Telecom M&As are waiting to happen, but Archaic Regulations are Preventing them from happening. The new Telecom Policy 2011 should provide some reprieve and foster healthy, and less severe competition in the sector
Sector analysts and industry experts believe that consolidation will happen in telecom once the cap on M&A, as defined by the NTP 1999, is removed. DoT rules stipulate that an operator can’t own 10% or more in another operator in the same circle. “Current M&A rules have many restrictions, and impose heavy costs on M&A; such as rules, which shorten the license terms of spectrum post-merger. These rules must be relaxed to allow the market to return to healthy & effective competition,” says the spokesperson from Vodafone Essar Ltd. Further, policies like unified license for all services, allowing voice calls on 4G, et al are raising fear of more competition. Hurdles in India have led to players looking overseas for greener inorganic pastures. Bharti acquired Zain’s African mobile services for $ 10.7 billion, 100% stake in Telecom Seychelles Ltd. for $62 million and a controlling stake in Warid Telecom.
Another barrier for M&As is the huge investments in 3G licenses, infrastructure, network rollout, et al, due to which telcos are concerned about return on capital investment. Most telcos including leading operators are under huge debts and price wars do not give much hope of reprieve. With uncertainties and irregularities in regulation, operators are uncertain about more investments and so are banks. Even foreign-backed new entrants like Uninor, Sistema & S-Tel have found it hard to be in the black. The picture does not look so good due to the hyper competition and rock-bottom tariffs. “There are many players looking to exit or sell off. This is also obvious from the fact that many have not even rolled out their services yet” highlights Hemant Joshi, Partner Deloittee Haskins & Sells.
Data revenue uplift is expected to help players, and Credit Suisse projects it to be 50% of incremental revenues in the next three years. However, the competitive advantage would still be with players like Bharti, Vodafone and Idea, who have higher net worth subscribers. That is why Credit Suisse has projected an EV/EBITDA ratio of 6.2 for Bharti and 5.1 for Idea for Q1, FY 2012-13, while it projects only 4.2 for RCom. Without the multiple advantages of these giants, many of the smaller players seem to be only sitting on spectrum and assets or maintaining a comfortable growth rate waiting for an exit. It’s time to let the deals flow.
Another barrier for M&As is the huge investments in 3G licenses, infrastructure, network rollout, et al, due to which telcos are concerned about return on capital investment. Most telcos including leading operators are under huge debts and price wars do not give much hope of reprieve. With uncertainties and irregularities in regulation, operators are uncertain about more investments and so are banks. Even foreign-backed new entrants like Uninor, Sistema & S-Tel have found it hard to be in the black. The picture does not look so good due to the hyper competition and rock-bottom tariffs. “There are many players looking to exit or sell off. This is also obvious from the fact that many have not even rolled out their services yet” highlights Hemant Joshi, Partner Deloittee Haskins & Sells.
Data revenue uplift is expected to help players, and Credit Suisse projects it to be 50% of incremental revenues in the next three years. However, the competitive advantage would still be with players like Bharti, Vodafone and Idea, who have higher net worth subscribers. That is why Credit Suisse has projected an EV/EBITDA ratio of 6.2 for Bharti and 5.1 for Idea for Q1, FY 2012-13, while it projects only 4.2 for RCom. Without the multiple advantages of these giants, many of the smaller players seem to be only sitting on spectrum and assets or maintaining a comfortable growth rate waiting for an exit. It’s time to let the deals flow.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
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IIPM: Indian Institute of Planning and Management
bai’s Maharashtra Navnirman Sena (MNS), the rebel Shiv Sena group, swooped down on impoverished migrants from Bihar & Uttar Pradesh.They came under attack everywhere: on the streets, and in local trains and buses and their property set wantonly ablaze. The mob frenzy was triggered by MNS chief Raj Thackeray’s statement about the migrants not deserving the state’s hospitality.
