Industry analysts feel the cut by the largest mobile service provider will put further pressure on its peers. The tariff war may now spill onto the SMS space as well as other areas like data plans, postpaid schemes, corporate plans and international roaming.
On Friday, Airtel said when a customer, who is on national roaming, makes an STD call to another Airtel number, the charge will be just 60 paise per minute, compared to Rs 1.50 earlier - a cut of 60%. Likewise, while roaming, all incoming calls will now be charged at 60 paise, down 40% from Re 1. The same rate will apply to calls to local Airtel numbers while roaming, but customers will be charged at 80 paise for each call, local as well as STD, to any other network. “Recent research has shown that customers need benefits while travelling and are not satisfied with just local calling benefits”, Bharti Airtel president (Mobile Services) Atul Bindal said in a statement.
In the last few months, most telecom providers, led by Tata DoCoMo and Reliance Communications, have cut roaming rates.
For example, Tata DoCoMo charges 2 paise per second on national roaming, while for RCom it is a flat 50 paise per minute. However, Vodafone Essar, another major player in the sector, is still to cut roaming rates.
About two months after Tata DoCoMo's 1 paise/second plan was launched and the telecom firm started clocking record number of new customers each month, most of its peers responded by offering attractive plans to retain their customers and also to attract new ones. But at the same time, sector analysts have been turning negative on the prospects of the listed telecom firms and investors have been selling these stocks.
A research report by foreign broking house Macquarie noted that the recent tariff action in the telecom sector was mainly concentrated in the prepaid voice space, but it expects further negative risks to telecom companies from tariff cuts in SMS, data plans, postpaid and corporate plans and international roaming.
Saturday, November 21, 2009
Friday, November 20, 2009
Sensex falls 22 points on weak global cues
Weak global cues and negative FII activity weighed on market sentiment.
The BSE barometer was quoted lower at 16,763.34 at 1015 hours, down 22.31 points or 0.13 per cent from its last close.
The broader 50-share Nifty of the National Stock Exchange also dropped by 10.50 points or 0.21 per cent to 4,978.50 at 1015 hours from its previous close.
Key stocks such as DLF were down 1.86 per cent, ICICI Bank 1.54 per cent, Reliance Infra 1.52 per cent and SBI 1.16 per cent in early trade.
The BSE barometer was quoted lower at 16,763.34 at 1015 hours, down 22.31 points or 0.13 per cent from its last close.
The broader 50-share Nifty of the National Stock Exchange also dropped by 10.50 points or 0.21 per cent to 4,978.50 at 1015 hours from its previous close.
Key stocks such as DLF were down 1.86 per cent, ICICI Bank 1.54 per cent, Reliance Infra 1.52 per cent and SBI 1.16 per cent in early trade.
Wednesday, November 18, 2009
Yellow metal sizzles to Rs 17k
Over the last one year the yellow metal has risen a whopping 42% in the Mumbai market, rising from about Rs 12,000 level a year ago to its Tuesday close at Rs 17,015. One of the main reasons for the gold's rally is the weakness of the US dollar against other currencies. Interestingly, the BSE sensex is also hovering around the 17K mark now. "There are four main factors that drive gold prices globally and at present three are leading the rally," said Jayant Manglik, president, Religare Commodities. "We expect the current rally to continue for some time. But for the strength of the rupee, by now it could have crossed the Rs 18,000 mark also," Manglik added. For one, globally gold is denominated and traded in US dollar. So any weakness of the dollar against other major currencies like Euro, British Pound and Japanese Yen, makes gold cheaper for people holding those other currencies. Secondly, gold is considered a good hedge against inflation. There are lot of people who believe the current easy money policies of most central banks would lead to inflationary situations. So these people are also betting on gold. The third factor is the low rate of interest in major economies. Since a low interest rate lead to low return if money is kept in the banks, a number of investors, looking for higher returns, prefer to invest in gold. The last major factor that drive gold prices is higher security threat, like war. But currently this factor is not influencing gold prices while the other three are having a combined effect in driving gold prices to newer peaks, market players said.
Tuesday, November 17, 2009
Essar buys Warid's operation
The combined enterprise value of Warid Telecom Uganda and Warid Telecom Congo is estimated to be $318 million.
