Convergence Plus
Legal & Patents
Wednesday, August 23, 2017
Reliance Communications and Aircel creditors may challenge NCLT order

Reliance Communications and Aircel creditors may challenge NCLT order Three creditors of Reliance CommunicationsBSE 4.31 % and Aircel could challenge the dismissal of their right to call for a lenders’ meeting by the National Company Law Tribunal (NCLT) in the National Company Law Appellate Tribunal (NCLAT), people familiar with the matter said. The key operational creditors — those who have dues because they provide a service, not because they lent money — are Ericsson, GTL InfrastructureBSE -0.73 %, and Bharti Infratel.

The NCLT last Monday admitted the RCom-Aircel merger proposal, dismissing the operational creditors’ contention that a lenders’ meeting be called to clarify how the outstandings will be settled before the merger petition is heard by the tribunal. The NCLT order suggested that any creditor accounting for less than 5 per cent of the companies’ total debt cannot oppose the merger even in the final hearing.

“The order is clear that any of our objections can be made at anytime during the process. But it also dismisses all claimants, saying none of us account for 5 per cent of debt exposure,” said a lawyer involved on behalf of the creditors of Reliance and Aircel.

Telecom tower company GTL Infra had earlier argued that it alone accounted for over 5 per cent of the exposure between current receivables and future commitments.

The argument has been dismissed by the NCLT and the company is likely to challenge it, said a person close to developments. Two lawyers said all three were readying applications to challenge the order in the Appellate court . Sources close to Bharti Infratel said they were “keeping options open” while another source close to Ericsson said it was reviewing the order.

The NCLT order said since none of these companies were owed more than 5 per cent of total outstandings of the companies in the last disclosed balance sheet, they would not be considered eligible to call for a lenders’ meeting. But “the order doesn’t say these companies can’t challenge again,” said another senior lawyer, not involved in the case.

The order also says that since the net worth of the Reliance Communications and Aircel combine is positive, their debt holders remain unaffected by a company rejig. “That isn’t true, we don’t know who will underwrite our liability,” said one of the companies objecting to the merger.

Late last week, RCom filed a caveat in the NCLAT that it should be heard if any one appeals against the NCLT order or asks for an ex-parte order. Ericsson, GTL Infra and Bharti Infratel didn’t respond to emailed queries.

The three companies, besides lenders such as China Development Bank (CDB), Standard Chartered Bank and HSBC had previously objected to the merger plea being admitted by the NCLT. The three lenders withdrew their objections, but retained their right to object at a later stage. (Source: Economic Times)

JioPhone: Operators may seek clarity on GST for bundled 4G handsets

JioPhone: Operators may seek clarity on GST for bundled 4G handsets India's top telecom operators are likely to seek clarification from the finance ministry on whether bundled 4G handsets offered effectively for free would attract the 12% goods and services tax applicable on mobile phones. "Ideally, the government must determine the GST implications of selling a handset at zero price and provide guidance to telcos about the pros and cons of structuring similar handset bundling deals," Rajan Mathews, director general of the Cellular Operators' Association of India, told ET.

Reliance IndustriesBSE 2.03 % unveiled a 4G feature phone last week that may further disrupt an already stressed telecom market. The JioPhone comes with free voice service for life and can be obtained for Rs 1,500, which is refundable after three years if the handset is returned. Apart from the tax treatment, telcos may seek clarity on whether such financing schemes will enable operators to skip payment of licence fees and spectrum usage charges.

Although telcos Bharti AirtelBSE 0.81 %, Vodafone India and Idea CellularBSE -1.09 % have not subsidised handsets so far, they could offer 'a scheme similar to what is being offered by Jio,' HSBC Global Research said in a note to clients. These telcos would have, at best, 4-5 months to come up with matching bundling offers. Mobile operators, Mathews said, would definitely "look for clarity" from the finance ministry as any "potential imposition of GST on a technically free phone would increase the cost of similarly structured handset bundling offers in future."

