Convergence Plus
Sunday, March 18, 2018
Foxconn's Nokia factory talks may bear fruit

Foxconn's Nokia factory talks may bear fruitFoxconn Technology is in an advanced stage of talks with the Tamil Nadu government to resolve a Rs21,000-crore tax dispute, which could help revive the Nokia mobile manufacturing plant in the state and provide employment to thousands. The Taiwanese company has taken a significant step already in this direction, buying some machines from the plant earlier this year. A senior state official said Foxconn was keen to revive the plant, which is lying defunct for more than three years now. The state government held several rounds of discussions with the company, which now needs to bring in a formal proposal, the official added.

Once the company makes an application, the state would approach the Centre to lift an asset freeze on the plant and facilitate the revival of the factory which at its peak employed some 12,000 people and produced more than 100 million handsets a year. At the time, it was the world’s largest facility for the then mobile handset market leader Nokia, and was a showcase for India’s manufacturing capabilities.

“Foxconn’s India arm is talking to their headquarters to get internal clearances, and once they give a formal proposal, we may move the department of revenue, Government of India, to at least release the plant for their operations,” the official said. “They are keen, because they’re a neighbour and they know the local ecosystem, workers, etc., and our only agenda right now is to make sure that the machinery and building that is lying vacant, gets utilised again,” he said.

Foxconn has a phone manufacturing facility at Sri City, Andhra Pradesh, located on the border of Tamil Nadu’s capital, Chennai. It employs around 6,000 people there and produces handsets for the likes of Xiaomi, Nokia and Gionee.

The world’s largest contract manufacturer, which is also the biggest contract manufacturer for phones in India, did not respond to ET’s request for comment. But a person familiar with the discussions at the company said “the plan is to go further in this direction".

Another person said Rising Star Mobile India, through which Foxconn runs its India manufacturing operations, bought machinery from the Nokia plant — shut in late 2014 — for an undisclosed amount after the Finnish company got permissions from the Central income tax authorities, as well as the Madras and Delhi high courts to sell those. It required the permission as there is a freeze on the assets due to the unresolved tax case.

"Earlier this year, Nokia engaged with a buyer interested in purchasing production machinery,” a Nokia spokesperson said. “Subsequently, we worked with the respective authorities and secured the necessary permissions for executing the sale of those specific production machinery."

Nokia has been trying to revive the plant for years and had even closed in on the Essar Group as a potential buyer two years ago. But the ongoing tax case thwarted the sale. The factory was then valued at Rs 360-415 crore. In fact, the tax dispute had kept the facility out of Nokia’s global deal four years ago to sell its handsets business to Microsoft.

"We remain open to discussions on the sale of the remaining assets including the Nokia building unit, and hope for similar support from the authorities should we find a suitable buyer," the Nokia spokesperson added.

Foxconn had earlier approached the state and Central governments to take over and revive the plant, but with a condition that it should not be saddled with liabilities from the legal issues. The talks back then had fizzled out.

Industry insiders said the latest efforts for the plant's revival appeared to be on a more solid ground as it’s a win-win for both the state government and the company. Success will help the Tamil Nadu government — which has the backing of the Centre — to showcase this as a successful development and employment generation initiative for a state which has seen political turmoil over the past year.

Foxconn, on its part, has plans to aggressively expand its capacity in the country so that it can export from here. Reviving the Nokia plant will allow Foxconn to also restart its own unit in the same Nokia SEZ, which was a feeder to the now-idle main manufacturing facility, even as it explores other states including Uttar Pradesh and Maharashtra for expanding operations.
The plant’s revival will also aid in the government’s larger aim of producing 500 million phones a year by 2020 under the Make in India programme, and bring to a closure another chapter which — together with the Vodafone-India retrospective tax dispute — had hit India’s image as an investment destination. (Source: Times of India)

Reliance Jio to raise up to $2.2 billion debt to fund RCom deal

Reliance Jio to raise up to $2.2 billion debt to fund RCom dealReliance Jio will receive funding support from parent firm RIL, and Jio’s fundraising plans may be finalized in the next few weeks
Reliance Jio Infocomm Ltd will raise as much as $2.2 billion in foreign currency debt to fund the purchase of Reliance Communications Ltd (RCom)’s wireless assets, according to two people directly aware of the company’s discussions with lenders.
While Reliance Jio hasn’t disclosed the value of the transaction to purchase RCom’s assets, the people cited above said that the deal would be funded through a mix of debt and internal accruals.