According to sources close to the development, the Essar group has acquired 51% equity for about $160 million. Essar investment in Warid Telecom in Africa is part of its strategic plans to grow its businesses in Africa.
The agreements to this effect were on Sunday signed by Sheikh Nahyan Mabarak Al Nahyan on behalf of the Dhabi group and Prashant Ruia, group chief executive, Essar group, in Abu Dhabi.
The Essar Group has committed growth capital to both telecom operations to facilitate network expansion and marketing, a joint statement from Dhabi group and Essar group said. "Upon completion, the Essar group will acquire a majority stake in both the assets. The partnership is also expected to bring operational efficiencies to the African operations", it said.
Commenting on the development Sheikh Nahayan Mabarak Al Nahayan, chairman of Dhabi group, said, "We are pleased to join hands with a group that both complements and extends our synergies to expand further into Africa."
"Warid has expanded its greenfield operations to become credible competitors and challengers in the market where it operates; the time is now right for the next stage of its growth and evolution", Nahayan added.
Ruia said, "This transaction with the Dhabi group augments our successful launch of telecom services in Kenya under the brand 'yu' which was a stepping stone for Essar to expand its telecom footprint to the African continent." This deal is a reflection of Essar's plans to increase its presence in the Middle East and Africa regions as it explores business opportunities.
According to sources close to the development, the Essar group has acquired 51% equity for about $160 million. Essar investment in Warid Telecom in Africa is part of its strategic plans to grow its businesses in Africa.
The agreements to this effect were on Sunday signed by Sheikh Nahyan Mabarak Al Nahyan on behalf of the Dhabi group and Prashant Ruia, group chief executive, Essar group, in Abu Dhabi.
The Essar Group has committed growth capital to both telecom operations to facilitate network expansion and marketing, a joint statement from Dhabi group and Essar group said. "Upon completion, the Essar group will acquire a majority stake in both the assets. The partnership is also expected to bring operational efficiencies to the African operations", it said.
Commenting on the development Sheikh Nahayan Mabarak Al Nahayan, chairman of Dhabi group, said, "We are pleased to join hands with a group that both complements and extends our synergies to expand further into Africa."
"Warid has expanded its greenfield operations to become credible competitors and challengers in the market where it operates; the time is now right for the next stage of its growth and evolution", Nahayan added.
Ruia said, "This transaction with the Dhabi group augments our successful launch of telecom services in Kenya under the brand 'yu' which was a stepping stone for Essar to expand its telecom footprint to the African continent." This deal is a reflection of Essar's plans to increase its presence in the Middle East and Africa regions as it explores business opportunities.
Monday, November 16, 2009
Satyam scam: SFIO to begin prosecution this month
The government on Monday said the Serious Fraud Investigation Office (SFIO) will begin prosecution into the Satyam scam this month.
He said the agency is "dutifully and diligently" pursuing what it is supposed to do in the Satyam case.
The SFIO, an arm of the corporate affairs ministry, had investigated the multi-crore rupee Satyam accounting fraud and submitted its reports to the government detailing violations of company law by founder chairman B Ramalinga Raju and others.
The investigating agency will initiate proceedings on about 30 charges, mostly under the Companies Act of 1956, while the Central Bureau of Investigation (CBI) will be acting on five or six charges involving criminal offences under the penal code, sources said.
The corporate affairs ministry had asked the SFIO to initiate prosecution in the Satyam case after obtaining opinion of the solicitor general, sources said.
"During this month, the SFIO will begin the prosecution on those or those areas of company laws that the SFIO is expected to and have been authorised to proceed with," corporate affairs minister Salman Khurshid told a press conference here.
He said the agency is "dutifully and diligently" pursuing what it is supposed to do in the Satyam case.
The SFIO, an arm of the corporate affairs ministry, had investigated the multi-crore rupee Satyam accounting fraud and submitted its reports to the government detailing violations of company law by founder chairman B Ramalinga Raju and others.
The investigating agency will initiate proceedings on about 30 charges, mostly under the Companies Act of 1956, while the Central Bureau of Investigation (CBI) will be acting on five or six charges involving criminal offences under the penal code, sources said.
The corporate affairs ministry had asked the SFIO to initiate prosecution in the Satyam case after obtaining opinion of the solicitor general, sources said.