The COAI represents the country's biggest phone companies, including Bharti AirtelBSE 0.81 %, Vodafone India, Idea Cellular and Reliance Jio Infocomm. "Someone can choose to offer anything for free, be it a handset or even a plot of land. But that doesn't mean the asset being offered is devoid of an imputed value, in that, the government can always go back to the company, determine a fair value of the asset and levy a tax," said a top mobile industry executive.

A senior executive at a Big 4 consulting firm said whether the JioPhone, given to a consumer against a refundable deposit, amounts to a deemed sale is open to interpretation. "Even if it is not a sale, it can be construed to be a handset lease, in which case, it would attract GST. The government must clear the air on the issue… as other telcos could also be contemplating similarly structured handset bundling offers," the executive said. While refundable deposits don't attract GST, a potential grey area could be the tax treatment on the amount if the phone is not returned after three years. To be sure, an importer of the phone would pay basic customs duty and iGST.

Bharti Airtel, Vodafone India, Idea and Jio did not immediately respond to ET's queries on the matter. The other issue is whether such deposits are included while calculating the licence fee and spectrum usage charges that operators pay to the government. "It's for the government to determine what JioPhone offer at an effective sale price of zero means. The key issue is whether or not a one-time fully refundable deposit over a three-year span can be construed as revenue and included in a telco's adjusted gross revenue," said Mathews. (Source: Economic Times)

Reliance Jio investigating claims of alleged data breach

Reliance Jio investigating claims of alleged data breachIndia's newest telecoms entrant, Reliance Jio, said it was investigating claims of customer personal data being leaked onto a website called "Magicapk." "We have informed law enforcement agencies about the claims of the website and will follow through to ensure strict action is taken," a Jio spokeswoman said early on Monday, adding the data on the website appeared to be "unauthentic."
She added the company's subscriber data was safe and maintained with the highest security.Users have been registered on the Reliance Jio network using a 12-digit Unique Identification Authority of India (UIDAI) provided number, commonly known as the 'Adhaar' number.

The 'Adhaar' number, which works on similar lines as Social Security numbers in the U.S., is unique to every Indian citizen and stores biometric and demographic data of the user at a centralised database. If the claims of the data breach are true, it would be a large setback for the Indian telecom entrant's aggressive push led by Reliance Chairman Mukesh Ambani, which added 3.9 million subscribers to its network in April.

Many users complained on Twitter about personal information of millions of Jio users being publicly available on Magicapk.com, in what appears to be the first of its kind large-scale data breach of an Indian telecom operator. The website, when accessed by Reuters, flashed a message saying: "This Account has been suspended." (Source: Reuters)

Centre plans to reinforce IT law to curb cyber crimes, says Ravi Shankar Prasad

Centre plans to reinforce IT law to curb cyber crimes, says Ravi Shankar PrasadUnion minister Ravi Shankar Prasad today said the Centre was mulling "further reinforcement" in the IT law to prevent cyber crimes including, posting and sharing of videos containing sexually abusive material.
Union minister Ravi Shankar Prasad today said the Centre was mulling “further reinforcement” in the IT law to prevent cyber crimes including, posting and sharing of videos containing sexually abusive material. The law and IT minister said he has given directions to top officials in the IT ministry to work on the matter to check such cyber crimes. “I have directed the IT secretary in particular to revisit the IT law if there is a need of further reinforcement on this issue…

I have already given the instruction,” the minister told reporters here when asked about the increasing incidents of such crimes in the country’s cyber space. In response to a query on social networking giant Facebook’s controversy-ridden Free Basics programme in India, Prasad said he was opposed to programme in the present form. “My serious problem of Free Basics is you get free only when you enter through my gate… To get free service you have to enter through Facebook gate… That is plainly not acceptable,” he said.

