Panel of secretaries seeks recommendations from DoT, TRAI on reforms for telecom, bailout package likely by Jan 2020

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With the need for a telecom bailout package getting more urgent every day, the government has sprung into action. The committee of secretaries, that has been set up to chart a bailout package for the ailing telecom sector, has asked Department of Telecom and Telecom Regulatory Authority of India (TRAI) to give their recommendations on incentives and reforms that are feasible and urgent for the industry, sources told CNBC-TV18.

The committee comprising of secretaries of the Department of Telecom, corporate affairs ministry, law ministry, revenue department and economic affairs department has held two meetings so far to discuss the matter.

According to a source, the DoT has also met with the committee of secretaries this week to present a detailed account on the state of the telecom sector and the areas of stress. Post the meeting, the panel asked for recommendations from both DoT and TRAI as it wants to fast-track the bailout package and complete it by January 2020 or before, the source, who did not want to be named, said.

“It’s a positive move that DoT and TRAI views have been sought since both have had regular consultations with telecom players and would be able to present a comprehensive outlook to the committee of secretaries,” said the source.

The telecom sector has been ailing with a high debt burden, tax levies that comprise almost 30 percent of its revenue and steep network costs.

While working capital is strained and debt is mounting, the SC ruling on the definition of Annual Gross Revenue (AGR) has added a massive liability of an expected Rs 1.43 lakh crore on the telecom players, with a large chunk falling on Bharti Airtel and Vodafone Idea.

The panel will be meeting telecom operators to get their view. While the operators have submitted their demands seeking a waiver of interest and penalties on the unpaid AGR amount, the COS will be speaking to executives of these companies to get a detailed presentation of the pain points.

“They will meet with Cellular Operators Authority of India, Bharti Airtel, Vodafone Idea and Reliance Jio to begin with and then meet BSNL and MTNL in the next round,” added another source.

Telecom players have asked for deferment of payments of spectrum won through auctions, lowering airwave usage charge, lowering obligation of telecom service providers for providing 5 percent of their annual revenues for the USOF and reduction in the AGR fee from 8 percent to 3 percent, among others.

“COS is considering all possible reforms which will enable long-term relief for the sector but it will not take drastic moves,” added the source. “The most likely reforms that are being considered are cuts in various tax levies to enable these companies to save costs for working capital, lowering interest rates on and widening the scope and tenure of payments for spectrum.”

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IndiGo signs one-way codeshare pact with Qatar Airways in its bid for international expansion

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IndiGo is going on war for international expansion and it has chosen Qatar Airways as its second codeshare partner. On Thursday, IndiGo signed a one-way codeshare agreement with Qatar Airways which will enable the latter to place its code on IndiGo flights from Doha to Delhi, Mumbai, and Hyderabad.

Currently, the agreement is for one-way codeshare as IndiGo is facing challenges with respect to the booking and reservation system in its codeshare with Turkish Airlines. A two-way codeshare between IndiGo and Qatar Airways is expected in around a year’s time.

“We expect the IT infrastructure should take about a year …,” IndiGo chief executive officer Ronojoy Dutta said.

This will be the second codeshare agreement for IndiGo after Turkish Airlines. However, IndiGo emphasised that its partnership with Qatar Airways is in line with IndiGo choosing the right friends for distant lands.

“It is a cold dark world out there and if there is anything that British history has taught us is to never go to war alone. We are going in a battle for international [destinations]  and we need to choose our friends wisely … we don’t want to be alone in foreign geographies and we want help in distant airports,” Dutta said.

While the current arrangement is for three Indian cities from Doha, Qatar Airways said that it expects that this codeshare will grow to all cities which IndiGo connects in India.

“There is huge potential for growth between IndiGo, Qatar Airways … there is tangible sign of togetherness and growing cooperation between two airlines, countries. The two airlines are more aligned that what casual observers might think,” Qatar Airways Group chief executive, Akbar Al Baker said.

“We believe this agreement will be just the first step in strengthening our relationship and we very much look forward to working together to harness our complementary strengths and resources, to enhance the travel experience for our passengers around the world,” Al Baker added.

Qatar Airways, with its fleet of over 250 aircraft, operates to 160 destinations worldwide. It currently operates 102 weekly flights between Doha and 13 destinations in India, including Ahmedabad, Amritsar, Bengaluru, Chennai, Delhi, Goa, Hyderabad, Kochi, Kolkata, Kozhikode, Mumbai, Nagpur, and Thiruvananthapuram.

The airline’s cargo division, Qatar Airways Cargo, currently operates a total of 28 weekly freighters to seven destinations in India.

“This is a momentous occasion for us, as we sign this codeshare agreement with one of the finest airlines in the world. This strategic alliance will not only strengthen our international operations, but also boost economic growth in India, by bringing in more traffic and heralding opportunities for trade and tourism through seamless mobility,” Dutta added.

