 1,800MHz frequencies, as well as ensure they have spectrum to continue their business as the existing holdings start expiring.

RANJAY KUMAR,

PGDM 2nd SEM,

SOURCE-: MINT

 

Rupee ends flat after hitting eight-month high

 

The rupee retreated after earlier hitting its highest level in eight months on Wednesday as importers rushed in to buy dollars, while traders also speculated about possible Reserve Bank of India (RBI) intervention.
The central bank is suspected to have been buying dollars in recent sessions to shore up its foreign exchange reserves, which now stand at $298.64 billion, their highest since December 2011.
On Wednesday however, views on whether or not the central bank had intervened were mixed unlike in some sessions last week, where traders suspected the central bank bought nearly $1 billion on a single day.

The rupee has remained supported by a powerful rally in Sensex, which touched a record high for an eight consecutive session on Wednesday, on the back of strong foreign inflows.
Sentiment was also supported after the Reserve Bank of India kept interest rates on Tuesday as widely expected as it shifts to growth from boosting inflation.
"Gains in the equity markets and foreign fund inflows is helping the rupee. It may slowly go up to 59 levels by the end of this month," said Uday Bhatt, a senior foreign exchange dealer with UCO Bank.
"The central bank has been there in the market buying dollars since the rupee broke below the 61 to a dollar level. They will allow gradual appreciation in the rupee but try and curb volatility," he added.
The partially convertible rupee closed at 59.90/92 per dollar little changed compared to its Friday's close of 59.91/92. Foreign exchange markets were closed on Monday and Tuesday for a local holiday and annual closing of bank accounts.
Traders will continue to monitor the domestic share market and foreign fund flows for direction.
Overseas investors have bought shares worth $64.5 million on Tuesday taking total $3.3 billion in March. Total investments in debt so far in 2014 stand at $5.8 billion.
In the offshore non-deliverable forwards, the one-month contract was at 60.32 while the three-month was at 61.01.

 vijay yadav

pgdm-2sem

Tata SIA airline joint venture cleared by aviation ministry

 

New Delhi: Tata Sons Ltd has been third time lucky in its quest to operate an airline in India ever since the flag carrier—Air India—the group started in 1932 was nationalized

 

On Wednesday, the civil aviation ministry cleared the Tata SIA Airlines Ltd project, the joint venture with Singapore Airlines Ltd (SIA), in what is the most important step in the process to take off.

 

“The proposal has been cleared today and there are no hitches now,” a top ministry official, who declined to be named, said on Wednesday.

 

Civil aviation minister Ajit Singh approved the proposal on Wednesday evening, a few days after the home ministry informed the aviation ministry that it had cleared the start-up’s board of directors.

 

Mint first reported on 25 March that the home ministry had cleared chairman Prasad Menon, a long-time Tata group executive; Tata Sons brand custodian and chief ethics officer Mukund Rajan; and SIA’s executive vice-president (commercial) Mak Swee Wah for Tata SIA Airlines.

 

The official orders for the no-objection certificate to start an airline will be sent to Tata SIA Airlines later in the week by the aviation ministry, the official quoted above said.

 

 

“We are thrilled,” said Sanjay Singh, a spokesperson for Tata SIA Airlines. “There is a lot of hard work that has gone on in the back-end. We are now going to apply to the DGCA (Directorate General of Civil Aviation) very soon.”

 

To start operations, Tata SIA needs a formal airline licence from DGCA, the industry regulator, based on the no-objection certificate from the aviation ministry.

 

This can take more than three months and is meant for the airline to showcase its technical capabilities such as staff, engineering set-up and aircraft to start the airline.

 

 

 

The airline is then registered as a scheduled airline in the country to conduct passenger operations.

AirAsia India—a joint venture between AirAsia Bhd, the Tata group and businessman Arun Bhatia—received security clearance in August and a no-objection certificate from the aviation ministry in September, but is yet to get a licence from DGCA.

 

Approvals for Tata SIA have come in record time so far.

 

On 24 November, SIA said it had received formal clearance to invest in the Indian airline from India’s Foreign Investment Promotion Board.

 

The airline then approached the home ministry for its approval on 13 January and the no-objection certificate was granted on 2 April.

 

 

Tata Sons, the holding company of the $109 billion Tata group, and SIA have proposed to start a full-service airline with $100 million in initial investment, with the Indian partner holding 51% and the city-state’s national airline the remainder.

 

The launch will mark the realization of an ambition that Tata Sons and SIA have together cherished for one-and-a-half decades, only to be thwarted twice.

 

In 2000, the two firms abandoned a joint attempt to buy a 40% stake in government-run Air India. 