“India is too big a country… India is too open a country and our digital ecosystem today is the top of the world. We have talked of digital access without hindrance. In Parliament, I have spoken when I was the communications minister. I said no and we don’t propose to permit Free Basics in the present form at all,” Prasad said. (Source: Financial Express)

PMO to take a call on imposing customs duty on mobile phones

PMO to take a call on imposing customs duty on mobile phonesThe Prime Minister’s Office will take a final call on imposition of import duties on mobile phones after weighing the pros and cons of taking such a decision, a government official has said. While, on one hand, levying of basic customs duties on mobile phones could ensure a competitive edge for domestic manufacturing as imports will remain more expensive in the goods & services tax (GST) regime, it could also spell trouble at the World Trade Organisation, where several countries are already accusing India of trying to breach the global Information Technology Agreement (ITA-1).

Domestic push
“The PMO has been presented with all possible scenarios and its call will be final on the matter,” a Commerce Ministry official told BusinessLine. The Department of Telecommunication made a case for imposition of basic customs duty on imported mobile phones to maintain the duty differential being enjoyed by domestic manufacturers (a 12.5 per cent countervailing duty is applicable on imported mobile phones compared with a 1 per cent excise duty for those made in India), which will disappear once the GST regime is implemented in July.

India’s justification
What is creating trouble is the fact that India has committed at the WTO under the ITA-1 pact not to impose customs duty on mobile phones. The DoT’s argument, backed by that of the Attorney General, is that mobile phones have evolved into smart gadgets carrying out multiple functions since the ITA was signed in 1996 and the new instruments are not covered under the pact.
“But there are two sides to the argument.

“Mobile phone exporting countries such as Japan, South Korea, the US and the EU have trashed India’s justification and said that no matter however evolved, mobile phones remain mobile phones, and hence, imposition of customs duty on them would be in breach of the ITA,” the official said.

Verdict soon
The PMO is aware of the situation and the implications of taking a decision either way, the official said, adding that it will come up with its verdict soon. There wouldn’t be a problem in imposing basic customs duty if the PMO decides it is in national interest even if it is challenged at the WTO. “It takes at least three years for a case to be fought, a verdict given and then implemented. The domestic industry would have moved a long away ahead in that time period,” the official said.

Smart or not
DoT argues that mobiles have evolved into smart gadgets that are not covered under WTO’s IT Agreement of 1996.
Mobiles remain mobiles, insist exporting countries. (Source: The Hindu Businessline)

Sacked IT employees approaching unions for support

Sacked IT employees approaching unions for supportInformation technology professionals, who claim they were coerced into resigning by employers looking to trim headcount in the midst of an industry slowdown, are flocking to unions in search of support for their demand for compensation. These retrenched employees — of both local and multinational IT companies — claim their former employers pressured them to hand in resignations instead of firing them, thereby saving on the expense of severance pay. Last week, a Bengaluru-based technology professional employed by a multinational IT services company received a phone call from the human resource executive asking her to quit voluntarily.

“I was given two days’ time to resign and with no compensation. I have a child and a home loan to pay, I need a severance to keep me going until I find my next job at least,” she said. “I did not join the company over one phone call, right? Why should I accept resignation over a call?” the employee with a decade of industry experience told ET. She reached out to Bengaluru-based IT/ITes Employee Centre (ITEC), which describes itself as a “welfare association for IT employees”.

The IT professional is one of nearly half a dozen mid-career professionals with over ten years of experience, interviewed by ET for this story, who claim they were asked to leave without being paid compensation by companies. Technology industry expert Siddharth Pai, however, didn’t think that the companies were being unfair to the employees.

“Companies would not have paid as much as the employees expected. But, contractually they would have met all the obligations. I don't think it is a fair allegation to make,” said Pai, founding partner of 3one4 Capital.

India’s $150-billion outsourcing industry is battling slowdown caused by rising automation in the industry and growing threat of protectionism in its biggest market – the United States.

In the past month, as companies trim workforce during the annual appraisal, a slew of unions representing employees claim they are seeing a sharp hike in distress calls.

“We get so many calls every day about companies forcing employees to resign. We got close to 200 phone calls in the last 3 weeks in our helpline number,” said an ITEC spokesperson. “Publicly companies are denying any retrenchment, but they are forcing people to resign on the other side,” he added.

