Convergence Plus
Monday, July 6, 2020
Tech Mahindra to bid for BSNL 4G tender, says Indian companies have capabilities

Airtel, Vodafone Idea, Tata Tele likely to pay AGR dues on Monday: DoT source Tech Mahindra and ITI are also looking to tap the global market with their upgraded 4G and 5G network equipment based on the success with the BSNL tender and implement the solution.

Tech MahindraNSE 1.59 % will bid for the revised tender to supply the fourth generation (4G) equipment to Bharat Sanchar Nigam Ltd (BSNL) partnering with state-owned ITI and other local companies, which have built expertise in building telecom software and devices, CEO C P Gurnani told ET.

Last week, BSNL cancelled the tender to upgrade the existing 4G network across 47,000 sites and building new capability in Delhi and Mumbai for Mahanagar Telephone Nigam Limited (MTNL) after the government barred state-run telcos from sourcing equipment from Chinese players Huawei and ZTE. ZTE had joined Nokia to bid for the tender, estimated to be around Rs 9,000 crore.

“We’re ready to build the digital highway for 4G or 5G. I believe that the technology is mature and we can do the transition in the network and create enough bandwidth,” Gurnani said.

In June, Tech Mahindra signed a pact with state-run ITI Ltd to jointly design and manufacture 4G equipment and work on building capabilities for 5G equipment for the local market.

TechM, India’s fifth largest IT services firm earns half of its $ 5.2 billion revenue from servicing telecom companies such as AT&T and BT Plc.

Gurnani said the consortium of companies led by Tech Mahindra would offer a virtualized network, where it has expertise and has partners in India.

“India has its capabilities but we haven't used it in a big format. I hope with this new focus, some of the Indian companies will get a chance to show their prowess,” he said on the move by the government to encourage Indian companies to take part in the tender.

In 2018, Tech Mahindra invested in Altiostar, a US company that develops software that allows virtualisation solutions on 4G and 5G networks enabling telecoms to build end-to-end web-scale cloud native networks. Bharti Airtel has deployed the Altiostar solution in India.

“Both core network and radio network could be virtualized,” said Gurnani. “While 70% of the component could be virtualized; 30% will still remain in the hardware (to be manufactured by ITI).”

Tech Mahindra and ITI are also looking to tap the global market with their upgraded 4G and 5G network equipment based on the success with the BSNL tender and implement the solution.

“We’re waiting for the new tender and this partnership is for the domestic market. We will also try to globalise the solution for the international markets,” siad Gurnani. (Source: Economic Times)

Tariff hike in telecom 'inevitable', two rounds likely in 12-18 months: EY

Sony India Feels the Heat from Chinese Cos, Cuts Over 120 JobsThe industry is talking of ARPUs going up anywhere from 60 per cent to 80 per cent over next two-three years, and that can happen by way of tariff increase

Tariff hike in the telecom sector is "inevitable" as the current structure does not allow reasonable returns for operators, although a lot would depend on the timing given the "unprecedented" scale of the Covid-19 pandemic and resultant affordability crisis, according to EY.

Acknowledging that an immediate tariff increase may not be feasible in the current setting, Prashant Singhal, emerging markets Technology, Media & Entertainment and Telecommunications (TMT) Leader at EY said two rounds of tariff hikes can be expected in the next 12-18 months, including one in the next six months.

"Tariff hike is necessary. Telecom as spend for consumers is fairly low, and tariff hikes should likely happen over next 6 months, I am not saying it must, but sooner the better...

"One has to keep in mind the economic situation and affordability factor... but over 12-18 months, you have to have two rounds of tariff hikes, including one in the next six months, to ensure sustainability in the market," Singhal told PTI.

Whether such a hike comes through regulatory intervention or industry action remains to be seen, but the financial health of the operators necessitates revision in tariffs, he said.

"Fundamentally, if the sector has to do well, what you require is fair price for service which is being offered by companies.

"There has been one revision of tariffs in December, and if one or two rounds of upward revision happen to make it at least at par with other emerging markets, in a way that consumers don't feel the pinch, that is where the revival of the sector will happen," Singhal said.

