How Do Experts See Day 1, Road Ahead for the 3G Auction? CNBC TV (India, April 2010) |
 The much anticipated 3G auctions kicked off today. In a CNBC-TV18 exclusive interview, telecom minister A Raja said that the bidders were showing high motivation in the auction and that govt may allocate additional spectrum to winners based on TRAI's recommendations.The official press release from the Department of Telecom while summarizing the activity of the auction for Day 1 says that five clock rounds were completed today. The total bids received in value terms, is Rs 16,000 crore. All 22 circles on offer for 3G have received bids. Delhi, in the fifth round saw a bid of Rs 373.29 crore while Mumbai comes next in terms of the level of demand at Rs 362.66 crore. In an interview with CNBC-TV18, Bundeep Singh Rangar, Indusview and Kunal Bajaj, MD, BDA Connect gave their perspective on the opening day of bids for the 3G auction. Here is a verbatim transcript of the interview. Also watch the accompanying video. Q: What have you made of the Rs 16,000 figure on Day 1 particularly with Delhi raking in about Rs 373 crore?  Bajaj: Basically because of that 80% activity figure that we are seeing right now, bidders are esssentially strategically holding back what their strategy for the coming weeks is going to be. It's only when the auctioneer raises the requirement to say 90% activity and 100% activity will we actually see all the eligibility points getting used up at the same time. So even though Delhi today for example they are saying that demand matches supply it is clearly not going to stay that way for a very long time.Q: It is a one of a kind auction that the industry and the government is trying to learn from. What have you made of the kind of perhaps global best practice when it comes to such auctions that perhaps is being replicated here?  Rangar: I guess one of the key things of course is prevent collusion amongst bidders because you don’t want people colluding and keeping the price artificially low. The government's biggest interest is in generating the maximum amount of revenue from this and of course cutting down its current deficit.So the best practice of course is clearly to allow the best price with the lowest possible chance of collusion. And you see that happening here. Remember this is day 1. This is a 2 week process and with most auctions the ultimate rush to the finishing gear is in the last few days, is in in fact the last few hours. So we have a long way to go and I think this is a good process that is in place for getting the maximum value. Q: Are you therefore saying as you heard Bundeep saying it is going to be, probably the real rush is going to happen in the last few days. So are you saying that the first day number Rs 16 thousand crore seems on track to get us closer to the Rs 40,000–Rs 45,000 crore number that the minister talked of this morning? Bajaj: Yes absolutely. For example if you look at the way the eligibility point system is structured since operators only have to use up to 80% of their eligibility points, which means 80% of activation or activity today, they are going to hold their cards back and essentially wait to see what other people are doing, people who maybe have fewer eligibility points or they are going to distribute their bids around the various circles. Once we get a little bit further down and eligibility increases to 90% then people will start driving those prices up. The provisional winners that are going to be declared today internally on the system even though we don’t have access to that information, I think all them will know that they clearly aren’t in a safe position to expect to win in the future. So as we move forward, when the auctioneer changes some of the rules around activity, when the auctioneer continues to raise the prices, a lot of the big players will probably re-enter the auction at that point, at those higher level of prices. Day 1 to have gone up this much and to have completed 5 rounds of activity, I think that’s pretty good. Q: In terms of the fact that five rounds have been completed what does this really indicate – are we sort of moving much faster than earlier expectations and does it mean that the two week timeline that really seems to be the consensus for completing the auction is perhaps going to finish earlier than thought. What about the C category circles which are seeing a minus figure attached to all of them? Bajaj: Basically given that we have already completed five rounds today that means definitely in some of the circles you had advances of 10-15% of prices because of the way the price advances are structured. If demand is largely in excess of supply then you are going to have more than a 5% jump in that circle price. The way to think about it is that yes we've moved quickly, but because everyone is not participating in every place that they intend on being, when they do participate we make a pattern situation where demand starts far outstripping supply. It is too early to say exactly what everyone’s strategy is going to be. But maybe two weeks is not what they can take. If they continue doing 6-7-8 rounds per day moving forward, we