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Bharti Airtel to gain at the expense of Vodafone Idea, say Brokerages

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NEW DELHI: Telecom czar Sunil Bharti Mittal-led Bharti Airtel may consolidate its position at the expense of Vodafone Idea Ltd as it has better balance sheet strength to deal with the eventuality of having to pay past statutory dues in case the Supreme Court rejects their review petitions, brokerages said.

Airtel and Vodafone Idea have filed separate petitions in the Supreme Court seeking review of the October 24 order of the apex court that held them liable to pay statutory dues for past 14 years after including non-telecom revenue in their annual adjusted gross revenues (AGR). The dues totalling Rs 1.47 lakh crore for the industry are to be paid within three months of the order.

“The liabilities are large at $4.8 billion for Airtel and $5 billion for Vodafone Idea, and if the Supreme Court were to dismiss the review petition causing the entire liabilities to devolve, it would be a negative development for Airtel but even more serious for Vodafone Idea which may find it difficult to fund these liabilities before January 24, 2020,” Morgan Stanley said in a report.

This, it said, “could potentially lead to further market share consolidation in the industry thereby strengthening Airtel’s positioning in the industry.” The two firms have been lobbying together with the government for relief on payment of the statutory liabilities.

Bharti Airtel’s board has already approved raising $3 billion through a combination of equity ($2 billion) and debt ($1 billion).

“In our view, this fundraise is primarily to take care of the worst-case outcome wherein the entire AGR dues become payable,” it said. “However, if part of the AGR liabilities were to be waived and/or were paid over a period of time, then the company could use the proceeds for repayment of existing debt. In either case, we see Airtel’s balance sheet strength as a differentiating factor in the industry.” Goldman Sachs said it hosted Mittal, founder and Chairman of Bharti Enterprises – the holding company of Bharti Airtel, on December 5.

“Mittal shared his thoughts on various aspects of the telecom business, including his outlook on industry structure and tariffs, the potential outcome of AGR liability, and his views on Bharti Airtel’s balance sheet and the company’s non-wireless subsidiaries, among other things,” it said.

The meeting, it said, “reinforces our constructive view on Bharti Airtel, with potential upside risk to estimates from higher-than-expected tariff hike and market share gains from Vodafone Idea,” it added.

Bharti Airtel expects industry revenues to start growing again due to recent tariff hikes, and expects industry revenues to surpass $50 billion (timeline unspecified) as opposed $30 billion at present, per company.

“In the event of any market share re-allocation in the industry, Bharti Airtel believes it is well-positioned to capture 50 per cent or more of the incremental market share; per company, incremental revenues can come at a very high EBITDA margin,” Goldman Sachs said.

The company saw a low possibility of a new player entering the India telecom market.

Morgan Stanley said the recent tariff hike announcements by all three operators is a step in the right direction towards self-repair. “While the transmission of these hikes into average revenue per user (ARPU) increases will take some time (as the new tariffs are applicable only on the next recharge and there is a possibility of downgrading to lower value packs), we believe FY21 ARPUs will nonetheless likely see substantial improvement,” it said.

It saw a possible ARPU path towards Rs 180-200 over the next few years which is not insurmountable as per user earnings were at Rs 200 in FY15.

“Such large increases will be required for Vodafone Idea along with other government relief measures to bring down its leverage position to more sustainable levels,” it said.

Before Reliance Jio entered the industry in 2016, Bharti’s ARPU was around Rs 200 per month, and the company believes it can get to similar levels over the next few quarters, with levels of close to Rs 300 per month over time, Goldman Sachs said.

“Return on capital in India telecom remains low, and per the company, ARPUs need to go up for this metric to improve; Bharti believes this is true even for competition. Bharti Airtel believes it can get to 35 per cent or more revenue market share over time, from about 32 per cent at present,” it said.

According to the brokerage, Bharti Airtel believes that while its current debt levels are elevated, it remains under control.

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63 moons to provide next-gen tech to Italian firm; eyes pan-European markets

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NEW DELHI: 63 moons technologies, formerly known as Financial Technologies, on Tuesday said it will provide next-generation technology solutions to Italy-based Spuma SRL as it targets pan-European markets.

In addition, 63 moons said it will evaluate global giants in cloud computing services like Amazon’s AWS, Microsoft’s Azure and Google cloud for deploying the technology, the provider of technology solutions to financial markets said in a regulatory filing to the BSE.