 

 

An earlier attempt by the two companies to start an Indian airline with 40% equity contribution by SIA was also aborted. In both the cases, political resistance and corporate rivalries were blamed.

 

For Tata group, the launch of operations will mark its return to an industry it pioneered in India with Tata Airlines in 1932, which was renamed Air India in 1946 and eventually nationalized by the government in 1953.

 

 

“This will be the first time ever in India that two entities like Tata and SIA, with such a strong financial base, would be commencing airline operations, making it more likely to be a success story. I think it’s a welcome move as it will bring in an efficient airline into the system,” said Manet Paes, formerly a senior executive with Air India and an independent aviation analyst.

 

“Granting the licence will benefit the consumer in the short term as capacity will be added and prices will come down. But unless the government takes steps for a viable industry, like reducing jet fuel taxes, the industry is not going to sustain in the long term and growth will be hampered,” Paes said.

Rahul kuamr Gupta

PGDM,1st Year.

Source:-Mint

Banks' NPAs rise to 2.8L crore in 5 years

 

 

As overleveraged companies saddled with stalled projects struggle to repay loans, it is the banks who are probably keeping one eye on the outcome of the upcoming Lok Sabha polls.
A fractured mandate in the elections could turn matters worse for banks, global investment banks have warned.
Between two general elections of 2009 and 2014, gross NPAs (non-performing assets) — shorthand for loans that could turn bad — of Indian banks have soared from Rs. 69,000 crore to an estimated Rs. 2.8 lakh crore.

“In the current downturn, corporate asset quality has deteriorated due to a sustained deceleration in GDP, policy paralysis, high interest rates and higher corporate leverage,” according to a research note issued global brokerage firm UBS last month.
“The issues related to investment cycle (fuel availability, land acquisition etc.) are stickier this time. A weak coalition government at the Centre would be most negative sentiment-wise for corporate private banks as credit costs would likely remain elevated,” the note says.

According to analysts, while the sharp slowdown in growth has hurt most sectors, iron, steel and infrastructure have been hit most by policy logjam.
These two sectors, coupled with textiles, made up for nearly half of total stressed assets.
In another note to investors, Macquire Equities Research has said that while banks are looking to sell bad loans to asset reconstruction companies, the latter do not have an appetite to buy more than 5-10% of stressed assets.
Between October and February, close to Rs. 45,000 crore of bad assets — about 15-20% of overall NPAs of banks — came up for sale. The number could rise to Rs. 60,000 crore by March 2014, almost four-times of last year’s level.
The government and state-owned banks, however, shrugged off any risks of bad loans becoming an unmanageable problem.
“NPAs have risen because of certain things but there is no need to press the alarm button, we have asked banks to focus on recovery to address the issue and banks are more or less on track,” Rajiv Takru, financial services secretary, told HT.
“Recovery is happening and now things are looking up and once the economy picks up, the issue would be addressed to a large extent,” said VR Iyer, chairperson and managing director, Bank of India. Iyer added that RBI’s norms on NPAs have also had a positive impact.
“All banks have taken several steps to ensure that the issue is addressed, we are monitoring all accounts regularly and there is no cause for concern,” said M Narendra, chairman and MD, Indian Overseas Bank.



anand maurya
pgdm-2sem

Opening Bell 3 April | RBI grants banking licences, IDFC in focus

Wall Street climbs to record high on encouraging US labour market signals ahead of Friday’s non-farm payrolls report 

Mumbai: In India, IDFC Ltd shares will be in limelight after Reserve Bank of India (RBI) granted in-principle approvals to IDFC and Bandhan Financial Services Pvt. Ltd to start new banks. The approvals will be valid for 18 months and the two firms will have to comply with rules stipulated by the central bank in that time.

Wall Street climbed to record peaks on encouraging signals from the US labour market ahead of Friday’s non-farm payrolls report. A survey from ADP Research showed 191,000 new jobs had been created in March while February’s figure was revised to 171,000, reports Financial Times. The Dow Jones Industrial Average was up 0.2%, S&P 500 gained 0.6% and Nasdaq Composite gained around 0.2%.

Asian markets continued to climb higher on Thursday morning after Wall Street extended into record high territory. The Chinese government announced another mini-stimulus and HSBC’s PMI gauge for the non-manufacturing sector rose to a reading of 51.9 in March from 51 in the previous month. China’s Shanghai Composite was up 0.2%, Hong Kong’s Hang Seng gained 0.6% and Japan’s Nikkei Stock Average was up 0.4%.

 

 

 

 

In India, Bharti Airtel Ltd shares will be in focus after it renewed its landmark outsourcing contract with International Business Machines Corp. (IBM) for five years for around $500 million after several rounds of negotiations, reports Mint.

