Convergence Plus
Friday, June 5, 2020
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)

Samsung to Set Up India’s 1st Mobile Display Plant

Firm to invest over ₹3.5k cr in plant near Delhi, may expand it later to make displays for laptops and TVs. Samsung is setting up India's first smartphone display manufacturing unit on the outskirts of Delhi.

The South Korean company is investing more than ₹3,500 crore in this facility in Noida, as per a regulatory filing with the Registrar of Companies (RoC). It could later be expanded to manufacture displays of other devices as well.

The chaebol’s flagship India entity, Samsung India Electronics, has transferred a plot to a group company, Samsung Display, in its existing manufacturing plant area and has given a loan of ₹3,500 crore to meet the investment and working capital requirement for establishing the production unit. As per the regulatory disclosures, sourced from business intelligence platform Veratech Intelligence, Samsung India said it had incorporated a group entity, Samsung Display Noida, “with the principal business of manufacturing, assembling, processing and sales of displays (including their parts, components and accessories) for all types and sizes of electronic devices.”

Samsung said the plant would produce displays of mobile phones and IT display. However, an industry executive aware of the plans said the plant would initially produce displays for mobile phones, but could later extend it to laptops and televisions. The current investment will be enhanced as the capacities increase and Samsung Display sells the component to other brands like it does globally, he said. The first phase will become operational this year itself.

An email sent to Samsung India seeking comment remained unanswered till Friday press time.

This fresh investment will expand Samsung’s play in the component segment, with display panel being one of the largest components by value used in the manufacturing of mobile phones and televisions.

It has recently started the world’s largest mobile phone manufacturing unit in India, at a total outlay of ₹4,915 crore. This enhanced investment comes at a time when the government wants to impose duties on imported displays for both smartphones and televisions to help boost its make in India efforts.

Veratech Intelligence founder Mohit Yadav said Samsung's decision to invest heavily to build cellphone displays in India was a significant boost to make in India. This highlights that Samsung is confident that consumption will increase in India, he said.

ET had written last year that Samsung Display wanted to set up a manufacturing unit in India and that another group entity, Samsung SDI India, was looking to start local production of smartphone batteries.

Samsung India has allotted the plot to Samsung Display for a consideration of ₹92.02 crore as per the RoC disclosures. The ₹3,500 crore loan is for three years.(Source: Economic Times)

Oppo weaves growth strategy around ‘Make in India’ drive

Chinese tech giant Oppo is looking to cash in on the “incredible” opportunities thrown by untapped millennial population in the Indian market and charting out strategies to back the government’s ‘Make in India’ mission by extending support to startups and bringing India-centric innovations.

Keeping ‘Make in India’ mission at the core of its growth strategy, Oppo is aiming to manufacture 100 million smartphone units locally by the end of 2020 and bring world-class technological products that meet the needs of the ever-evolving Indian consumers.

With fast-changing technology landscape in India, Oppo is also shifting its focus towards next generation innovations like 5G and Internet of Things (IoT) to drive its next leg of growth in the country.

On the future course, Oppo India Vice President (R&D) Tasleem Arif told PTI, “India is a promising market when it comes to the roll out of 5G. India’s new National Digital Communications Policy (NDCP) presents a positive vision for the industry and country, with the goal of creating the digital infrastructure that supports the next generation of digital services.”

At Oppo, he said, work on 5G network has already begun at its Hyderabad research and development (R&D) centre and as soon as the ecosystem gets in place, the company will bring in innovative 5G technology-enabled smartphones.

5G network is being seen as the next battleground in the telecommunications space where service providers and equipment manufacturers are waging an all-out war to prove their dominance in the entire mobile ecosystem.

In the backdrop of muted smartphone sales in recent months in many countries, India becomes even more important for manufacturers in their global growth strategy as the Indian market with its large untapped millennial population presents an exciting opportunity for these players.

Oppo India Vice President (Product & Marketing) Sumit Walia said, “There are half a billion users still on feature phone that will potentially upgrade to smartphones, and that coupled with 4G penetration, availability of affordable devices and cheap data along with a strong ecosystem will continue to help the industry grow.

As per the latest IDC report, Oppo has achieved a market share of 11.8 per cent in Q3 2019, he said, adding that the company has also doubled its sales with an overall solid 92.3 per cent year-on-year growth. It has become the second-largest vendor in the fast-growing $ 300-500 segment following the recent launch of Reno2 series.

Walia further said that Oppo would like to pace up growth with “a continued focus on ‘Make in India’ and we expect to manufacture 100 million units by the end of next year”. Also, the key focus areas would be the development of differentiated form factors and meaningful innovation for all, while delivering premium experience to consumers, he added.

Acknowledging India’s importance in Oppo’s scheme of things going forward, Arif said the company is “committed to the development of the country and recognises that innovation and entrepreneurship are crucial for the future growth of the economy. Our commitment to ‘Make in India’ is a shining example of our endeavour to co-opt with the local authorities in achieving their objectives“. (Source: The 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)

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