63 moons provides next-generation technology ventures and solutions for creating digital markets and marketplaces that enable price discovery and transaction efficiencies across industry segments.

The announcement comes a day after 63 moons said that it will not provide technology support to Multi Commodity Exchange (MCX) after September 30.

As per the filing, Spuma SRL will leverage 63 moons’ expertise on real-time mission critical solutions, using the latest technology suite.

The company will be offering a SaaS (Software-as-a-Service) model with earnings by way of share in revenue by transaction charges and services earned by the digital ecosystem, which is its innovative model for high-growth IP monetization similar to Indian exchanges.

The company said it “would back and boost Italy-based Spuma SRL, with its next generation technology capabilities and solutions to create a digital market ecosystem for revitalised goods in the pan-Europe multi-million euro project and offering efficient and high value procurement and exchange proficiencies of revitalised goods”.

Spuma SRL will be offering these services initially from Italy, followed by extending to all the European Union countries and users of the platform.

63 moons would be offering technology support for the production, installation, and maintenance of the software application for the entire project, while the remaining operational functions will be carried out by Spuma SRL.

Source: Press Trust of India

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Realme DIZO partners OEL to make smartwatches, audio wearables in India

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NEW DELHI: Smart devices maker Realme DIZO has partnered with electronic manufacturing services company Optiemus Electronics Limited to manufacture smartwatches and audio wearables in India.

DIZO is a global technology brand and already has its presence in several other countries. However, India is the most important market for the brand, the company said in a statement.

“We have been talking about local manufacturing since the beginning and today, this dream is realised too and we are very excited about the future. Our alliance with Optiemus Electronics Limited (OEL) only supports our commitment towards India and Indian consumers.

“We are positive that through this partnership, we will be able to bridge the gap of making more futuristic AIoT (Artificial intelligence of things) and lifestyle products for the growing consumer needs,” DIZO India CEO Abhilash Panda said.

The brand has already started manufacturing some of its products, including DIZO Watch D, here in India and will eventually move to production of the other DIZO products – existing and upcoming ones in phases.

“From selling out products within minutes of the first sale to touching 1 million consumer base in just 5 months of inception to being rated as one of the top five smartwatch brands and fastest growing brands in audio wearables, our journey has been nothing less than a dream come true,” Panda said.

Since its inception, DIZO has launched over 30 products, including smartwatches, earbuds, neckbands, beard trimmers, hair dryers, feature phones and smartphone accessories.

In terms of product categories, DIZO will focus on entering into smart entertainment, smart home, smart care, and accessories for its consumers, the statement said.

Source: Press Trust of India

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Singtel arm sells 1.59% stake in Bharti Airtel for Rs 7,261 crore

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NEW DELHI: Pastel Ltd, an entity of Singtel, on Thursday divested 1.59 per cent stake in Bharti Airtel for Rs 7,261 crore through an open market transaction.

The stake has been picked by Bharti Airtel’s promoter Bharti Telecom Ltd, as per block deal data with the National Stock Exchange (NSE).

According to the data, Pastel offloaded 9,40,00,000 shares, amounting to 1.59 per cent stake in the company.

The shares were disposed of at an average price of Rs 772.5 apiece, taking the transaction value to Rs 7,261.50 crore.

Pastel Ltd is a unit of Singapore Telecommunications Ltd (Singtel).

Post this transaction, Pastel’s shareholding in Bharti Airtel will decrease to 10.62 per cent from 12.21 per cent.

At the end of the June quarter, Pastel held 13.84 per cent stake in the firm, shareholding data with the bourse showed.

Bharti Group Chairman Sunil Bharti Mittal’s family and Singtel are co-investors in Bharti Telecom Ltd (BTL).

In early September, Singtel entities had jointly sold a 1.76 per cent stake in Bharti Airtel for about Rs 7,128 crore, while its co-promoter Bharti Telecom Ltd bought 1.63 per cent stake from Pastel for Rs 6,602 crore.

Last month, Singtel announced that its affiliates have entered into an agreement to transfer approximately 3.33 per cent stake to BTL for an aggregate amount of approximately 2.25 billion Singapore dollars (SGD), leaving direct shareholding of Singtel and Bharti in Airtel at around 10 per cent and 6 per cent, respectively.

Bharti Telecom at present holds 35.85 per cent stake in the country’s second-largest telecom service provider Bharti Airtel.

Source: Press Trust of India

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