Reliance Jio, a subsidiary of Reliance Industries Ltd (RIL), will receive funding support from the parent, said one of the two people cited above. “The modality of the fundraising is being worked out and no decision has been made yet.”
While requests for comments sent to RIL remained unanswered until press time, a senior company official who did not wish to be named said that all necessary approvals for the RCom deal were in place and the fundraising plans will be finalized in the next few weeks.

In December, Jio agreed to buy RCom’s wireless spectrum, media convergence node assets, 43,000 towers, and around 178,000km of fibre network for an undisclosed sum. The deal involves primarily cash payment and an assumption of the deferred spectrum payment liabilities of RCom to the telecom department.

In a January report, rating agency Icra Ltd said that any additional debt due to the acquisition will not impact Reliance Jio’s credit profile given the strong backing of its parent.

Till 31 March 2017, RIL had invested Rs45,000 crore as equity and Rs33,785 crore as non-cumulative optionally convertible preference shares in Reliance Jio. It has also guaranteed Rs19,232 crore of Reliance Jio’s outstanding debt in the period. RIL owns 99.44% in Reliance Jio.

Reliance Jio turned profitable in the quarter ended 31 December, about a year after it started services in September 2016. It reported a profit of Rs504 crore in the fiscal third quarter.

“Jio’s profitability is to a large extent related to its low costs since Jio needs to maintain a single 4G network, while its competitors have to manage 2G and 3G networks along with 4G offerings. Going forward, Jio will also benefit from the recent reduction in call termination charges by Telecom Regulatory Authority of India since a vast majority of calls terminate in rival networks,” said Mahesh Uppal, founder, ComFirst consultancy, a telecom sector advisory firm.

In December, Anil Ambani-led RCom had announced a new asset monetization plan and its exit from the strategic debt restructuring programme.

Ambani said that his company had agreed to a new debt resolution plan that will see RCom sell its assets—spectrum, fibre, telecom towers and real estate, apart from Dhirubhai Ambani Knowledge City—and does not entail lenders and bond-holders writing off dues or converting it into equity. Through this process, he hoped to cut RCom’s debt by Rs39,000 crore from the Rs45,000 crore it owed lenders at the end of October, Mint reported in December.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.(Source:Mint)

Re-verify mobile numbers online from January 1, 2018: DoT to telcos

Re-verify mobile numbers online from January 1, 2018: DoT to telcosMobile phone users will have to wait till January 1, 2018 for re-verifying their mobile numbers through Aadhaar, without visiting the retail outlets of telecom companies.
NEW DELHI: Mobile phone users will have to wait till January 1, 2018 for the comfort of re-verifying their mobile numbers through Aadhaar, without visiting the retail outlets of telecom companies. Foreign nationals who do not have Aadhaar and did not have the option to get their mobile numbers re-verified will be able to do so by visiting their carrier’s retail outlets and submitting their passport details, the telecom department said Friday. A telco representative can also visit the subscriber.

The DoT mandated telcos to re-verify mobile numbers belonging to non-resident Indians (NRIs) and senior citizens above 70 years not having Aadhaar or their mobile number registered with Aadhaar, besides physically challenged people, by using systems created by telcos on their websites.

Those having mobile numbers registered with Aadhaar will be able to use 14546 as an interactive voice response system (IVRS) helpline number for generating one-time password (OTP), for getting their mobile numbers re-verified.

