Convergence Plus
Monday, November 18, 2019
BSNL to open VRS window on Monday; October salary not credited, yet

BSNL is expecting a likely savings of about ₹7,500 crore in case 80,000 employees opt for VRS. State-owned Bharat Sanchar Nigam Ltd (BSNL) is slated to accept

Applications for the voluntary retirement scheme (VRS) starting from Monday, even as the public sector unit (PSU) defaulted on October salaries. BSNL plans to offer VRS to employees above 50 years of age and expects at least 80,000 personnel to avail it.

“The 30-day VRS window opens on Monday, and the management and unions have requested employees eligible for it to submit applications. Under the proposed VRS formula, employees will get 100-125 per cent of the salary for remaining years of service, including pension, based on the retiring month wage,” a source close to the development told BusinessLine. “It would take at least three months to implement the VRS,” the source said, adding the implementation of the scheme will not affect the company’s services.

BSNL was expecting a likely savings of about ₹7,500 crore in case 80,000 employees opt for VRS. BSNL employs nearly 1.59 lakh personnel as of date, of which nearly 1.06 lakh are aged above 50 (eligible for VRS). The company’s employee costs stood at ₹14,492 crore in 2018-19.

In case the VRS turns out to be a success, then the PSU might not reduce the retirement age to 58.

Retirement age

The proposal under the revival plan was to slash the retirement age to 58 from the present 60 after the implementation of VRS.

As part of the revival package, the Centre will direct all government departments and State governments to take BSNL landline and broadband connections. As and when 4G rollout happens, BSNL mobile services also will become mandatory for government departments, another source said.

BSNL is also making it mandatory for its own officers and staff to use a BSNL connection.

Salary delay

Separately, the company has defaulted on October salary, which was to be credited on Thursday. This time also the salary is expected with a 15-20 days delay.

“The salary delay will continue for another 3-4 months, and till the revival package is in place and other issues including the VRS are ironed out,” another source said.

BSNL has also launched a new scheme offering 6 paise cashback for voice calls. The scheme, a festival offer, is limited to wireline, broadband and Fibre-To-The-Home (FTTH) customers. Subscribers making calls of 5 minutes or more would be credited with 6 paisa cashback.

Meanwhile, both BSNL and Mahanagar Telephone Nigam Ltd (MTNL) received Department of Telecommunications approval for their revival plans. The letter dated October 29, approved reducing employee costs, administrative allotment of spectrum for 4G services, debt restructuring through bonds, monetisation of assets and merger of BSNL and MTNL. (Source: Hindu Businessline)

Airtel Urges Trai to Postpone Scrapping of IUC

Bharti Airtel has urged the telecom regulator to postpone the scrapping of interconnection usage charges by at least three years from the planned January 2020 deadline, saying traffic symmetry between networks has not been achieved and over 400 million mobile users continue to use 2G networks, people close to the regulator said.

“The (London-based) GSMA too has predicted that 12-13% of customers will continue to use 2G handsets till 2025,” Airtel said in its submissions to the Trai, which had sought comments on a proposal to defer the introduction of a zero interconnection usage charges regime.

“Traffic from the 4G-only operator continues to be on the higher side, both in terms of absolute magnitude and percentage,” Airtel said, adding that this indicated “traffic symmetry has not been achieved.”

Reliance Jio Infocomm, which operates India’s only nationwide 4G network, has opposed the move to defer the zero-IUC regime. In its submission, it said Trai’s proposal was created to incentivise Airtel and Vodafone Idea, which are yet to fully upgrade their networks to 4G standards. Jio said any deferment of the regime would adversely impact Trai and the government’s credibility, besides reducing investor confidence in the telecom sector and discouraging foreign and domestic investment.

Jio is currently a net payer of IUC, while Airtel and Vodafone Idea are net recipients, underlining the reasons for their respective stands.

At press time, Airtel did not reply to ET’s queries. Submissions of Vodafone Idea, which has historically opposed the zero-IUC regime, were not immediately available.

