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The ‘Tower’ing Burden Of Telecom

 

Vodafone and Idea are trying to save costs by shedding their tower businesses. Retail inflation has hit a 7-month-high, dimming hopes of a rate cut. The government may be scrambling to meet the fiscal deficit target. Italy, the football nation, failed to qualify for the FIFA world cup, the second time since 1958 edition. And, in tech world, chipmaker Qualcomm rejected Broadcom’s takeover bid.

 

3.58%

What is it? The rate at which retail inflation, as measured by the Consumer Price Index, rose in October from the same period a year ago.

Why is it important? This is the fastest pace in seven months, dimming hopes of an interest rate cut on December 6, when the central bank’s next monetary policy review is scheduled. This was driven by an increase in food prices—combined food inflation was 1.9% in October, against 1.25% in September, while vegetable prices increased from 3.92% to 7.47%–and fuel inflation of 6.36% last month as against 5.56% in September.

Tell me more: Retail inflation in June was the lowest (at 1.46%) since India started publishing these datasets in January 2012 and has been steadily climbing since then. Last month, it was higher in the urban areas (3.81%) than the rural ones (3.36%).

 

12

What is it? The number of state-run companies from which the government is reportedly seeking dividend amounts of 30% to 100% of their 2016-17 and 2017-18 net profit.

Why is it important? This indicates the government is scrambling to make up for the shortfall in tax revenue to meet its fiscal deficit target of 3.2% of GDP (gross domestic product) for 2017-18. It raises questions on how these public-sector firms would be able to shoulder the twin responsibility of handing out dividend payouts to the government as well as stepping up investments in an economic environment where the private sector remains hesitant.

Tell me more: India’s fiscal deficit stood at Rs 499,000 crore at the end of September, which translates to 91% of its full-year target.

 

Rs 7,850 crore

What is it? The total amount for which Vodafone India (Rs 3,850 crore) and Idea Cellular (Rs 4,000 crore) are looking to sell their standalone towers businesses to ATC Telecom Infrastructure.

Why is it important? This would help these telecom firms reduce their debt levels, which are currently straining under a five-year borrowing spree to acquire spectrum and a fierce price war introduced by Reliance Jio in a highly competitive market since 2016. Idea and Vodafone have a cumulative debt of Rs 108,000 crore. This sale is likely to generate property revenue of Rs 2,100 crore and around Rs 800 crore in gross margin for ATC in the first year.

Tell me more: Idea and Vodafone had announced a $23 billion-merger (excluding the latter’s 42% stake in Indus Towers) in March to create the world’s second largest and India’s largest telecom firm by subscribers, which the competition regulator approved about four months ago.

 

0

What is it?  The number of goals scored by Italy in the two legs of its elimination tie against Sweden to decide who will go to the 2018 FIFA World Cup in Russia.

Why is it important? Italy’s 1-0 loss on aggregate to Sweden means this high-profile footballing nation failed to qualify for the football World Cup for the first time since it missed the 1958 edition. Italy, along with Germany has the second-highest number of World Cup tournament participations (18), after Brazil (20).

Tell me more: Italy also has won four World Cup titles, the last one coming in 2006. Here, too, it is at par with Germany and ranked second only to Brazil, which has five titles.

 

78%

What is it?  The percentage of shares of chipmaker Qualcomm that are held by institutions, as of June 2017, according to Nasdaq.

Why is it important? Yesterday, Qualcomm formally rejected an unsolicited $103 billion acquisition bid from Broadcom, in what would have been the largest merger in the technology space. This shifts the attention to institutional shareholders as Broadcom CEO Hock Tan, while announcing the bid last week, said he was open to exploring more aggressive options to acquire Qualcomm.

Tell me more: The 78% institutional shareholding in Qualcomm is fragmented and spread across 1,512 shareholders. Blackrock and Vanguard have the largest holdings, of 7.2% and 7%, respectively.

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In The Making: The Largest Ever Tech Takeover

 

Broadcom has offered to acquire smartphone chipmaker Qualcomm. The average surface temperature is above that of pre-industrial era’s now. Telangana government has decided to supply electricity to the farm sector for the whole day for 4-5 days.

 

$105 billion

What is it? The value of the offer in cash and stock by Broadcom to acquire smartphone chipmaker Qualcomm.

Why is it important? If it goes through, it would be the largest-ever takeover in the technology sector, and Broadcom would become the third-largest chipmaker after Intel and Samsung. However, Qualcomm, which is in the midst of a $38.5 billion takeover of NXP Semiconductor, is likely to reject the bid on the argument that it undervalues the company. Further, this deal would face tough anti-trust scrutiny.

Tell me more: Including debt, the total transaction value would be $130 billion. Qualcomm is currently fighting a legal battle with Apple and facing an anti-trust investigation in Europe.

 

1.1° Celsius

What is it? The amount which the average surface temperature was above the pre-industrial era from January to September 2017, according to the United Nations’ World Meteorological Organization.

Why is it important? This has set 2017 to be on course to be among the three hottest years on record, which means many high-impact events such as floods, catastrophic hurricanes, heatwaves and droughts. The warning signs for governments to act couldn’t be more compelling as long-term indicators of climate change worsen, including a rise in sea levels, and increasing carbon dioxide concentrations and ocean acidification.

Tell me more: As many as 200 countries began discussions in Germany on Monday to strengthen a global climate accord even as the United States plans to quit.

 

714

What is it? The number of Indians whose names figure in the ‘Paradise Papers’, a global investigation that reveals financial dealings in tax havens of some of the world’s most powerful people and companies.

Why is it important? The income tax department and the capital market regulator said on Monday they would investigate if any of these people were involved in illegal transactions. The Central Board of Direct Taxes has asked its investigation arm to re-check tax returns filed by individuals and companies named in the Paradise Papers. And the Securities and Exchange Board of India (Sebi) will seek information from stock exchanges on listed companies’ offshore entities, which will be matched with statutory disclosures.

Tell me more: Of the 180 countries featured in Paradise Papers, India ranks 19th in terms of number of names.

 

24 hours

What is it? The number of hours a day the Telangana government is aiming to provide power supply to the farm sector for “five to six days” this week, beginning Monday.

Why is it important? This dry run of sorts is a precursor to its goal of 24×7 power being available to all 31 districts from March-April 2018. Usually, state governments have focused on subsidising power to the farm sector, whereas Telangana, on the face of it, is strengthening delivery.

Tell me more: In the April to September 2017 period, Telangana registered a 25% increase in power generated on a year-on-year basis, which was next only to the much-smaller states of Sikkim and Meghalaya.

 

$9.75 million

What is it? The interest payment on a dollar-denominated debt instrument that Reliance Communications missed on Monday.

Why is it important? This is the first debt-related default in a foreign currency by the Anil Ambani-owned company, whose telecom business lies in shambles, and which is now dependent on asset sales and lender restructuring to salvage an exit.

Tell me more: Elsewhere, it was a red-letter day for a part of Ambani’s financial services business: the company that manages his group’s mutual fund business listed yesterday and closed at a 13% premium to its issue price.

 

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