Saturday, November 14, 2009
Bid to hike CNG price may raise transport cos
Public transport running on CNG (compressed natural gas) in cities such as Delhi and Mumbai as well as power is set to get costlier if
the government approves an oil ministry proposal to raise the price of gas under government control by as much as 33%.
Since gas under government control fuels most gas-fired power generation and CNG services, their costs will rise proportionately. Present norms allow power producers to pass on the fuel cost to consumers. The hike in city transport, however, could be moderated by the service providers such as IGL in Delhi and MGL in Mumbai who could absorb part of the increase.
Official sources said the proposal, being prepared for consideration of the cabinet, envisages raising the price of controlled gas from Rs 3,200 per thousand cubic metres ($1.8 per unit) to Rs 4,250 per thousand cubic metres ($2.4 per mBtu) in the first round. Subsequently, it is to be raised to Rs 7,500 per thousand cubic metres ($4.2 per unit) by 2013 in stages.
Government controls the price of gas from fields given to state-run explorers without bidding. Gas from joint venture fields and the quantity bought and marketed by GAIL is market-driven and costs between $4.3 and $5.65 per unit. Next is imported LNG and finally gas from Andhra offshore field of Reliance Industries Ltd.
A ministerial panel had set $4.2 per unit as the price for RIL gas and the Planning Commission wants this to be the benchmark for pricing gas from all domestic sources. The increase in the price of controlled gas is also in line with a 2005 Tariffs Commission recommendation. Prices were last revised in 2005.
State explorers ONGC and Oil India will be the main beneficiaries. ONGC alone could mop up an additional Rs 2,000 crore per year. Producer price for ONGC is proposed at Rs 3,870 per thousand cubic metres from Rs 3,200. The consumer price would be 10% higher. The government too will garner Rs 750 crore more by way of taxes and royalty in the current year. This would rise to Rs 4,500 crore in 2013 when prices are brought at par with RIL's price.
Sources said consumer price for power and fertilizer units outside north-east would be fixed at 10% above the producer price, while for the plants in that region it would be 60% of the price. Consumer price for transport and small consumers outside north-east may be fixed at 20% above the price for power and fertilizer sectors.
Since gas under government control fuels most gas-fired power generation and CNG services, their costs will rise proportionately. Present norms allow power producers to pass on the fuel cost to consumers. The hike in city transport, however, could be moderated by the service providers such as IGL in Delhi and MGL in Mumbai who could absorb part of the increase.
Official sources said the proposal, being prepared for consideration of the cabinet, envisages raising the price of controlled gas from Rs 3,200 per thousand cubic metres ($1.8 per unit) to Rs 4,250 per thousand cubic metres ($2.4 per mBtu) in the first round. Subsequently, it is to be raised to Rs 7,500 per thousand cubic metres ($4.2 per unit) by 2013 in stages.
Government controls the price of gas from fields given to state-run explorers without bidding. Gas from joint venture fields and the quantity bought and marketed by GAIL is market-driven and costs between $4.3 and $5.65 per unit. Next is imported LNG and finally gas from Andhra offshore field of Reliance Industries Ltd.
A ministerial panel had set $4.2 per unit as the price for RIL gas and the Planning Commission wants this to be the benchmark for pricing gas from all domestic sources. The increase in the price of controlled gas is also in line with a 2005 Tariffs Commission recommendation. Prices were last revised in 2005.
State explorers ONGC and Oil India will be the main beneficiaries. ONGC alone could mop up an additional Rs 2,000 crore per year. Producer price for ONGC is proposed at Rs 3,870 per thousand cubic metres from Rs 3,200. The consumer price would be 10% higher. The government too will garner Rs 750 crore more by way of taxes and royalty in the current year. This would rise to Rs 4,500 crore in 2013 when prices are brought at par with RIL's price.
Sources said consumer price for power and fertilizer units outside north-east would be fixed at 10% above the producer price, while for the plants in that region it would be 60% of the price. Consumer price for transport and small consumers outside north-east may be fixed at 20% above the price for power and fertilizer sectors.