Airtel said in its submissions that “despite the massive deployment of 4G, the assumption regarding adoption of technologies is not proven.” It said 49% of its customers still use 2G handsets and only 17% of the company’s voice traffic was carried on 4G-VoLTE in June 2019 even 2-3 years after deployment of the upgraded network.

Trai’s latest IUC review comes barely two years after it cut the charge by 57% to six paise a minute and ordered its end from January 2020. Its view was that by end 2019, a majority of operators would move to packet switched technologies and the cost of terminating calls would be small. (Source: Economic Times)

RCom Asks Ericsson to Refund ₹ 579.74 Crore

Says telecom gearmaker has to be treated on par with other operational creditors. Reliance Communications has asked Ericsson to refund ₹579.74 crore that the bankrupt telco had paid it, saying the Swedish telecom equipment maker had to be treated on a par with other operational creditors. It also said the money paid must be returned because the insolvency resolution process that Ericsson had initiated against RCom had resumed.

The demand may resurrect a legal battle and delay the insolvency process, given that the payment by RCom was made on Supreme Court’s directions. “Ericsson should not be allowed treatment which is any different than the treatment that shall be accorded to the other operational creditors… either in terms of a resolution plan subsequently approved, or, in the event of liquidation,” Deloitte, the resolution professional overseeing the telco’s affairs, said in a letter to Ericsson last week. ET has reviewed a copy of the letter. “Ericsson is requested to hereby initiate a refund of the total sum of the monies received by it,” the RP said in the letter.

Ericsson may Seek Minutes of CoC Meeting
The letter requires Ericsson to join the queue of operational creditors including tower companies, equipment vendors and the Department of Telecommunications, which have claimed Rs 88,000 crore in dues, of which over Rs 70,000 crore had been verified.

According to the company’s lenders, payment to an operational creditor, in this case Ericsson, made while RCom is in insolvency is against the Insolvency and Bankruptcy Code. Financial lenders including State Bank of India, China Development Bank, Standard Chartered Bank, Deutsche Bank and DBS Bank, which have raised claims of up to Rs 57,382 crore, of which Rs 49,223.88 crore had been verified, get preference over operational creditors upon resolution.

RCom keeled over under Rs46,000 crore of debt and is undergoing insolvency proceedings with its assets up for sale.

Ericsson plans to ask the RP to send the minutes of the Committee of Creditors meeting that passed the resolution demanding the refund, according to people aware of the development. The company will then take a call on approaching the Supreme Court, which decided on the matter in February. Mails sent to Deloitte didn’t elicit a response, while Ericsson declined to comment.

Ericsson petitioned for RCom’s bankruptcy in September 2017 over non-payment of dues worth over Rs 1,500 crore. The bankruptcy court admitted the petition but, under RCom’s appeal, the National Company Law Appellate Tribunal stayed the insolvency order and a settlement with Ericsson was chalked out. ( Source: Economic Times)

Kuwait to issue virtual telecom operator licence

Kuwait to issue virtual telecom operator licence. Kuwait is to issue a virtual telecom operator licence, effectively creating a fourth player in a market serving roughly four million people.

Virtual network operators do not own the networks they use to provide communications services but instead lease capacity from conventional operators, usually paying them a percentage of their revenue as well as fees.

Kuwait's Communications and Information Technology Regulatory Authority has issued a request for applications for the licence, according to a document seen by Reuters.

State news agency KUNA also reported a licence would be granted.

Applications must be submitted by Nov. 14, 2019 and the selected application will be announced by Feb. 6, 2020, the document shows.

The applicant will have to partner with a company that can provide it with the technology, know-how and operational and management experience. The partner will also own at least 40% of shares and have a five-year management agreement.

Kuwait's current telecom providers are Zain, Ooredoo, and Viva.

Kuwait's existing telecom providers, as well as anyone holding 25% or more shares in Kuwaiti telecom companies, are not allowed to apply.

Foreign ownership would be subject to Kuwaiti law, which restricts non-Kuwaitis to minority ownership. (Source: ETTelecom)

Huawei asks India to take 'informed and independent decision' on 5G trials

The US has banned Huawei, the world's leader in telecom equipment and the number two smartphone producer, over concerns of security. Huawei has urged India to make an "informed and independent decision" on permitting its 5G trials in the country as the Chinese telecom giant reeled under pressure following the US ban.