may be wrapped up within a week’s time because the eligibilty requirements is what is going to determine how quickly we get to the finish line. Q: While the auction process is going on right now you got all the India’s top telecom companies taking part in the auction process, will the kind of money that has been invested right now justify the returns in the long term? Rangar: That has been a key debate. Every country would have had particularly 3G license auctions and the huge investment just in the spectrum because typically to get the license and the spectrum bundled together in the 2G licences. But in almost every case there is definitely a return on investment scenario. As in India's case in particular, given the fact that you have got a market dynamic where you have got 500 million users, 92% of which is voice driven revenue, of that only 127 million, about 25% of the users today have Internet enabled phones and 10% have used the Internet in the last year and 1% of the population have used the Internet on average of once a month. So the frequency of usage beyond the novelty factor is very low. If you want to make India a truly broadband country you need a critical mass of about 25% of the population. So the 25% reach into India’s overall population particularly to remote areas, areas outside the key metros is going to be through wireless spectrum. It is not necessary just a phone. In England for example we use phones for 3G, there is iPhone for 3G and a lot of us carry 3G dongles, which allow our PC and our laptops to connect to 2MBPS wireless access. I believe the return on investment scenario is partly driven by mobile phone usage. A huge amount is just providing broadband wireless access and therefore the various access revenue, the bundled on services revenue and an ecosystem that generates from an Apple Appstore like further e-commerce revenues is really where the return of investment lies for both the carriers and people sitting on top. This is a 20-year license. So the return on investment will be spread over that period of time. I do believe the investment is justified in that case. |
Saturday, May 15, 2010
India's 3G Telecom Licenses Auction
Sunday, December 13, 2009
INDIA INC RIDES RECOVERY WAVE, RAISES $16.7 BLN IN APR-DEC
Despite poor participation from retail investors, India Inc raised $16.7 billion (Rs 78,000 crore) through equity issues in the first eight months of the current fiscal, five times that in the entire financial year ended March 2009, as foreign investors returned and companies resumed expansion activities.
The pick-up in fund-raising coincided with the economy showing clear signs of revival and the sharp rebound in stock market valuations after they hit a low in early March.
However, the amount raised so far in the current fiscal is still far lower than in the corresponding period of 2007-08, a boom year for the stock markets. India Inc raised Rs 125,526 crore between April and November 2007.
The Economic Times
Despite poor participation from retail investors, India Inc raised $16.7 billion (Rs 78,000 crore) through equity issues in the first eight months of the current fiscal, five times that in the entire financial year ended March 2009, as foreign investors returned and companies resumed expansion activities.
The pick-up in fund-raising coincided with the economy showing clear signs of revival and the sharp rebound in stock market valuations after they hit a low in early March.
However, the amount raised so far in the current fiscal is still far lower than in the corresponding period of 2007-08, a boom year for the stock markets. India Inc raised Rs 125,526 crore between April and November 2007.
The Economic Times
TELECOM TOWER COS AIM HIGHER, MERGE TO REACH OUT
India’s telecom tower industry is set for a wave of consolidation with small and medium sized firms opting for mergers or alliances to take on larger rivals and hasten rollouts in the face of rising demand. India’s position as the fastest growing wireless market in the world has attracted several global players such as UK’s Vodafone Plc, Japan’s NTT DoCoMo and UAE’s Emirates Telecommunications Corp (Etisalat).
“Under the current circumstances, when competition is so severe at operators’ end, the tower companies have to become much more efficient,” said Ravi Sharma, executive chairman of industry body CMAI Association of India. “They will only survive, provided they have more than three tenants per tower,” he said. “Now to get to that, there will be consolidation amongst companies.”
Earlier this month, two sources had told Reuters that GTL Infrastructure Ltd was leading the race to buy the tower holdings of Aircel, the Indian unit of Malaysia’s Maxis, in a deal valued at $1.6 billion to $1.7 billion. Private equity firm New Silk Route, which owns a stake in tower leasing firm Aster Infrastructure, is reportedly in talks with Essar Telecom Infrastructure to buy a stake in the latter. The consolidation spree was kicked off in 2007 when India’s top mobile operator Bharti Airtel, Vodafone Essar and Idea Cellular decided to pool their resources and hived off their towers into an independent firm, Indus Towers.