Friday, November 13, 2009
AI gets Rs 2000cr lifeline
The cash-strapped Maharaja will not go bankrupt, at least for now. The government on Thursday agreed to inject Rs. 2,000 crore in
this fiscal in a phase-wise manner of Rs 400 crore per month, subject to the airline cuts costs and increases revenue. The Pranab Mukherjee-headed Group of Ministers (GoM) met on Thursday and decided to do a monthly review of AI's performance before giving the next tranche of Rs 400 crore.
Without a bailout, the AI-IA combine — that has a monthly cash loss of Rs 400 crore — may not have survived beyond this year. The aviation ministry was eying Rs 5,000 crore and Rs 9,000 crore as equity infusion and aircraft purchase assistance over next three years. But the GoM has for now agreed to recommend to the Union Cabinet phase-wise infusion of fund till March 2010. Future funding will be decided on AI's progress card.
GoM's biggest worry was how deep-in-red AI would fund the Rs 55,000 crore order to acquire 111 new aircraft. The civil aviation ministry pointed out that AI-IA combine's aircraft order size has been halved in value terms.
"Out of the 111 new planes, 50 were wide body aircraft that accounted for over 65% of the total bill. Of these big ones, 27 Boeing 787 Dreamliners are nowhere on radar as they are yet to fly. Delivery of three Boeing 77 have been deferred to 2013 and three of them — already with AI — are being leased out. So, the aircraft order in terms of monetary value has been halved with these 33 twin aisle planes out of the radar," said sources.
Both Mukherjee and Chidamabaram are learnt to have been sceptical of AI's tall claims on revenue and cost fronts. "Employees must know this money has not come easily and focus on cost-cutting has to remain," they are learnt to have told Patel and the AI management. Patel told TOI: "A number of steps will be taken to cut costs by rationalising routes and leasing aircraft. Cutting salaries is not the only way to cut costs and the management must look at all other means very closely. There is no room for complacency as fund infusion is closely linked to achieving success on cost cutting and revenue generation."
The GoM is also learnt to have promised Arvind Jadhav, CMD, certain degree of freedom to take tough decisions without any interference. In a previous GoM, Chidambaram had questioned the accountability of bureaucrats who headed AI in the past and presided over its decline.
"By early January, a number of tough steps will be taken. This will be in terms of cutting loss-making routes and instilling discipline," said highly-placed sources. AI loses Rs 3,000 crore on 30-odd routes alone and most of them could be closed.
Without a bailout, the AI-IA combine — that has a monthly cash loss of Rs 400 crore — may not have survived beyond this year. The aviation ministry was eying Rs 5,000 crore and Rs 9,000 crore as equity infusion and aircraft purchase assistance over next three years. But the GoM has for now agreed to recommend to the Union Cabinet phase-wise infusion of fund till March 2010. Future funding will be decided on AI's progress card.
GoM's biggest worry was how deep-in-red AI would fund the Rs 55,000 crore order to acquire 111 new aircraft. The civil aviation ministry pointed out that AI-IA combine's aircraft order size has been halved in value terms.
"Out of the 111 new planes, 50 were wide body aircraft that accounted for over 65% of the total bill. Of these big ones, 27 Boeing 787 Dreamliners are nowhere on radar as they are yet to fly. Delivery of three Boeing 77 have been deferred to 2013 and three of them — already with AI — are being leased out. So, the aircraft order in terms of monetary value has been halved with these 33 twin aisle planes out of the radar," said sources.
Both Mukherjee and Chidamabaram are learnt to have been sceptical of AI's tall claims on revenue and cost fronts. "Employees must know this money has not come easily and focus on cost-cutting has to remain," they are learnt to have told Patel and the AI management. Patel told TOI: "A number of steps will be taken to cut costs by rationalising routes and leasing aircraft. Cutting salaries is not the only way to cut costs and the management must look at all other means very closely. There is no room for complacency as fund infusion is closely linked to achieving success on cost cutting and revenue generation."
The GoM is also learnt to have promised Arvind Jadhav, CMD, certain degree of freedom to take tough decisions without any interference. In a previous GoM, Chidambaram had questioned the accountability of bureaucrats who headed AI in the past and presided over its decline.
"By early January, a number of tough steps will be taken. This will be in terms of cutting loss-making routes and instilling discipline," said highly-placed sources. AI loses Rs 3,000 crore on 30-odd routes alone and most of them could be closed.
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