One employee, who works for a US-based IT services giant, claimed the company he worked for axed several employees during appraisals last month. “In the new appraisal process, the total number of buckets the employees fall under was increased from 3 to 5. This way many are put in the final bucket and are asked to leave without any severance,” the person said.

Union representatives in turn are turning to state governments for help in allaying the concerns of affected employees and to help them receive their due.

Employee Unions like Chennaiheadquartered Forum for IT Employees (FITE) and IT-wing of National Democratic Labour Front (NDLF) say they are seeing more IT employees reaching out to them seeking legal counsel.

“More than 500 people have approached us alleging unfair termination of their job in the last two months. As of now, we raised the issue with the labour commission of Telangana and Hyderabad urging the state to intervene in ‘illegal termination’ of employees,” said Vinodh AJ, general secretary of FITE.

NDLF-IT says it has received about over 100 complaints while ITEC says it is helping employees lodge complaints with the labour department of Bengaluru.

“We already had a meeting with the Additional Labour Commissioner who confirmed that there was no request from any IT companies for official layoffs,” said the ITEC’s spokesperson. “We are now meeting Karnataka IT minister Priyank Kharge and labour minister Santhosh Lad for government intervention in this matter,” he added.

LAW AMBIGUOUS
Labour advocate Madhu Damodaran said the law on unionisation in the IT industry in Karnataka is somewhat ambiguous. “Under the trade union act, both the employers and the employees of companies can form a union. And no IT company can be seen exempt,” he said.

“However, as per exemptions provided under the Industrial Establishment Act (standing orders), they can argue that IT employees are not ‘workmen.’

As growth slows, fresh hiring in technology companies has cooled down and companies have started laying off employees. ET recently reported Wipro is letting go of at least 600 employees and Infosys, more than 1,000. IT companies, though, have denied that they are doing anything unusual this year.

ET reached out to half a dozen IT services companies based in Bengaluru and US about the alleged “unfair practices” but most of them refused to comment. (Source: Times of India)

Telecom regulator to 'look into' retention offers of Airtel, Idea, Vodafone

Telecom regulator to 'look into' retention offers of Airtel, Idea, VodafoneTrai Chairman RS Sharma asserted that all offerings by operators need to be transparent, non-discriminatory and filed with the regulator but refused to be drawn into the specifics.
Telecom regulator Trai will "look into" the complaints about operators doling out customised retention offers to influence subscribers who want to shift to a rival network. Trai Chairman RS Sharma asserted that all offerings by operators need to be transparent, non-discriminatory and filed with the regulator but refused to be drawn into the specifics.

"If these complaints have come, we will certainly look into them. Because the tariff has to satisfy the criteria of being transparent and being non-discriminatory. So these principles have to be followed...we will look into that," Sharma told . He was responding to a query about Trai views on newcomer Reliance Jio's recent allegation that incumbent operators are lining-up customised retention offers for subscribers wanting to shifting out of their network. In a letter to Trai last month, Jio had termed such methods as being "unfair and deceptive", and claimed that the offers were being presented to customers "surreptitiously" on one-to-one basis and not available to the general public.

Nor are the companies openly publicising such offers on their website as is stipulated, Jio charged, demanding that "strongest action" against the three operators - Airtel, Vodafone and Idea Cellular -- for what it termed as a gross violation of Trai's norms. "I remember having discussions in Trai in one of the meetings that such complaints have come. But I have not seen the specific complaints," Sharma said.

While it may be natural for operators to play up offerings and the strength of their networks to the departing customers, telcos cannot offer plans that they do not file with Trai, he said."If someone tries to leave, people will tell him ours is the best network, that is part of the business. (But) I don't think any operator should be giving a plan which is not given to Trai...or is not a part of their standard set of plans," he said. As per the norms, while tariffs are under forbearance, every plan has to be filed with the Telecom Regulatory Authority of India (Trai) within 7 working days from its launch. (Source: Economic Times)

Infosys, TCS, Cognizant violating H-1B visa norms: US official

Infosys, TCS, Cognizant violating H-1B visa norms: US officialThe US has complained that Indian blue chip IT firms Tata Consultancy Services, Infosys and Cognizant unfairly get the lion's share of H-1Bvisas by putting extra tickets into the lottery system, which the Trump administration wants to replace with a 'merit-based' immigration policy. A Trump administration official said at a White House briefing last week that a small number of giant outsourcing firms flood the system with applications, which increases their chances of success in the lottery draw.