“The licensee must ensure that the above mentioned category of subscribers shall be able to re-verify their mobile connections through these alternative methods by January 1, 2018,” the DoT said in a notice on Friday, detailing processes for five sub-categories of subscribers.

“The licensee shall use 14546 as the non-metered short code for IVRS based OTP authentication process the re-verification of mobile subscribers,” the department added in an 18-page note, which was also issued to telecom players.

The telecom department has specified the processes telcos have to adopt for doing the re-verification online for each of the subset of subscribers, while addressing the issue of changes in customer acquisition form or CAF, which was flagged by carriers. The DoT has now allowed telcos to use electronic forms or e-CAF while completing the re-verification process on their websites.

The clarity from DoT will now allow carriers to put processes in place and begin online re-verification from January, 2018. For instance, telcos will have to create a web portal or page specifically for NRI customers. It also addressed the demand of carriers to provide an extension of four to six weeks to implement the government-mandated processes.

ALSO READ: Telcos suggest user-friendly innovations for rural customers to spur mobile-Aadhaar linking

"We're looking into and evaluating the processes that have been defined by the DoT," said Cellular Operators Association of India, which represents all carriers including Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio.

The DoT has been mandated by the Supreme Court to re-verify all mobile numbers, and had set the deadline of February 6, 2018. With a month-long delay, meeting the deadline looks tough.

“In case required, we can seek an extension from the apex court. But if the new methods are adopted, it will fasten the process of verification manifold,” a DoT official said, but did not mention whether the call for seeking the extension has been taken internally.

The Unique Identification Authority of India (UIDAI) had said mid-last month that mobile phone users will no longer need to visit stores of telcos from December 1, after the DoT identified three methods of re-verification of mobile phone numbers – to use OTP or one-time password generated through SMS, IVRS and through the telcos’ mobile apps – to ease the process of re-verification.

DoT, in October, had also allowed re-verification through iris-based biometric devices and at the doorsteps of consumers who are unable to use OTP or fingerprint authentication or who are incapacitated and cannot go to retail stores. While telcos submitted the processes for approval to DoT and UIDAI, the latter turned down the option of OTP through SMS, citing security issues.

It is unclear at the moment if the DoT has disallowed home visits. (Source: ETTelecom)

Telcos wrote off up to $50 billion due to Reliance Jio: Sunil Mittal

Telcos wrote off up to $50 billion due to Reliance Jio: Sunil MittalReliance Jio's prolonged free voice and data offers were a major reason for telecom companies writing off investments of up to $50 billion, said Bharti AirtelBSE -1.00 % chairman Sunil Mittal, who also called out the newcomer for opposing a relief package for the debt-laden sector. In an interview with ET, Mittal said that Bharti Airtel had benefited from the rapid consolidation in the telecom industry, which has been accelerated by Jio's entry with free services and could well return to the No. 1 slot by revenue market share by March 2019, beating the Vodafone India-Idea Cellular combine.

"Market has consolidated to a level which was an aspiration, but never thought to be possible. No. 2 Vodafone and No 3 Idea being put together, is unprecedented... you never see two strong companies merging," Mittal said.

The Bharti Airtel chairman said his company would be open to acquisition talks with Aircel, whose merger with Reliance Communications (RCom) recently fell through. "I think for them (Aircel), it's only Vodafone-Idea combinationor us. Whenever there will be a possibility of a conversation, I have no doubt, we will be a part of that conversation," he said, when asked if Airtel was the natural suitor for the Maxis-owned carrier.

Airtel had last year bought Aircel's 4G airwaves in the 2300 MHz band in eight circles for Rs 3,500 crore through a trading deal. Jio's entry in September 2016 with free calls and data tariffs disrupted the Indian telecom space, forcing older telcos like Bharti Airtel, Vodafone and Idea to dramatically drop tariffs to retain customers and stay competitive.