MINT
India’s telecom tower industry is set for a wave of consolidation with small and medium sized firms opting for mergers or alliances to take on larger rivals and hasten rollouts in the face of rising demand. India’s position as the fastest growing wireless market in the world has attracted several global players such as UK’s Vodafone Plc, Japan’s NTT DoCoMo and UAE’s Emirates Telecommunications Corp (Etisalat).
“Under the current circumstances, when competition is so severe at operators’ end, the tower companies have to become much more efficient,” said Ravi Sharma, executive chairman of industry body CMAI Association of India. “They will only survive, provided they have more than three tenants per tower,” he said. “Now to get to that, there will be consolidation amongst companies.”
Earlier this month, two sources had told Reuters that GTL Infrastructure Ltd was leading the race to buy the tower holdings of Aircel, the Indian unit of Malaysia’s Maxis, in a deal valued at $1.6 billion to $1.7 billion. Private equity firm New Silk Route, which owns a stake in tower leasing firm Aster Infrastructure, is reportedly in talks with Essar Telecom Infrastructure to buy a stake in the latter. The consolidation spree was kicked off in 2007 when India’s top mobile operator Bharti Airtel, Vodafone Essar and Idea Cellular decided to pool their resources and hived off their towers into an independent firm, Indus Towers.
MINT
INTEL BANKS ON 3G AND WIMAX IN INDIA
As India is all set to take a final call on the spectrum allocations in January 2010 for the much-awaited 3G and WiMax licenses, Intel hopes for more demand of its products and solutions in the computing and Internet space.
Recently, Intel has come out with new devices and solutions that provide mobile and wireless broadband Internet access. For instance its Nettops with Atom processor is a low-cost computing device with a good computing performance, available at the market price of around Rs.10,000 in India.
The company considers Nettops as a key affordable computing device along with boosting Internet penetration in the rural parts of the country. Since its launch, Intel already has sold over half a million units.
Besides, Bharat Sanchar Nigam Limited (BSNL) in association with HCL, Intel and Microsoft has launched BharatPC to boost Internet penetration under the National Broadband Penetration Project (NBPP).
As India is all set to take a final call on the spectrum allocations in January 2010 for the much-awaited 3G and WiMax licenses, Intel hopes for more demand of its products and solutions in the computing and Internet space.
Recently, Intel has come out with new devices and solutions that provide mobile and wireless broadband Internet access. For instance its Nettops with Atom processor is a low-cost computing device with a good computing performance, available at the market price of around Rs.10,000 in India.
The company considers Nettops as a key affordable computing device along with boosting Internet penetration in the rural parts of the country. Since its launch, Intel already has sold over half a million units.
Besides, Bharat Sanchar Nigam Limited (BSNL) in association with HCL, Intel and Microsoft has launched BharatPC to boost Internet penetration under the National Broadband Penetration Project (NBPP).
DOT CHALKS OUT PRIORITY LIST FOR 2G SPECTRUM
Ahead of the upcoming 3G spectrum auctions, the department of telecommunications (DoT) is working on a policy on drawing up a priority list to allocate 2G spectrum. The matter has assumed significance because the DoT needs to clarify who would first get 2G spectrum —the successful 3G bidders or the companies whose applications for licences to operate 2G services are still pending before it. Around 343 applications by 16 companies are still pending before the DoT.
The Financial Express
Ahead of the upcoming 3G spectrum auctions, the department of telecommunications (DoT) is working on a policy on drawing up a priority list to allocate 2G spectrum. The matter has assumed significance because the DoT needs to clarify who would first get 2G spectrum —the successful 3G bidders or the companies whose applications for licences to operate 2G services are still pending before it. Around 343 applications by 16 companies are still pending before the DoT.
The Financial Express
3G AUCTION AS SCHEDULED
Union Minister for Communications and Information Technology A. Raja on Friday said the auction of spectrum for 3G mobile service would be held as scheduled. “There is no change in the schedule,” he told journalists here.
The Department of Telecommunications (DoT) has set January 14, 2010 as the date of auction.
Referring to the number of slots to be auctioned per circle, Mr. Raja said: “It would be decided by the empowered-Group of Ministers (eGoM).” Initially, it was planned to auction four slots a circle, apart from a State-run telecom firm, but the DoT now wanted only three players due to shortage of spectrum.