firms to appreciate the effectiveness of search advertising or the reach of the online medium. In an exclusive interview, Shailesh Rao, MD, Google India, tells B&E’s Debdeep Singh how the company is evolving new strategies, services and products to woo Indian customers. But Rao accepts that computing infrastructure has a long way to go in India.
the West was busy preaching lessons of liberal democracy to Russians. America’s ‘triumph over the evil empire’ was celebrated as the greatest moment of 20th century liberalism. Sixteen years down the line, where does Russia stand in global democratic industry? Not impressive, if one goes by standards of Western democracies. Well before the December 2 Parliamentary elections, liberal press had warned that President Vladamir Putin, who is leaving Kremlin in March, would use the results to tighten his grip over Kremlin. Despite widespread international campaign against Putin, his United Russia party emerged victorious with 315 seats, 14 seats more than the 2/3rd majority needed to pass constitutional amendments. The only opposition, United Russia would face in the Houses would be Communists. Putin had defeated the liberal opposition parties, Yabloko & the Union of Right, well before the elections, by increasing, the minimum requirement of percentage of total votes, for having a seat in Duma, to 7%.
IT majors like Sun Microsystems and IBM are organizing press conferences and creating their spaces within SL. CISCO and DELL (www.dell.com/secondlife) are already selling products in-world. TELUS Mobility (www.telus.com) opened a retail outlet offering replica mobile phones with SL specific features. Leo Burnett Worldwide has started a community for their globally dispersed staff to explore the possibility of opening up shop within SL. And last summer, American Apparel opened a branch with a lot of fanfare selling digital renderings of their actual collections. And since money is changing hands, banking as a business is flourishing in SL. Based on current estimates there are as many as fifteen odd banks in SL today out of which ten operate in-world only. This is raising questions of how such non-regulated entities should be managed.
I will choose funds like Birla Sun Life Frontline Equity, Franklin India Prima Plus, HDFC Top 200, Kotak 30 and Principal Global Opportunities as its major constituents. They all have garnered fabulous returns in the past and surely hold a great potential as far as future growth is concerned. Moreover, instead of ranking them on a scale of one to five, I would treat them all equal. All of them have been really resistant to market volatility and appear equally good to me with respect to future performance too. In fact other mutual fund schemes are not far behind. They all seem to have garnered decent returns in the past. 
Growth Fund, DSP ML Tiger Fund, Sundaram Select Midcap and Birla Frontline Equity Fund are the top five schemes, which really have the potential to garner good returns. The Reliance Funds (designated schemes under Reliance SIP Insure) even provides free life insurance cover at no extra cost. These are long term schemes which will help in long term wealth creation. Minimum investment to the tune of Rs.2,000 per month is available. With infrastructure sector all set to witness major growth, investors have a good option in DSP ML Tiger. Birla Frontline Equity too is aimed at long term growth. 
aggressive mutual fund investments over the last couple of years, never bothered with the above precautionary statement, blurted out in fast-forward mode at the beginning and end of every bucolic communication emanating from various asset management companies (AMCs). He is not alone. For most retail investors going alone in the surging equity markets, friends, associates and tele-channels, proved to be the first and last advice centres. And as the markets were running faster than a doped athlete (with mutual fund houses offering returns as high as 100%), investors threw caution to the winds. But what goes up, comes down. Struck by incessant market volatility presently, mutual funds are no more the safe haven that they once were. Returns have fallen worse than a pack of cards over the last few months, and people like Anand are learning their lessons the hard way.
behind that ‘S’ logo you see on the grill of that omnipresent Swift. This is the same piece de resistance adorning the bulging, yet classy tank of that elusive Hayabusa GSX R1300, one of the most powerful street bikes ever! The ‘S’ sign is a symbol of raw power, virility, waiting to be unleashed at a throttle’s notice and is indeed coveted. With such a potent definition, this explosive logo has a brand image which is hard to match when it comes to the ‘must have list for men’; and evidently, Suzuki is proud of its testosterone inducing moniker.