Since April this year, Jio has started to charge for data, albeit at very low rates, while voice is free for life. Mittal believes the fierce price war in the sector will take two more quarters to stabilise.

This bruising price war has adversely impacted the revenue, profitability and cash flows of all telcos, forced Vodafone and Idea to merge, left smaller companies like RCom and Aircel struggling for survival, and pushed the government into setting up an inter-ministerial group to suggest relief measures for the industry.

"My estimate is about $40-50 billion have been written off by various companies, many of whom are international investors. It (the write-offs) is largely due to Jio...the pricing. Having such a long, free promotional period and in some sense, decided by laws of the land in their favour, is unheard of. In my opinion, in Europe or US, this would have been stopped. It would have been seen as predatory," said Mittal, who recently turned 60.

Most of the write-offs accrue to Vodafone, Telenor, Etisalat, Tata Teleservices and Reliance Communications, which is shutting down voice services by the end of the month. Mittal said the measures proposed by the inter-ministerial group (IMG) that had been set up to devise a relief package for the telecom industry, were 'inadequate' and expressed the hope that the union cabinet, which was the final authority, would consider other measures such as reducing licence fee and spectrum user charge.

"Sixteen years (instead of 10 to pay for auctioned airwaves) without reduction of interest is not giving any benefit. It's absolutely inadequate," he said. He added that the government had recognised the crisis in the industry, which is saddled with a debt of Rs 5 lakh crore, by setting up the IMG in the first place. "But one operator (read: Jio) opposed any relief package for the industry, which is rare. I think outcome of the IMG recommendations, therefore, was weakened from the objectives it started with."

In its submission to the IMG, Jio had blamed the older telcos for their own financial plight due to under investment into their operations and over dependence on debt funding. The billionaire industrialist said his company accepted the telecom regulator's recent proposals on the caps on airwaves holdings, but criticised the regulator's suggestion to remove the 50% limit on telcos' holding airwaves within a specific spectrum band, saying it was designed to allow one operator to hold more than 10 MHz in the lucrative 4G band of 850 MHz.

"Moving (the overall spectrum holding limit from) 25 to 35% is a very good move given there are only four operators left. But in every band, there should have been a 50% cap. This whole thing is designed to allow more than 10 MHz in 850 MHz...but it's alright. We accept it," Mittal said.

Jio holds the maximum amount of airwaves in the 850 MHz band across all 22 circles, with 10 MHz or close to it in most circles, and above 10 MHz in three, according to the regulator's data. Trai's recommendation to relax the intra-band caps, if accepted by the government, will offer Jio the option of adding more airwaves in the band, likely from RCom, which has just received 30 MHz of airwaves in that band from its merger with Sistema Shyam Teleservices. (Source: Economic Times)

Aircel Partners With Amazon to Offer Cashback on Unlimited Calling Plans

Aircel Partners With Amazon to Offer Cashback on Unlimited Calling PlansAircel has announced a cashback offer that will provide buyers of the operator’s Unlimited plan cashback on payments made using Amazon Pay balance. The new offer is applicable only on select Aircel recharges purchased via via Pay balance and provides customers Rs. 75 cashback.

Additionally, the operator has launched a Rs. 146 plan that is available only via the Aircel app. The new plan provides unlimited calls and 5GB of 3G/ 2G data for 28 days.

Anupam Vasudev, Chief Marketing Officer, Aircel said, “We want to pitch Aircel Mobile App and Amazon as the best recharge and service destination for Aircel consumers and are confident that these value-loaded offerings on Aircel App and Amazon Pay are not only going to delight our customers but also tip the scale for the fence-sitters to adopt and embrace the convenience of digital payments, available on their phones.”

Sriram Jagannathan, Vice President, Amazon Payments, said, “We are happy to partner with Aircel to extend the trusted and convenient Amazon Pay experience for customers on their preferred telecom service provider.”