The industry is talking of Average Revenue Per User (ARPUs) going up anywhere from 60 per cent to 80 per cent over next two-three years, and that can happen by way of tariff increase, and moving away from fixed price plans to data based on usage or consumption.

Tariff hike is inevitable, and the issue is one of timing, he asserted.

"If we did not have the pandemic, we may have seen a hike in June itself. Now because of the pandemic, which is unprecedented and extraordinary, we may see a tariff hike in next six months but it is inevitable, as current structures don't allow companies to have reasonable return on capital employed," Singhal added.

Admitting that now may not be a suitable time for initiating tariff increases, given the "affordability crisis", Singhal said that things are speeding-up and several measures have been taken by the government to ensure that the economy is back on track. (Source: Business Standard)

Govt strengthens telecom connectivity in Ladakh

Sony India Feels the Heat from Chinese Cos, Cuts Over 120 JobsBSNL will be providing the coverage in all these areas. Although the government has not taken any decision to ban Chinese firms from telecom sector, it is working to make networks more secure going forward.

Amid the stand-off with China at the border, the government has strengthened telecom connectivity in Ladakh and Jammu and Kashmir (J&K). According to sources, 87 uncovered villages in J&K and 57 in Ladakh will be provided telecom connectivity soon.

The decision was taken a few days ago as the government wants to cover the regions with 100% telecom coverage, so that the communication flow remains intact.

“Universal Service Obligation Fund (USOF) has taken an initiative to cover 354 uncovered remote villages of India. Out of these 354 villages, 144 are in J&K and Ladakh. After execution of this project, there will be 100% telephonic coverage of habitation in the two regions,” said a source. Apart from that, 812 digital satellite phone terminals have been provisioned to cover remote territories of the country, of which 134 sites are in the Ladakh region, including the Galwan Valley and Hot Springs, DBO, D. Singh Post, Lukumg, Thakung and Chusul.

BSNL will be providing the coverage in all these areas. Although the government has not taken any decision to ban Chinese firms from telecom sector, it is working to make networks more secure going forward.

To start with, the government is considering a NITI Aayog proposal to roll out 4G network of BSNL using locally designed and manufactured products. BSNL is already providing connectivity at the border areas of J&K and Ladakh regions and at other difficult and hilly terrains of the country.

As the revenue potential is less in these areas, which are also strategically important, the government provides funding to BSNL from the USOF to set up infrastructure. (Source: Financial Express)

Jio Platforms raises Rs 6,598.38 crore from General Atlantic

Telcos Estimate AGR Dues at Half the DoT DemandIn its fourth fund raising in less than a month, Jio Platforms, a subsidiary of Asia's richest man Mukesh Ambani-controlled Reliance Industries Ltd (RIL), has raised Rs 6,598.38 crore from US PE major General Atlantic (GA).

The investment, which is GA’s largest in Asia, is in lieu of a 1.34 per cent stake, RIL said in a regulatory filing.

With this, Jio Platforms had raised Rs 67,194.75 crore from leading technology investors including Facebook, Silver Lake Partners, Vista Equity Partners and General Atlantic in less than four weeks. The investments by leading global growth investors to help enable Jio to scale its ecosystem towards building a digital society in India, it said in a regulatory filing.

This re-emphasises Jio’s continuing attraction among global investors for its deep understanding of the Indian markets, the rapid digitisation opportunity post-Covid and its capabilities to bring cutting-edge technologies and tools such as AI, Blockchain, AR/VR, Big Data into play for all Indians.

Diverse marquee investors are becoming long-term shareholders of JPL because of a unique set of technologies and platforms under one entity. There are no similar opportunities available anywhere else globally. And it is an endorsement of the quality of the management. (Source: The Hindu Businessline)

After Samsung, Vivo and Oppo, Lava resumes production at Noida factory

Telcos Estimate AGR Dues at Half the DoT DemandSmartphone maker Lava has resumed production at its Noida factory after receiving permission from authorities to begin limited operations, the company said on Saturday.

The company has started operations with 20 per cent production capacity. Currently, the company is working with 600 employees out of its 3,500 people workforces.