Reserve Price
The DoT had fixed the reserve price of spectrum at Rs.3,500 crore for the pan-Indian 3G spectrum and Rs.1,750 crore for wireless broadband (WiMAX). However, with a cut in the number of slots, revenue generation from the auction process could fall short by around Rs.5,000 crore from the earlier estimated Rs.25,000-Rs.30,000 crore.
The Hindu
Union Minister for Communications and Information Technology A. Raja on Friday said the auction of spectrum for 3G mobile service would be held as scheduled. “There is no change in the schedule,” he told journalists here.
The Department of Telecommunications (DoT) has set January 14, 2010 as the date of auction.
Referring to the number of slots to be auctioned per circle, Mr. Raja said: “It would be decided by the empowered-Group of Ministers (eGoM).” Initially, it was planned to auction four slots a circle, apart from a State-run telecom firm, but the DoT now wanted only three players due to shortage of spectrum.
Reserve Price
The DoT had fixed the reserve price of spectrum at Rs.3,500 crore for the pan-Indian 3G spectrum and Rs.1,750 crore for wireless broadband (WiMAX). However, with a cut in the number of slots, revenue generation from the auction process could fall short by around Rs.5,000 crore from the earlier estimated Rs.25,000-Rs.30,000 crore.
The Hindu
AVERAGE URBAN TELEDENSITY CROSSES 100% MARK
Close on the heels of celebrating 500 million mobile customer mark, the country’s cellular phone market has now crossed another major landmark: The average urban teledensity in India has now crossed the 100 per cent mark as per latest figures released by the department of telecom (DoT). This implies the country’s towns, cities and metros, all of which are classified as ‘urban’ by the government, now have as many mobile connections as that of their population. In March 2008, the country’s urban teledensity was about 60 per cent, which jumped to over 85 per cent in March 2009 and it has now crossed the 100 per cent mark.
The Economic Times
Close on the heels of celebrating 500 million mobile customer mark, the country’s cellular phone market has now crossed another major landmark: The average urban teledensity in India has now crossed the 100 per cent mark as per latest figures released by the department of telecom (DoT). This implies the country’s towns, cities and metros, all of which are classified as ‘urban’ by the government, now have as many mobile connections as that of their population. In March 2008, the country’s urban teledensity was about 60 per cent, which jumped to over 85 per cent in March 2009 and it has now crossed the 100 per cent mark.
The Economic Times
Friday, December 04, 2009
FDI FLOW SPURTS BY 56% IN OCT
The flow of foreign direct investments into the country saw a major increase in October, registering a 56 per cent jump to touch $2.3 billion in October against the same period last year, an official said.
In October 2008, the FDI stood at $1.5 billion. However, the consolidated inflow during the April-October period of this fiscal saw a decline of $1.1 billion to $17.6 billion from $18.7 billion in the year-ago period.
The Financial Express
The flow of foreign direct investments into the country saw a major increase in October, registering a 56 per cent jump to touch $2.3 billion in October against the same period last year, an official said.
In October 2008, the FDI stood at $1.5 billion. However, the consolidated inflow during the April-October period of this fiscal saw a decline of $1.1 billion to $17.6 billion from $18.7 billion in the year-ago period.
The Financial Express
Tuesday, December 01, 2009
SECOND QUARTER GDP AT 7.9%
India’s economy grew at its fastest rate in 18 months in the quarter through September, smashing expectations and adding pressure to bring forward an interest rate rise and cut stimulus spending as inflation mounts.
Asia’s third-largest economy grew 7.9% in the past quarter from a year earlier, far above forecasts of 6.3%, but growth was expected to slow this quarter when the impact of a weak monsoon would be seen on crops.
The expansion was driven by government spending, manufacturing, services, and a better-than-forecast farming output, sending bond yields and swap rates higher as investors bet on a rise in rates and the finance minister said growth could hit 7% in the fiscal year ending in March 2010.
“This data could be a green light for the Reserve Bank of India to hike rates, and there are greater chances of this by end of the calendar year,” said Robert Prior-Wandesforde, senior Asia economist at HSBC in Singapore.