The US has banned Huawei, the world's leader in telecom equipment and the number two smartphone producer, over concerns of security and Washington has been pressuring other countries to restrict the operations of the Chinese telecom firm.

India, however, is yet to take a call on whether it intends to place curbs on Huawei or allow the Chinese telecom equipment maker to participate in the upcoming 5G trials, that are scheduled to commence in 100 days.

"The Indian Government or any other country must take an independent view to protect its own networks and data through its own standards, test mechanisms and policies. It is important to address cyber security risks through an evidence and fact-based approach, introducing checks and balances with a monitored participation rather than banning out of fear," Huawei, which is based in Shenzhen, said in a statement to PTI here.

Earlier this month, Telecom Minister Ravi Shankar Prasad said India has its security issues over allowing Huawei to participate in the upcoming 5G trials.

"We will take a firm view on it. There are also security is not only a matter of technology, as regard their participation in 5G is concerned...Participation of 5G is not conditional upon the trial being started. Whether a particular company is allowed to participate or not, is a complex question including security issues," he had said.

Commenting on the minister's remarks, Chinese Foreign Ministry last week said that India should take an independent decision without being guided by the US ban and provide an "unbiased and non-discriminatory" environment for the Chinese businesses.

In its statement, Huawei said that it received full support from India for about two decades for its operations and obtained Department of Telecom (DOT) invitation to conduct 5G trials.

"In India, Huawei has received full support and confidence of the Government during our near 20 years operations in the country," it said in response to questions over the security concerns raised by Prasad.

"Over the past few months, we have proactively engaged with the Indian Government and their feedback has been positive. We are confident that the Indian Government will make an informed decision on 5G, one that provides a level-playing field to all vendors," it said.

Huawei has a long-term strategy for India and will keep investing there in people, business and operations, it said.

Huawei said it recognised the importance of India as a talent base way back in 1999 when it set up its largest overseas R&D centre in Bengaluru.

"Today, with almost two decades of operations in India, India is one of the largest and most localised presence outside China for Huawei," it said.

"We are committed to bringing world class ICT solutions and products through our wide spread presence in India encompassing the R&D Centre, Global Service Centre, the Innovation and Demo Centre, and a nationwide presence with regional and circle offices including the recently launched OpenLab in Gurugram," it added. (Source: Economic Times)

Telecom tower industry seeks more relief, priority lending

Digital India providing e-services to the common man depend entirely on the availability of telecom infrastructure and any levy on such nation-building installations will up the cost of such services.

The telecom tower industry has urged the Finance Ministry to allow accelerated depreciation rate of 65 per cent on batteries, 20 per cent funding through External Commercial Borrowings (ECB) for the working capital and inclusion of telecom towers in the priority sector for lending by banks. The industry uses lithium-ion batteries, which have an average life of 3-5 years.

A higher depreciation rate for these batteries can help higher adoption of these batteries, which can decrease dependence on diesel for power back-up.

Diesel adds to the higher cost of production for the tower companies.

Accelerated depreciation is a method whereby an asset loses book value at a faster rate than the traditional straight-line method. Generally, this method allows greater deductions in the earlier years of an asset and is used to minimise taxable income.

Apart from these key demands, the Tower and Infrastructure Providers Association (TAIPA) in its submission to the Finance Ministry, said it wants inclusion of the telecom infrastructure service providers in Section 72A in the cases of mergers and amalgamations.

As the tower industry is an inseparable part of telecom services, the specific inclusion will bring parity for the tower companies with telecom operators and other key industrial sectors. The benefit of Sec 72A was introduced to telecom operators in FY 2002-03 with a view to encouraging rapid consolidation and growth in the sector.

Before that, each telecom operator used to set up its own towers to cater to its own need for passive infrastructure (telecom towers, shelters, power back up) services. Accordingly, the concept of TISPs was not envisaged in FY 2002-03, when the benefit of Section 72A was extended to the telecom sector.