Lava is not the only smartphone manufacturer to resume production in India.

Smartphone companies Samsung, Xiaomi, Vivo and, Oppo have also received approval from their respective state governments to partially resume manufacturing and assembling of devices given the ongoing lockdown, TechCrunch reported.

The South Korean electronics giant Samsung had received required permission from the Uttar Pradesh authorities to begin operations at its Noida Sector 81 factory on Thursday. It has begun operations at its Noida factory and plans to gradually increase its workforce to 3,000, the 30 per cent workforce requirement as per the guidelines, according to media reports.

Vivo and Oppo will also resume production at their respective Noida factories with 30 per cent of their capacity.

Phone makers Oppo, Vivo and Samsung had paused production at their respective Greater Noida factories in March when the Center had imposed lockdown across 75 districts impacted by Covid-19. Other smartphone makers had also shut down their factories owing to restrictions imposed by the nationwide lockdown announced on March 24.

The Centre had recently released revised guidelines for the lockdown ending on May 17, allowing for some relaxations on restrictions for Green and Orange zones which has allowed these companies to resume limited operations. (Source: The Hindu Businessline)

Telcos, DoT in Sync with States to Track Patients

Airtel, Vodafone Idea, Tata Tele likely to pay AGR dues on Monday: DoT source The Department of Telecommunications (DoT) and mobile phone operators are working in tandem with state governments to use call data of subscribers to closely track the movement of Covid-19 positive patients, besides keeping a close watch on millions of migrant labourers to help them with food and find employment.

But officials clarified that only location details of calls were being used for the purpose, and not the detailed call data records (CDRs), which may have raised concerns around privacy and state surveillance.

Privacy experts, however, said such sharing still triggers concerns around data privacy since no permission has been sought from subscribers.

"If a patient moves away from his quarantine location, it means he has moved away from his geo-fencing area and alerts go out to agencies including police," said an official aware of the work done by different government bodies on Covid-19.

"The DoT is also tracking the cell sites of the patients and places they visited for 15 days prior to being tested positive. This helps to check up on those who have come in contact with the patient," added the official. (Source: Economic Times)

Telcos Warn of Full Service Breakdown in Virus Hotspots

Telcos Estimate AGR Dues at Half the DoT DemandRED ALERT Cos seek urgent intervention of DoT to ensure free movement of service teams. Phone companies have warned of an imminent breakdown in telecom services across Covid-19 hotspots where their emergency teams are being blocked by local authorities.

They have, in fact, sought the urgent intervention of the Department of Telecommunications (DoT) to ensure their teams can operate freely and ensure uninterrupted mobile and internet connectivity in these sealed locations where the pandemic outbreak is severe.

Rajan Mathews, director general of Cellular Operators Association of India (COAI), in a letter dated April 9 to telecom secretary Anshu Prakash, said there could be a total breakdown of mobile and internet services if telco technicians are denied access to telecom sites in the Covid-19 hotspots. ET has seen a copy of the letter.

The COAI represents Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea.

“Telecom has been recognised as an essential service in various government orders, but curfewlike restrictions are being imposed by various state governments in areas sealed off as Covid-19 hotspots where no movement of telecom services personnel is being allowed, which can lead to a complete breakdown in services,” Mathews said.

The situation, industry sources said, is particularly challenging in Delhi, Uttar Pradesh and Maharashtra where numerous locations have been notified as hotspots where the Covid-19 outbreak is severe.

The COAI, in fact, has urged the telecom secretary to “monitor developments and issue instructions to the concerned state governments” to allow movement of staff of telcos, tower infrastructure service providers, fibre optic providers and (vendor) partners to ensure fault repair and maintenance work” can be undertaken for ensuring uninterrupted connectivity in these sealed off areas. At press time, Airtel, Jio and VIL did not respond to ET's queries.

In response to COAI’s letter, DoT’s Maharashtra wing has already urged the local state police to cooperate with telecom operators and allow their field units to maintain essential telecom services in public interest in the Covid-19 hotspots. Maharashtra is among the states worst hit by the pandemic.(Source: Economic Times)

EGoM may be Set up for Telecom Relief Measures

Telcos Estimate AGR Dues at Half the DoT DemandGovt likely to request SC to allow staggered AGR payments over 20 years at reduced interest rate of 8%. The government is considering setting up an empowered group of ministers (eGoM) to oversee steps to tide over the adjusted gross revenue (AGR) crisis in the telecom sector.

