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.



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%).



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.



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.



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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News in Numbers, Mar 20, 2017: The Wall (not Trump’s)


What is it? Minimum wage for a H1B visa holder, as proposed in High Skilled Integrity and Fairness Act, introduced by Congressperson Zoe Lofgren of California earlier this year.

Why is it important? It’s one of the visa reforms being sought by some United States politicians, concerned about foreign nationals taking away American jobs. This bill was expected to impact the way Indian IT companies operate. One of the first signs of change on ground is a decision reported to have taken by Infosys not to apply for H1B visas for junior staff.

Tell me more: The introduction of the bill is potentially acting as a catalyst for IT companies even as they tweak their operating models so they are less dependent on H1B visas (and human resources in general).


139 days

What is it? The number of days Manipur was under economic blockade.

Why is it important? United Naga Council, which had imposed the blockade on the north eastern state to protest against the creation of Sadar Hills and Jiribam into full fledged districts, has called it off effective Sunday midnight.

Tell me more: It’s a win for the BJP-led coalition, which is awaiting a floor test in the State Assembly. In the recent elections, Indian National Congress emerged as the single largest party. BJP joined hands with smaller parties to claim the right to form the government.



What is it? The number of people who were sworn in as ministers in Uttar Pradesh government under chief minister Yogi Adityanath and deputy chief ministers Keshav Prasad Maurya and  Dinesh Sharma.

Why is it important? The focus of everyone’s attention was Yogi Adityanath himself, who is known for provocative and often divisive speeches, and controversial statements. His selection as the country’s largest state came as a surprise to many who thought of recent election results as a mandate for development.

Tell me more: The newly formed government has 21 ministers in cabinet rank. BJP won 312 of the 384 seats it contested (and of 403 available) in the recently held assembly elections. Samajwadi Party won 47 seats and Bahujan Samaj Party won 19.


~ 400 million

What is it? The number of customers that telecom players Vodafone and Idea will have as a merged group.

Why is it important? That would mean a 35% market share by number of users. While there were talks about Vodafone – Idea merger for some months now (especially after the launch of Reliance Jio), the companies acknowledged they were in talks last month, and formally announced it after Idea board approved the merger on Monday.  The merged entity will control over 40% of revenue market share, and a quarter of all the spectrum available in the country.

Tell me more: Vodafone will own 45.1%, and Idea promoters will own 26% in the new company.



What is it? The number of balls faced by Cheteshwar Pujara against Australian cricket team at Ranchi in the ongoing test series.

Why is it important? It is the longest innings ever played by an Indian, and beats Rahul Dravid’s record of 495 balls against Pakistan, in which Dravid scored 270 runs. Pujara scored 202. This is the third test in India – Australia series. The match ends on Monday.

Tell me more: The others in the top five list (of Indian players) who stayed longest on crease by number of balls faced) are Navjot Sidhu, Ravi Shastri and Sunil Gavaskar.

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News in Numbers: September 26. ISRO does it again..

 isro pslv


What is it? The number of satellites that were launched by Indian Space Research Organisation’s PSLV-C35 on Monday.

Why is it important? The satellites that flew on India’s workhorse rocket included three from India, three from Algeria, and one each from Canada and the US. The main payload is India’s weather satellite, SCATSAT-1. It can predict formation of cyclones four to five days in advance by studying the wind speed and direction.

Tell me more: PSLV released the weather satellite into a 730 km Polar orbit and will release the other seven into a lower orbit of 689 kms. So far, PSLV has launched 39 satellites for ISRO.



What is it? The number of countries that have ratified Paris Agreement so far. India will be the 62nd, when it ratifies the climate change agreement on October 2.

Why is it important? US and China, the two largest carbon emitters,ratified the agreement earlier this month. With India, the third largest, joining the list, the world is closer to combating climate change better. The agreement  aims to cut down global greenhouse gas emissions and limit global warming to less than 2 degree celsius over pre industrial times.

Tell me more: It was widely expected that India would ratify the agreement this year. The agreement would come into force after countries that account for at least an estimated 55% of the total global greenhouse gas emissions ratify it.


$ 6.5 billion

What is it? The amount venture capitalists invested in Flipkart, Snapdeal and Ola since 2010

Why is it important? The rationale is that the homegrown players would become ‘the Amazon of India’ and ‘the Uber of India’, just as China created its own internet giants in Alibaba (e-commerce) and Didi (cab aggregation). However, the last several quarters saw Amazon and Uber stepping up their gas in India, and might themselves end up being Amazon and Uber of the country. If that happens and it could adversely impact the returns VCs are hoping to get from their investments, and their outlook for India.

Tell me more: Amazon is estimated to have exceeded Flipkart’s sales in July. Post the merger of Uber and Didi in China, Uber has increased its focus on India.



What is it? Percentage of votes with the top three telecom companies in the GSM industry body, Cellular Operators Association of India, according to Reliance Jio, which became a member in July 2014.

Why is it important? In a letter to COAI, Reliance cited this figure to allege that the industry body was favoring the top three companies(Bharti, Vodafone and Idea). COAI, in turn, called Jio a “backdoor operator”, deepening fault lines within the telecom sector and the industry grouping.

Tell me more: Telecom is a frenemy sector. Besides competing against each other, operators depend on each other to provide network linkages to complete calls—a sore point currently—and to fill network gaps.



What is it? Number of golf majors won by American Arnold Palmer,who died Sunday night at the age of 87 years.

Why is it important? This ranks Palmer joint seventh among all players. All his seven wins came between 1958 and 1964, a period during which he competed against Jack Nicklaus (18 majors, ranked first) and Gary Player (9 majors, ranked joint fourth).

Tell me more: They were called the ‘The Big Three’ who made golf mainstream. And Palmer, the first TV star of golf, was nicknamed ‘The King’.

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Chart of the Day | Why RCom and Aircel had to merge

The merger of Reliance Communications and Aircel, announced yesterday, is a union of two telecom companies who have been struggling to keep pace in a hyper-competitive sector. This is also a sector embarking on a fresh round of consolidation that will leave it with, the prevailing wisdom says, 4-6 players of significance.

The Reliance-Aircel merger is the first of those consolidation moves. In the last five years, both companies have struggled to contend with the big three: Bharti, Vodafone and Idea. Each has had its own challenges. In 2012 and 2013, Reliance bore the brunt of the directive from the telecom regulator to weed out inactive subscribers, and saw its subscriber base plummet; even otherwise, it has struggled to add subscribers. Aircel has added subscribers, but legal troubles around the company have robbed it of the capital and entrepreneurial ballast needed to stay competitive in Indian telecom.

The fourth-largest telecom company by subscribers (Reliance Communications, owned by Anil Ambani) and sixth-largest (Aircel) have joined to create the third-largest telecom company. For how long is anybody’s guess. Unless the two companies decisively and effectively address the issues that have hobbled them, it’s probably only a matter of time before the merged company is either overtaken by current number four (Idea) or swallowed by another (Reliance Jio, owned by Anil’s brother, Mukesh).

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