Section 72A of the Act allows accumulated losses of amalgamating company to be carried forward and set off in the hands of the amalgamated company.

Currently, the carry-forward of losses is limited to industrial undertakings or ships, hotels, aircraft or banks. The term "industrial undertaking" has been defined to include the companies which are engaged in the business of providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, broadband network and internet services, said T.R. Dua, Director General, TAIPA. There have been consolidations in the tower industry in recent times. India's telecom tower industry is expected to see further consolidation after the Bharti Infratel-Indus Towers merger.

The combined entity of Bharti Infratel Ltd -- the tower arm of Bharti Airtel, and Indus Towers, post their merger, will own more than 1,63,000 towers and will create the world's largest tower company outside China.

In the tower industry, if ATC seals the deal with Idea, then the former would operate over 78,000 tower sites in India. State-run telecom operator Bharat Sanchar Nigam Ltd (BSNL) owns 66,000 towers.

TAIPA also seeks to amend the definition of "plant and machinery". "Plant and machinery mean apparatus, equipment, machinery fixed to earth by foundation including telecommunication tower and shelters, that are used for making outward supply and include the term 'telecommunication tower' for the purpose of Input Tax Credit," it said.

According to TAIPA, the tower industry is expecting to install around 25,000 towers in the coming FY with around Rs 1.25 lakh taxes paid on each. The current situation could result in an increase in the cost of providing the telecom service.

The Association rues that under the Central Goods and Services Act, 2017 (CGST Act), telecommunication towers have been specifically excluded from the definition of "plant and machinery" provided in the explanation to Section 17.

"Digital India, smart cities, providing e-governance services to the common man and other flagship programmes of the government depend entirely on the availability of critical telecom infrastructure and any tax/ levy on such nation-building installations will ultimately increase the cost of the services to the end-consumer. Towers are the backbone of the telecommunication industry and any denial of this credit would substantially increase the cost of services to the common man," said TAIPA. (Source: New India Express)

Telecom companies stop user poaching as stability returns to industry

Older telcos, Vodafone Idea & Airtel and latest entrant Jio are close in terms of revenue & subscriber share. A decade after a wave of suicides at France Telecom in which 35 employees took their own lives, the telecoms giant and its former CEO go on trial Monday for "moral harassment".

The case will look at what was behind the deaths that occurred between 2008 and 2009 when Didier Lombard was at the helm of the company, which is today known as Orange.

The trial opens at the Paris criminal court nearly seven years after Lombard and France Telecom were charged with harassment in what was a first in France.

Also in the dock are a handful of former senior executives accused of harassment and others facing charges of complicity in a trial which will likely be closely followed by business, unions and workforce experts. Expected to last more than two months, it could result in a conviction for institutional psychological harassment.

Despite France's labour laws, which are some of the strongest in the world, depression, long-term illness, professional burnout and even suicide have become increasingly common.

Unions and management accept that 35 France Telecom employees took their own lives between 2008 and 2009 and Lombard stepped down as a result of the deaths.

Formerly a public company, France Telecom was privatised in 2004, a move which led to major restructuring and job losses.

Prosecutors say the company and its chief executive at the time introduced a policy of unsettling employees in order to induce them to quit.

- 'Climate of anxiety' - During the investigation, magistrates focused on the cases of 39 employees, 19 of whom killed themselves, 12 who tried to commit suicide and eight who suffered from acute depression or were signed off sick as a result of it. In July 2008, a 51-year-old technician from Marseille killed himself, leaving a letter accusing the bosses of "management by terror". Two months later, a 32-year-old woman jumped out of the window of her Paris office as horrified colleagues looked on.

Lombard, who served as chairman and chief executive between 2005-2010, inflamed the situation with remarks that came off as extremely callous, admitting he had committed "an enormous gaffe" when he speaking of a "suicide fad".

The remark was seen as a final straw, and he resigned in March 2010.

The investigating magistrates' summary of charges, a copy of which was seen by AFP, it says Lombard put in place "a corporate policy aimed at undermining the employees.. by creating a professional climate which provoked anxiety".