is not adhered to. Ratna corroborates, “We believe in openness and trust which makes us gel and in taking care of employees; not only those who have been with us for long standing years, but even the very new ones.” Even when I analysed the communication channel present in the organisation, I found Emami to be an open and informal organisation. From the HR side, they have a quarterly news letter called ‘Endeavour’, which acts as a communication medium for and between all departments. They also an HR Intranet called the Encarna (Encarna in Spanish means Incarnation; so it is an electronic incarnation of HR). It was a pleasant surprise when I came to know that all these names (Endeavour, Encarna) start with the letter ‘E’ as Emami begins with the letter ‘E’. And with respect to training and development, Emami has both internal and external programs. Though they invite eminent faculty members and senior personnel to impart training, employees are also sent to reputed institutes to undergo short and long term MDPs.
as well as aggressive PE groups, there is always that theoretical chance that something more desirable for Yahoo! would emerge. It may be more an issue of Yahoo!’s management really believing that there is great upside potential if the company remains independent and not wanting to transfer that potential to Microsoft regardless of price. “If it were ever put to a shareholder vote, however, I imagine shareholders would look at the situation much differently and line up in overwhelming numbers in support of a sale to Microsoft”, feels Richard.
and ‘what’s on surface’ the time has come to get a hang of ‘what lies ahead’. Amidst the rollicking PE investments that are sweeping various sectors of the Indian economy, one truth stands out for sure – the ‘sunrises’ of today might be the ‘twilights’ of tomorrow! And as we say this, we dare to add the natural truth that most definitely, some new sector(s) will lead the lap in the race to woo investors. Here’s a primer…
Intelenet deal to 4Ps B&M: “We wanted to retain our third party BPO focus and wanted to grow into a global brand. From the outset, we were very clear about what we were looking for in a potential partner. This deal with Blackstone will enable us to continue to grow as a third party BPO service provider and will also help our multi-pronged growth strategy. The association with Blackstone is a mutually beneficial one where Blackstone leverages Intelenet’s delivery capabilities for all its portfolio companies. Intelenet aims to optimally leverage Blackstone’s financial backing to improve and expand its operations. These acquisitions will enable Intelenet to expand its delivery footprint from solely offshore centres, to an on-shore and near-shore capability based out of the US and Latin America. Blackstone is lending its global brand and ready access to its investee portfolio.”
for more vehicles. We are developing something in our labs and will be launching another car in the Spark segment some time soon.” Clearly this time, GM is leaving no room for mistakes. It is now very clear that GM has chosen the Chevrolet brand as the platform for its future growth. Also all new products introduced will be un der the brand name Chevrolet. Explains Slym, “We added Spark, U-VA, Optra Magnum and Captiva to the Chevrolet brand as it is important to clarify to the customers what the GM brand stands for in India.” As branding holds such relevance, the company is “now banking on brand enhancement and building consumer awareness.” In order to reach these ends effectively, GM is now ready to bring in its premium brands into Indian terrain. “I’ll be definitely going beyond the Chevrolet brand. Presently Chevrolet looks after 90% of the market. Now we also have to take care of the remaining 10% of the market,” says Slym.
familiar to those not well versed with western history. But the philosophy this founding father of America and top inventor gave to this world holds fort till date, with his statement, “Nothing is certain, but death and taxes!” As the financial year draws to an end, taxation is one buzzword which is bound to keep us busy for the next two months. Tax planning has already gained momentum; more so as March is synonymous with taxation. Salaried tax payers, like Sasawata Mukherjee (Geologist, Gujarat State Petroleum Corporation Ltd), comment, “It is only during the last quarter of the year that I gear up for tax planning and in a hurry I have to depend a lot on the agents advice.” It is no wonder that financial products are marketed more during this period. Be it mutual funds (the primary one being the Equity Linked Saving Schemes – ELSS) or insurance policies (Unit Linked Insurance Plans – ULIPs and endowment plans are the major pitch), both eye on capturing a significant share of an individual’s tax-planning kitty, mainly because investments up to Rs.100,000 are eligible for deduction from one’s gross total income under Section 80 C of the Income Tax Act.