The eGoM will look at ways to lower levies such as licence fees and spectrum usage charge (SUC) to help retain a three-private player market, as well as attract investments from new players. The government is also likely to request the Supreme Court to allow affected telcos to stagger payment of AGR liabilities over up to 20 years on net present value basis, at a reduced interest rate of 8%, against the 12% that is usually charged on dues, a senior government official told ET.

Other steps expected to be announced include giving a sovereign guarantee for telcos to raise up to 15% of their AGR dues from state-owned banks, and the freezing of interest and penalty components as on October 24, the date on which the Supreme Court ruled in favour of the government’s calculation of AGR. Several of these measures were discussed at the Cabinet meeting last week. “The Cabinet has to find a middle path to ensure the Supreme Court’s judgement is upheld and honoured, while the sector isn’t reduced to a duopoly, and the banking system doesn’t see another massive default, as it could have a domino effect on the economy, including job losses,” said the official quoted earlier.

The director general of the Press Information Bureau, did not respond to an email seeking comment till press time on Sunday.

SC Final Call Tomorrow

The Supreme Court will take a final call at the next hearing on March 17 on the number of years over which the payment could be spread, the official said. It is, however, unclear if the hearing will be held as scheduled because of the precautions taken over the Covid-19 outbreak. The package being considered would provide immediate relief to telecom companies — primarily Vodafone Idea that is on the brink of collapse —prevent the sector from being reduced to a duopoly, and save banks from massive loan defaults, the official said.

The move to stagger the payments may also help Bharti Airtel and Tata Teleservices, in case they face higher AGR demands from the telecom department (DoT) than they have estimated and paid and if those additional demands are upheld by the courts, the officials added. The government is trying to make the sector attractive to investors as at the highest levels, the government is “convinced” that India needs at least three, and probably more, private telecom players to establish a strong, robust and competitive digital infrastructure, a second official said.

“Despite moving to the auction regime, we still have such high licence fees, SUC. And then there is GST on all payments telcos make to the government … it cascades and inflates the burden … the eGoM could also explore rationalisation of levies,” the official said.

Historically, the finance ministry has pushed back the telecom ministry’s calls to reduce levies for improving health of the sector, hurt badly by over three years of price wars, coupled with debt of more than Rs7 lakh crore.

The Supreme Court ruling that AGR includes non-core items, left 15 telcos — including that are now defunct — facing more than Rs 1.47 lakh crore in licence fees, SUC, interest and penalties, further adding to the gravity of the sectoral situation. Licence fees and SUC are paid on the basis of AGR. Vodafone Idea has warned it will shut shop unless given some relief on its AGR liabilities, leaving just Bharti Airtel and Reliance Jio.

“(It’s) not an ideal situation and the government realises that,” the second official said, adding that encashing bank guarantees of Vodafone Idea would force it to shut down, leaving over 300 million customers in chaos.

Moreover, banks have an exposure of over Rs 35,000 crore in Vodafone Idea, which would then turn into another non-performing asset.(Source: Economic Times)

Telcos Estimate AGR Dues at Half the DoT Demand

Telcos Estimate AGR Dues at Half the DoT DemandAirtel, Voda Idea put dues at up to ₹41kcr against DoT calculation of ₹89kcr, may make part payment today Bharti Airtel and Vodafone Idea have assessed their adjusted gross revenue (AGR) dues at about half the amount that the Department of Telecommunications (DoT) has demanded, likely setting the stage for another dispute between the companies and the government, said people with knowledge of the matter.

Initial calculations at Bharti Airtel peg the dues at ₹15,000-18,000 crore, instead of more than ₹35,500 crore estimated by DoT. Vodafone Idea’s initial computation puts it at ₹18,000-23,000 crore against DoT’s ₹53,000 crore estimate. Cash-strapped Vodafone Idea is likely to pay only a part of the amount in the next few days, said one of the persons. The company had in a statement on Saturday once again warned of the continuing threat to its viability in the absence of judicial relief.