It outlined multiple haphazard restructures, forcing people to move around geographically and repeatedly pushing incentives for them to resign.

- 'Management through social violence' - Also on trial is Louis-Pierre Wenes, Lombard's former number two and Olivier Barberot, who handled human resources, with another four facing charges of "complicity".

If convicted, they could face a year behind bars and a 15,000-euro fine.

And France Telecom could be slapped with a 75,000-euro sanction if found guilty of "moral harassment" which is defined as "frequently repeated acts whose aim or effect is the degradation of working conditions".

Sebastien Crozier, who heads the CFE-CGC Orange union said the trial was about the use of "social violence as a method of management".

For Marie Peze, a psychologist who specialises in workplace distress, the trial raises one key question.

"In 2019, with suicides among farmers, police and nurses. what is the human cost of work?" (Source:ETTelecom)

Telecom on the brink of recovery

Huawei CFO sues Canada for wrongful detention Operators are estimated to soon raise prices: experts. An inevitable price recovery expected from the second-half of financial year 2020 would change the fortunes of telecom companies as their Average Revenue Per User (ARPUs) would rebound. ARPU, a metric used to gauge the financial strength of an operator, was pushed to a decadal low after Reliance Jio Infocomm launched its services.

RJio’s entry in FY17 had unleashed one of the most “brutal price” wars in India’s telecom market. Consequently, industry ARPU plunged about 38 per cent, leading to the total industry size shrinking to ₹1.4 trillion from ₹1.8 trillion, said a report by Edelweiss. According to the brokerage firm, now there is light at the end of the tunnel as mobile broadband penetration has crossed 50 per cent, and monetising existing customer base is more lucrative than chasing incremental market share. Further, price hikes are imminent as RJio approaches its 400 million subscriber goalpost and telecom operators’ massive non-core asset monetisation drive makes it imperative for investors to repose confidence in the telecom industry’s long-term health.

A price recovery would be triggered the second half of FY20, propelling industry ARPU to the pre-RJio level of ₹156 by FY22-end (₹98 in Q3FY19), it said, adding that telecom operators are estimated to raise prices in H2FY20.

Reversing a trend

The Indian telecom industry will reverse a two-year declining trend with a 7 per cent revenue growth in FY2020. The turnaround will ride on an increase in ARPU by 11 per cent, though the overall subscriber base is expected to shrink by 4 per cent, Crisil said in a note.

A protracted tariff war has pushed ARPU to a decadal low. This is despite the consolidation in the industry that has reduced the number of major players to three, in line with global standards. In the past two years, the industry has lost about 20 per cent of potential revenue, tantamount to over ₹40,000 crore.

Crisil, however, believes telecom tariffs have bottomed out, as reflected in the stable pricing and the fact that the top three telecom companies now have almost equal revenue market share.

Mobile revenues to rise

Research firm UBS estimates aggregate sector mobile revenues to grow 10.4 per cent and 11 per cent in FY20 and FY21, after declining 20.2 per cent and 6.2 per cent in FY18 and FY19. The pricing environment has been stable in recent months.

“Meanwhile, the launch of min-ARPU plans could be 3-4 per cent revenue-accretive, even assuming a loss of 20-25 per cent of low-end feature phone subs (subscribers), while the migration of subs from feature phone to smartphones continues to drive modest ARPU upgrades,” it said, adding that the current tariff levels would persist for another six months, with likely modest tariff hikes from Q1-Q2 of FY20. (Source: The Hindu BusinessLine)

MNP service providers to push for Rs 120 crore arrears

Huawei CFO sues Canada for wrongful detention The move comes after High Court on Friday junked Trai’s move to cut porting fee by 80%. Mobile number portability (MNP) service providers Syniverse Technologies India and MNP Interconnection Telecom Solutions India will push to recover an estimated Rs 120 crore from telcos after a court quashed the regulator’s decision to slash a key porting fee by 80% over a year ago.