"You may know their names well, but like the top recipients of the H-1B visa are companies like Tata, Infosys, Cognizant—they will apply for a very large number of visas, more than they get, by putting extra tickets in the lottery raffle, if you will, and then they'll get the lion's share of visas," the senior official said, according to a transcript of the briefing posted on the White House website.

Asked why Indian companies were singled out for mention, he responded that TCS, Infosys and Cognizant were the top three recipients of H-1B visas. "And those three... have an average wage for H-1B visas between $60,000 and $65,000 (a year). By contrast, the median Silicon Valley software engineer's wage is probably around $150,000," the official said.

While TCS and Cognizant did not offer a comment, Infosys said, "We have provided a statement on the H-1B matter earlier. At this point we have nothing additional to add." Infosys's earlier statement on H-1B was: "We are deeply committed to helping US clients leverage technology to transform their businesses, empower their employees in new ways, and become even more competitive. To do this, we continue to invest in the local communities in which we operate, including hiring local American top talent, bringing education and training to our clients to shrink the skills gap in the US, and working with policy-makers to foster innovation within states and across the country. It's our endeavour to help clients leverage the best US talent together with the best global talent, to drive economic growth in the US, ensure the US continues to be at the forefront of innovation, and bring skills and education in the new technologies that will transform our world." The US official said H-1B visas were awarded through random lottery with about 80% of H-1B workers being paid less than the median wage in their fields. "Only about 5% to 6%, depending on the year, of H-1B workers command the highest wage tier recognised by the department of labour, there being four wage tiers. And the highest wage tier, for instance, in 2015, was only 5% of H1B workers," he said. He said workers are often brought in well below market rates to replace American workers, again, sort of violating the principle of the programme, which is supposed to be a means for bringing in skilled labour. "Instead, you're bringing in a lot of times workers who are actually less skilled and lower paid than the workers that they're replacing," he said. (Source: Times of India)

RCom, Aircel seek shareholders’ approval as merger hits last lap

RCom, Aircel seek shareholders’ approval as merger hits last lapThe mega merger between Reliance Communications (RCom) and Aircel to create the country’s third-largest operator is entering the final phase, with both companies seeking shareholder approval in the coming days.

Aircel will hold its shareholders’ meeting on April 22, while that of RCom will be on April 24. The meetings have been convened following a direction by the National Company Law Tribunal (NCLT), according to the notices posted on the companies’ websites. Following the shareholder meetings, NCLT will hear the merger application filed by the companies on April 24 itself. Shareholder and NCLT approvals are the statutory requirements for the merger.

In March, the companies received Competition Commission of India’s approvals for the merger, prior to which approvals the companies had got permission from capital markets regulator SEBI, and the BSE and NSE.

The merger was announced in September 2016, under which RCom and Aircel’s Malaysia-based promoters Maxis Communications Bhd will hold 50 per cent each in a newly-created venture, with equal representation on the board.
Helping pare debt

The merger would help both players pare debt by ₹14,000 crore each, which will be transferred to the new entity. At present, RCom’s debt stands at ₹42,000 crore, while that of Aircel is at about ₹18,500 crore. (Source:The Hindubusiness Line)

Taiwan Excellance
Elemental
Seagate
Ultra
Conax
Irdeto
Gospell
Cineom
Nabshow
Rahul Commerce
CII
Dataminer
Convergence Summit
Sign up for Newsletter

Gadget Reviews

Xite
Interview

Satya Kalyan Yerramsetti
Satya Kalyan Yerramsetti
Founder & CEO
SMS Country Networks


Strip
cp
Convergence India 2017
cp

Strip
cp
Internet of things  India expo 2017
cp

Strip
cp
Mehta Group
cp
convergence plus