“The exit from the fiscal stimulus by the government may also be earlier post the GDP data.”
Prior to the data, most economists had predicted a rate rise sometime between January and April 2010.
In the June quarter, India’s economy grew 6.1% from a year earlier, and Prior-Wandesforde said that by his calculation the last quarter’s growth was the sharpest on a quarter-by-quarter basis since quarterly data began in 1996.
Manufacturing output grew 9.2% in the quarter as consumers bought more cars and other goods.
Larger neighbour China, which along with India is helping to pull the global economy out of its worst recession in decades, clocked growth of 8.9% during the same quarter.
MINT
India’s economy grew at its fastest rate in 18 months in the quarter through September, smashing expectations and adding pressure to bring forward an interest rate rise and cut stimulus spending as inflation mounts.
Asia’s third-largest economy grew 7.9% in the past quarter from a year earlier, far above forecasts of 6.3%, but growth was expected to slow this quarter when the impact of a weak monsoon would be seen on crops.
The expansion was driven by government spending, manufacturing, services, and a better-than-forecast farming output, sending bond yields and swap rates higher as investors bet on a rise in rates and the finance minister said growth could hit 7% in the fiscal year ending in March 2010.
“This data could be a green light for the Reserve Bank of India to hike rates, and there are greater chances of this by end of the calendar year,” said Robert Prior-Wandesforde, senior Asia economist at HSBC in Singapore.
“The exit from the fiscal stimulus by the government may also be earlier post the GDP data.”
Prior to the data, most economists had predicted a rate rise sometime between January and April 2010.
In the June quarter, India’s economy grew 6.1% from a year earlier, and Prior-Wandesforde said that by his calculation the last quarter’s growth was the sharpest on a quarter-by-quarter basis since quarterly data began in 1996.
Manufacturing output grew 9.2% in the quarter as consumers bought more cars and other goods.
Larger neighbour China, which along with India is helping to pull the global economy out of its worst recession in decades, clocked growth of 8.9% during the same quarter.
MINT
Thursday, November 26, 2009
RELIANCE INDUSTRIES POTENTIALLY ACQUIRES LYONDELLBASELL AMIDST RECESSION LED PURCHASE PRICE
The potential purchase of a controlling stake in LyondellBasell Industries AF, the world’s third largest petrochemical company, by Reliance Industries Ltd, India’s largest company by market capitalization, marks a return to multi-billion dollar overseas acquisitions by cash-rich Indian companies tempted by depreciated asset prices of companies affected by the biggest worldwide recession since the Great Depression. If successful, it could make Reliance Industries India’s first company to have a market value greater than $100 billion.
Indian companies with a war chest of cash reserves include the Oil and Natural Gas Corporation Limited (ONGC), India’s state owned petroleum company, with reserves of about $5 billion; Reliance Industries with reserves of $4.2 billion and Tata Sons, the holding company for all Tata Group’s investments, with about $640 million .
Indian companies are on the hunt for bargain basement prices overseas. This is a good time for them to buy market share and customers in the West at fraction of what they would have paid a couple of years ago.
After a lull of about 18 months, Indian companies have aggressively started looking at foreign assets again. During that time, western economies dipped to low single-digit GDP growth and unemployment surged into double digits amidst the worst banking industry led financial crisis in decades. By contrast, the Indian economy continues to grow at nearly 7% annually amidst growing consumer demand and a robust banking system.
The fear that India’s economy might follow the West into a recession is over. That’s giving Indian companies the confidence to go hunting again in overseas markets where the recession gives them one-in-a-lifetime opportunities to acquire depressed assets.
LyondellBasell, based in Rotterdam in the Netherlands, sought bankruptcy protection early this year after demand for its plastic products plunged last year.
The acquisition of LyondellBasell by Reliance is expected to be India’s biggest cross-border deal this year, on par with the acquisition of the U.K.’s top steel maker Corus Group Plc for $12 billion by India’s Tata Steel Ltd in January 2007. Indian M&A activities peaked in 2007 with more than $51 billion worth of transactions.
India has been host to 234 M&A deals amounting to only about $8 billion during the first 10 months of this year, less than a third of that in the corresponding period in 2008.