The Telecom Regulatory Authority of India cut per port transaction charge to Rs 4 from Rs 19 in January 2018, a move that hurt revenue flows of both MNP service providers, prompting them to move court. The Delhi High Court junked Trai’s regulation on Friday, calling it illegal and unsustainable.

MNP refers to the facility allowing a user to switch telco operators without changing the mobile number. The recipient operator pays a fee to the MNP service provider for processing the request.

Trai secretary Sunil Gupta said Trai “would examine the (court) order before making any comments.”

Syniverse will start the process of recovering arrears retrospectively from February 2018 through talks with Trai and telcos, Himanshu Goel, managing director (India, Middle East & Africa), told ET. A global spokeswoman of iconectiv, US parent of MNP Interconnection, declined comment, saying the company “is in the process of getting information.”

While the service providers are still calculating dues, industry estimates peg them at roughly Rs 120 crore, including fees related to unsuccessful ports from February 2018.

MNP was first offered in India in November 2010. About 412 million subscribers have availed of the facility as of December 2018, Trai said in a consultation paper on February 22, which seeks to review per port transaction and other charges related to MNP.

Last January, Trai said Rs 4 per transaction would be payable only for successful porting. This meant MNP service providers would be unpaid if a porting request wasn’t successful, even after the use of their resources, experts said.

The Delhi High Court criticised Trai’s decision to “limit” the payments to successful requests, calling it “inconsistent” with the definition of the term in the MNP rules, which say such fees are payable to the MNP service provider for processing a request.

“Even where a porting request is unsuccessful, the MNP service provider would necessarily have expended resources in processing it,” the court said. Accordingly, both MNP service providers are likely to include fees linked to failed porting requests in their calculation of arrears.

However, Syniverse’s Goel said “a possible challenge” in recovering the arrears would be “the exit of several fringe carriers” following consolidation in the telecom industry. Recovery would “hinge on how Trai responds to the court verdict and eventually supports the two MNP service providers,” another top industry executive said.

Syniverse and MNP Interconnection had approached the telecom department last year, saying the sharp reduction in porting processing fees had led to losses and would compel them to shut services in India on the expiry of their permits in March 2019. However, both companies are said to have applied to DoT for licence renewals. (Source: Economic Times)

Huawei installs three 5G stations in Tibet

Huawei installs three 5G stations in Tibet Battling a wave of opposition to its 5G trials from the US and other countries, China's telecom technology giant, Huawei has installed three 5G stations in Tibet. Battling a wave of opposition to its 5G trials from the US and other countries, China's telecom technology giant, Huawei has installed three 5G stations in Tibet.

The first three 5G base stations have been installed, with equipment provided by Huawei, the state-run Global Times reported on Saturday.

The 5G stations are being installed in different parts of the China as part of Huawei's plans to lead the 5G trials despite the opposition.

The US has been putting pressure on the countries, it has closer ties, to ban Huawei and other Chinese telecom firms from providing gear used to build 5G wireless networks.

The 5G is the next generation of cellular technology with download speeds 10 to 100 times faster than 4G LTE networks. Huawei has denied official links with the Chinese government.

China Mobile's Tibet branch announced on Friday that one of the 5G base stations, with a peak download speed of 530 megabytes per second (MBps), became operational in Lhasa on Wednesday, the report said.

Xiang Ligang, chief executive of telecom industry news site, told the Global Times that construction of the 5G network in the remote areas of the Qinghai-Tibet Plateau faces challenges from cold weather and high altitude.

"Electricity supply alone is a complex process," Xiang said, adding that optical fiber tends to lack stability in cold weather.

Xiang insists the obstacles will be overcome. "It is important to realise synchronous development of 5G service between Tibet and other regions in China, which is a move we've been talking about since 4G kicked in," Xiang said.

The next step for China Mobile's Tibet office will be to accelerate the testing of the 5G application and promote the development of the big data industry and innovation of the Internet of Things based on 5G technology in Tibet, which will enable residents living in farming areas in Tibet to enjoy advanced modern communication services, the reported.

"Transport, communications, and energy are equally important in driving a region's economic development," Xiang said. (Source:ETTelecom)

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