“The reason for the difference in estimates is because even by calculating their AGR according to the Supreme Court verdict of October 24, there are certain errors such as duplication of certain items, as per DoT’s definition,” said the person cited above. “Thus, certain items still don’t make it to the list, and the interest on those items plus the penalties go down.” A news agency reported that Bharti Airtel, Vodafone Idea and Tata Teleservices may pay some of their dues as early as Monday.

Department of Telecommunications to Decide on Next Step Today
Lower principal will lead to a reduction in interest and penalties. Of the DoT estimated dues of more than ₹89,000 crore for the two telcos, interest and penalties account for 75%. “This (the self-assessment) itself is a very tedious process — it requires the companies to open their records in a circle-wise manner for the last 16 years and add those items, the penalty and interest thereof and so on,” said a telecom executive.

DoT may issue fresh notices for the balance dues if the telcos' estimates don't match their own, or take other action against them for not paying up on time, officials said. The course of action will be decided on Monday since the telcos hadn’t paid by the Friday midnight deadline some of the circle offices had set. Some other circle offices had sought 'immediate' payment. Under the rules, DoT can encash bank guarantees submitted by telcos for unpaid dues and can even cancel licences as a final step.

Vodafone Idea and Bharti Airtel didn’t respond to queries. Airtel sources said that the telco's self-assessment shows the dues to be “significantly lower” than DoT's estimates. Bharti Airtel has already raised more than $3 billion through a private placement of shares and an overseas bond issue to meet its AGR obligations.

Vodafone Idea can use ₹2,826 from its ₹25,000 crore rights issue proceeds for AGR payments. In addition, the company can call upon Vodafone UK to cough up ₹8,000 crore towards payment of AGR dues. The telco’s books show cash and cash equivalents of ₹23,114 crore as of December 2019.

The telco also expects about Rs 4,500 crore from the sale of its stake in the Bharti Infratel-Indus Towers merged entity. But that depends on when the merger will close, with the deal already delayed pending government clearances. It also hopes to sell its optic fibre and data centres but those deals may take a while to close as well. The telcos have come under increasing pressure to pay their dues urgently after the Supreme Court on Friday rapped them and the government for non-payment by the January 23 deadline.

The court threatened the telcos with contempt proceedings and personal appearance of their top executives unless dues were paid by the next hearing, which is set for March 17. This prompted Bharti Airtel to say it would be paying ₹10,000 crore by February 20 and the balance — as per its own assessment— by March 16. Vodafone Idea said it was assessing what it could pay as part of its dues and plans to do so in the next few days. However, in the same statement, the company once again warned of the continuing threat to its viability in the absence of judicial relief in the dues.

On Friday, Vodafone Idea chairman Kumar Mangalam Birla met telecom minister Ravi Shankar Prasad to discuss the situation. The telco has been highlighting the negative impact on the telecom ecosystem and the jobs that will be lost if telco is forced to shut. Bharti Airtel, Vodafone idea and Tata Teleservices have been trying to get relief from the Supreme Court on the latter’s verdict of October 24 that widened the definition of AGR to include non-core items. This left 15 telcos facing Rs1.47 lakh crore in dues, with Bharti Airtel, Vodafone Idea and Tata Teleservices the worst hit.

Tata Tele’s internal assessment also shows the dues to be “significantly lower” than DoT’s estimate of nearly ₹14,000 crore, said another person. An email sent to the company didn't elicit a response. After their review petition against the October order was rejected, these telcos filed a modification plea with the apex court, hoping to be allowed to negotiate a longer payment tenure and waiver of interest and penalties with the DoT.

At a hearing of the modification plea on Friday, the top court asked why they shouldn’t be prosecuted for contempt for not paying their AGR dues by the deadline. After being rebuked by the Supreme Court on Friday, the DoT also sent out letters on Friday and Saturday to all telcos, asking them to make AGR payments “immediately,” failing which “necessary action will be taken in terms of provisions of the License Agreements.”(Source: Economic Times)

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