Aircel rival Reliance Jio will also announce a cashback offer on Thursday evening, wherein it will provide Prime users benefits worth up to Rs. 2,599 on purchasing recharges of Rs. 399 or more. The Mukesh Ambani-backed operator is partnering with wallet companies, e-commerce websites, and fashion and travel sites to provide the vouchers and cashbacks to the tune of Rs. 2,599. Airtel had also offered 100 percent cashback on its Rs. 349 recharge a few weeks ago. (Gadgets 360, NDTV)

BSNL to hire consultant for tower business spin-off blueprint

BSNL to hire consultant for tower business spin-off blueprintState-run Bharat Sanchar Nigam Ltd (BSNL) hopes to soon rope-in a consultant to work out modalities for hiving-off the mobile tower business into a separate company, its CMD Anupam Shrivastava has said. The Cabinet, in September, had cleared spinning off the mobile tower assets of the telecom corporation into a separate company. BSNL owns 65,000 of the estimated 4.42 lakh total mobile towers in the country, or 15 per cent share. A committee has already been formed with representatives from Telecom Department and BSNL to look into the requirements and formalities for the separate tower company, Shrivastava told PTI.

“We are also hiring a consultant... who will drive us through formation of Tower Company,” he said.

The consultant could be hired on nomination basis, meaning a firm that has already done work for the telecom PSU, he added.
The corporation hopes to hire the consultant in about a fortnight, if all goes well.

Shrivastava said the final proposal outlining the modalities for the new company along with recommendations from the consultant could be placed before the BSNL board as early as December. (Source: The Hindu BusinessLine)

Spectrum allocation critical to 5G: Jio President

Mobile app to make Aadhaar verification easierSpectrum allocation will be the most critical element in adoption of fifth-generation or 5G mobile networks in India, Reliance Jio Infocomm president Mathew Oommen has said. The comment comes in the wake of the government last month setting up a high-level panel with a corpus of Rs 500 crore for research and development to facilitate rolling out of 5G-based services by 2020. “The government has set its focus on 5G. It is important for the industry, technology community and academia to work together and also participate (in auction) for getting the right amount of spectrum,” Oommen told ET. “We need building blocks, and the most critical element is the amount of spectrum allocation per carrier.”

Oommen, who heads global strategy, service development and networks at the new entrant, had recently said that the telco was focusing on 4G-based services but was also looking at 5G.

Telecom Regulatory Authority of India has sought views of the stakeholders on the quantum, timing and valuation of airwaves in 3300-3400 MHz and 3400-3600 MHz bands that could be auctioned in order to enable telecom operators to offer 5G services.

At least 100 MHz per operator would be required for 5G enablement, according to Oommen, who said deployment would be carried over frequencies in the 3.5 GHz or less than 6 GHz range. The Global Mobile Suppliers Association has said the 3300-4200 MHz and 4400-4990 MHz bands would be primary spectrum bands between 1GHz and 6 GHz for the introduction of 5G.

In the previous auction, the spectrum in 700 MHz band, considered efficient for rolling out 5G, besides 4G, remained unsold as the industry alleged exorbitant pricing. Asked whether Jio could consider purchase of airwaves in the premium 700 MHz band in the next auction, Oommen said it was too early to spell out a strategy. Jio, which launched commercial services in September 2016, has IP-based 5G-ready network. (Source: Economic Times)

Telcos ask distributors to join GST network this week

Airtel's Sunil Mittal flags 'unprecedented market disruption' by Reliance JioBig phone companies have asked their distributors to complete all pending registrations under the goods and services tax (GST) this week, warning that a failure to do so could invite government action, throw up legal complications, disrupt prepaid services business and hurt revenue in the July-September quarter. Third-largest carrier, Idea CellularBSE 1.92 % is learnt to have set a July 10 deadline for its distributors to conclude GST registrations, while No 2 carrier, Vodafone India, is believed to have told its battery of distributors to do the same this week and also ensure their partner retailers follow suit, as every link in the distribution cycle is legally bound to comply with GST, three executives in the know told ET.