Petronet LNG Ltd shares may see some action as Oman is in talks with India to buy around 10-20% stake in Petronet’s planned liquefied natural gas terminal at Gangavaram, in the state of Andhra Pradesh. The stake could be bought through an investment or pension fund, reports Wall Street Journal.

Airline shares will be in focus as the Competition Commission of India (CCI) has started an investigation into airfare pricing after finding that airlines were behaving like a cartel, reports Mint. There was little choice to travellers as seats were sold at identical prices.

Larsen and Toubro Ltd (L&T) shares will be under pressure as it may write off slow-moving orders worth Rs.15,000 crore when it announces earnings for the full year in March due to lack of approvals, aggressive bidding and other problems which have frozen execution, reports Economic Times.

Tata Communications Ltd shares will be in focus after Vodacom Group Ltd said that it was still in talks to acquire Neotel, a South African subsidiary of Tata Communications for around $590 million.

Suzlon Energy Ltd shares will be in focus after it acquired Big Sky Petroleum Corp. wind park from Edison Mission Energy in the US through its North American subsidiary.

The aviation ministry on Wednesday gave its clearance to Tata SIA Airlines, the joint venture between Tata Sons Ltd and Singapore Airlines Ltd, taking it a step closer to the start of operations. The airline now needs a permit from the Directorate General of Civil Aviation (DGCA) to start operations.

Lastly, India’s meteorological department now expects that El Nino weather conditions—typically marked by less rainfall will be seen latest by June this year which could stoke food prices, reports Wall Street Journal India



Source-Livemint.com         

                    By

Shah Mohammad Abdul Qadir
            PGDM 1st Yr.
IIMT College Of Management
      Greater Noida, U.P.

GMR Infra’s stock valuation could get a boost from Energy IPO 

 

 

 

On Monday, GMR Infrastructure Ltd filed the draft prospectus to offer shares of its 100% subsidiary, GMR Energy, to the public. It’s an exit route for private equity investors in the entity and will help garner funds to meet equity and debt reduction needs. From an investor standpoint, the move along with several asset divestments through fiscal 2014 could help improve stock valuation.

 

So far, GMR has invested roughly Rs.6,500 crore in various power projects. Analysts’ estimates of GMR’s 80% stake in its energy entity range between Rs.1,600 and Rs.2,000 crore. However, a recent restructuring of the private equity investors’ holding in the company pegged valuation at a higher level. Thus, through these ambiguities, the public offering will set a valuation benchmark for the energy arm and other such entities. The stock has moved up by about 5% since the announcement.

 

So far, the energy business’s contribution in the estimated stock price has been insignificant given the beleaguered state of the power sector. Poor generation due to shortage of gas or high price of coal resulted in poor valuation for the business. Almost 90% of GMR’s stock valuation came from airports.

 

According to an Edelweiss Research report, “We expect GMR to hold 65-70% stake in the energy company post-listing.” Divestment will also reduce concerns about exit opportunities for private equity firms.

Meanwhile, the group’s net consolidated debt stands at around Rs.36,000 crore (as on September 2013). 

 

In any case, from the current price levels of Rs.23, downsides are limited given that the prospects for infrastructure could get better in the near to medium term.

md.aquil alam

pgdm 2nd semester 

source.live mint 

Rupee rallies, Sensex surges as foreign funds pour in dollars

The rupee closed at 59.91 on Friday rising to a level above 60 to a dollar for the first time in eight months, and equities continued to scale new peaks as Indian markets hit a sweet spot aided by a gush of dollars on expectations of a stable, investor-friendly government after the Lok Sabha polls.

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The rupee's closing on Friday was the highest in eight months, and it hit an intra-day high of 59.68, bringing relief for the government battling to contain prices and push the economy out of a slowdown.
A stronger rupee will make most imported goods such as crude oil cheaper raising hopes of a cut in transport fuel, particularly of petrol where retail prices are already aligned with global crude prices.

The rupee's rise against the dollar will aid the government's and the Reserve Bank of India's (RBI's) efforts to cool prices.
However, a strong rupee also hurts exports as it makes Indian goods pricier in dollar terms compared to other competitors.
Forex traders told HT that the RBI, which is widely speculated to maintain a status quo on interest rates next Tuesday, has likely bought $3 billion this week to prevent a further rise in the domestic currency's value.
Equities scaled new peaks on sustained buying by foreign institutional investors (FIIs).
The 30-share BSE Sensex gained by 125.60 points or 0.57% to close at 22,339.97 points, and the NSE Nifty gained 54.15 points or 0.82% to close at 6,695.90 points, after briefly crossing 6,700 for the first time ever.


vijay yadav
pgdm-2sem
source- hindustan times