The $100 Billion Club
The Reliance – LyondellBasell combine will accelerate Reliance into the elite league of companies worldwide that have a market capitalisation of more than $100 billion (Rs 460,000 crore). The combined entity will have potential consolidated revenue of more than $85 billion, transcontinental presence across more than 60 facilities and 60,000 people. Reliance Industries currently has a market value of about $75 billion.
The Indian companies are buying international scale and growth not only in developing economies, but to compete in developed economies as well. Reliance’s acquisition of LyondellBasell will mark India’s entry in the international petrochemical industry, just as previous years saw India Inc. buy into international steel, auto and IT industries.
Indian oil companies are stepping up overseas purchases as shrinking profit margins have prompted international refiners to idle and sell plants. Crude oil currently trades at about half its record $147.27 a barrel in July 2008.
Essar Oil, India’s second-largest private refinery is currently in talks to buy three refineries in the U.K. and Germany from Royal Dutch Shell Plc. Oil & Natural Gas Corp., India’s biggest energy explorer, completed a 1.4 billion-pound ($2.3 billion) acquisition of Imperial Energy Plc in March.
The potential purchase of a controlling stake in LyondellBasell Industries AF, the world’s third largest petrochemical company, by Reliance Industries Ltd, India’s largest company by market capitalization, marks a return to multi-billion dollar overseas acquisitions by cash-rich Indian companies tempted by depreciated asset prices of companies affected by the biggest worldwide recession since the Great Depression. If successful, it could make Reliance Industries India’s first company to have a market value greater than $100 billion.
Indian companies with a war chest of cash reserves include the Oil and Natural Gas Corporation Limited (ONGC), India’s state owned petroleum company, with reserves of about $5 billion; Reliance Industries with reserves of $4.2 billion and Tata Sons, the holding company for all Tata Group’s investments, with about $640 million .
Indian companies are on the hunt for bargain basement prices overseas. This is a good time for them to buy market share and customers in the West at fraction of what they would have paid a couple of years ago.
After a lull of about 18 months, Indian companies have aggressively started looking at foreign assets again. During that time, western economies dipped to low single-digit GDP growth and unemployment surged into double digits amidst the worst banking industry led financial crisis in decades. By contrast, the Indian economy continues to grow at nearly 7% annually amidst growing consumer demand and a robust banking system.
The fear that India’s economy might follow the West into a recession is over. That’s giving Indian companies the confidence to go hunting again in overseas markets where the recession gives them one-in-a-lifetime opportunities to acquire depressed assets.
LyondellBasell, based in Rotterdam in the Netherlands, sought bankruptcy protection early this year after demand for its plastic products plunged last year.
The acquisition of LyondellBasell by Reliance is expected to be India’s biggest cross-border deal this year, on par with the acquisition of the U.K.’s top steel maker Corus Group Plc for $12 billion by India’s Tata Steel Ltd in January 2007. Indian M&A activities peaked in 2007 with more than $51 billion worth of transactions.
India has been host to 234 M&A deals amounting to only about $8 billion during the first 10 months of this year, less than a third of that in the corresponding period in 2008.
The $100 Billion Club
The Reliance – LyondellBasell combine will accelerate Reliance into the elite league of companies worldwide that have a market capitalisation of more than $100 billion (Rs 460,000 crore). The combined entity will have potential consolidated revenue of more than $85 billion, transcontinental presence across more than 60 facilities and 60,000 people. Reliance Industries currently has a market value of about $75 billion.
The Indian companies are buying international scale and growth not only in developing economies, but to compete in developed economies as well. Reliance’s acquisition of LyondellBasell will mark India’s entry in the international petrochemical industry, just as previous years saw India Inc. buy into international steel, auto and IT industries.
Indian oil companies are stepping up overseas purchases as shrinking profit margins have prompted international refiners to idle and sell plants. Crude oil currently trades at about half its record $147.27 a barrel in July 2008.
Essar Oil, India’s second-largest private refinery is currently in talks to buy three refineries in the U.K. and Germany from Royal Dutch Shell Plc. Oil & Natural Gas Corp., India’s biggest energy explorer, completed a 1.4 billion-pound ($2.3 billion) acquisition of Imperial Energy Plc in March.
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