Telcos have told their distributors that if they fail to wrap up all pending GST registrations this week, it would become legally impossible for them to refill their talk-time balances, which would disrupt continuity of the prepaid services business, scuttle new activations and product launches, and in turn, hit revenues, the executives said. Telcos, their distributors and retailers were expected to wrap up GST registrations by July 1.

"If the problem lingers for several weeks post-July 1, the immediate revenue hit for the telecom industry could be around Rs 130-140 crore per month during the September '17 quarter," a senior executive of a leading mobile carrier told ET. One of India's biggest phone companies has asked all its distributors to get GST-registered immediately. "Legally, there are turnover-based exemptions, but we would want all our distributors to be registered to simplify things," a top executive of a Big 3 phone company told ET.

Under GST rules, any business entity supplying goods and services with an annual turnover of Rs 20 lakh has to register, while the threshold is Rs 10 lakh for those operating in the Northeast. A senior executive of another Big 3 phone company said "our distributors have also been told to get cracking on registrations and also coax partner retailers to get GST-registered quickly as a retailer's GST liability would come on the distributor if it fails to complete the registration process".

Though the situation has improved marginally over the past week, the level of pending registrations across the telco distributor/retailer fraternity on a national level remains sizeable. More than 90% of mobile phone users subscribe to prepaid services, which generate as much as 80% of telecom operators' revenues. If distributors of such services fail to complete GST registration formalities, they will be unable to legally seek talk-time refills from telcos, and in turn, not be able to offer the same to partner retailers.

If the retailers are unregistered, they too will be unable to sell prepaid recharge vouchers and top-ups to nearly a billion prepaid users. The GST registration woes come on the heels of telcos already under pressure amid intense competition and have sought incentives from the government to ease financial stress levels.

Bharti AirtelBSE 2.27 %, Vodafone India, Idea, Reliance CommunicationsBSE 5.93 %, Reliance Jio Infocomm, Aircel and MTS India did not reply to ET's queries at press time. Separately, telcos are also bracing for a negative impact on Ebitda — albeit limited — in the April-June '17 period for having incurred one-time costs towards overhauling software/billing systems to ensure they were GST compliant from July 1.

Experts reckon each pan-India operator has spent nearly Rs 50 crore on such systems reconfiguration, while smaller telcos have each shelled out Rs 20-30 crore for the same. Angel Broking fund manager and telecoms sector watcher, Mayuresh Joshi, however, feels these additional costs incurred for rejigging software/billing systems "will not make a material difference to telco Ebitda levels in the June quarter as these are one-time expenses of a non-recurring nature". (Source: Economic Times)

DoT insists on GPS in low-cost phones; price may go up by 50%, says industry

DoT insists on GPS in low-cost phones; price may go up by 50%, says industryCiting consumer safety, especially of women, Department of Telecom has rejected handset makers’ demand for using alternative technology instead of GPS in low-cost mobiles, while the industry warned that the decision will push up prices of such feature phones by over 50 per cent. The government has made it mandatory to install Global Positioning System (GPS) in all mobile phones, including feature phones that will be sold in India, from January 1, 2018 so as to locate subscribers in emergency situations.

“GPS is the main tool regarding location details of the subscriber in emergency, so government has decided to implement it in all the mobile phone handsets from 1 January 2018 in a positive manner,” the DoT has said in a reply to industry body Indian Cellular Association (ICA). ICA, which represents majority of mobile phone companies in India, had written to the government to use A-GPS technology which can help in locating callers using mobile towers near their location.

DoT however said the method used for locating caller with the help of mobile towers is not very accurate. When contacted, ICA National President Pankaj Mohindroo said: “The price of low-cost feature phones may rise by over 50 per cent as adding GPS system will require better configuration.” (Source: The Hindu Businessline)

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