IndiGo operates close to 1,500 daily flights to 60 domestic and 23 international destinations, with a fleet of 247 aircraft.

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Indiabulls Housing Finance shares jump 17% after Q2 earnings, govt package

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Indiabulls Housing Finance surged nearly 17 percent after the company disclosed its financial results for the quarter ended September 30. The housing finance company’s gross non-performing assets declined by 3.1 percent to Rs 1,611 crore. Indiabulls Housing Finance’s consolidated Q2 net profit fell 32 percent to Rs 702.18 crore year on year, while total income fell 24 percent to Rs 3,420.45 crore.

The stock price jumped as much as 16.71 percent to a high of Rs 255 intraday on the BSE. At 11.30 AM, Indiabulls Housing Finance shares traded 10.40 percent higher at Rs 242.05 per share. The Sensex was up 0.18 percent at 40,552.77.

The government’s proposal to create a Rs 25,000 crore alternative investment fund for middle-income and affordable housing project has also boosted sentiment for the shares of housing finance companies. The fund is expected to support around 1,600 projects across major cities in India.

The company said its board approved the issuance of non-convertible debentures of up to Rs 10,000 crore. Its board of directors also declared an interim dividend of Rs 7 per equity share.

Edelweiss Securities said Indiabulls Housing Finance’s valuations would remain under pressure owing to weak real estate sentiment in the country and with the merger with Lakshmi Vilas Bank rejected.

“However, management is trying hard to reignite investor confidence by evaluating a potential buyback (subject to regulatory clarity) and a higher dividend (rate maintained at 50% levels),” said the brokerage.

Gagan Banga, VC and MD of Indiabulls Housing Finance, said in an interview to CNBCTV18, “our pre-provisioning operating profits, along with the other buffers that we carry, have put us in a position that whatever be the situation we should be able to handle it as we have handled the last 13 months.”

Indiabulls Housing Finance shares fell over 71 percent in the last one year due to several regulatory and legal issues. Allegations of financial fraud were filed against the promoters of the housing finance firm and its parent.

The Citizens Whistle Blower Forum has filed a public interest litigation before the Delhi High Court wherein certain allegations have been made against the Indiabulls group. The company has vehemently denied the frivolous allegations that have been made without basic research or inquiry. The company has also filed a perjury application wherein notice has been issued,” the company said.

It said the management has concluded that the allegations made in the writ petition has no merit and no impact on the financial statements. The matter is sub-judice and pending with the Delhi High Court, it added.

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Govt’s Rs 25,000 crore real estate package will help ease distress in the sector, but time is of essence, say analysts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Keeping her promise to bring relief to the real estate sector, finance minister Nirmala Sitharaman’s on Wednesday announced that the government will invest Rs 10,000 crore in the Rs 25,000 crore alternative investment fund (AIF) for the completion of stalled affordable and middle-income housing projects.

As per analysts, this booster is a positive move for the liquidity-starved real estate sector. However, they added that one needs to see the modalities on implementation as time is of essence in delayed projects.

“The vexed problem of delayed and stalled real estate projects appears to have found a solution, with the finance minister announcing Cabinet approval of the scheme to provide ‘last mile funding’ for such projects, which she had proposed earlier. The funds will provide relief to developers with unfinished projects and also ensure delivery of homes to buyers,” said Niranjan Hiranandani, president (National), NAREDCO and managing director, Hiranandani Group.

Anuj Puri, chairman at ANAROCK Property Consultants, also cheered the move, saying that this is a critically important move that eliminates the ambiguity which surrounded the timelines for setting up the fund, and its actual implementation.

Many sovereign funds have shown interest in the AIF, which will be managed by SBICAP Ventures, Sitharaman said at a media briefing after a Cabinet meeting.

As per the government’s estimates around 4.58 lakh housing units are stuck in India with over 1,600 stalled realty projects.

Also, the special window will get investments from institutions like Life Insurance Corporation, the State Bank of India, and others which will take the corpus to nearly Rs 25,000 crore. The fund will also be open to other sovereign funds to add to the corpus. More importantly, several non-performing asset (NPA) projects and those facing bankruptcy proceedings under the National Company Law Tribunal (NCLT) shall also be included provided they are not referred for liquidation. This will bring in even more stalled projects into the eligibility criteria and give relief to more aggrieved homebuyers.

Experts believe that this move couldn’t have come at a better time because the delay was causing serious apprehensions. “The delay in the on-ground deployment of the stress fund gave rise to severe apprehensions about the main issues – that of stuck and delayed projects – that had remained unaddressed so far. The timeline for setting up this fund and its actual implementation is quite critical,” noted Puri.

Other market experts also echoed similar views.

Shishir Baijal, chairman and managing director, Knight Frank India said: “The inclusion of developments under NPAs and NCLT into the gamut of eligible projects, albeit these are net positive projects, into the special window funding is a welcomed decision.

“The extension of this benefit to mid-income beyond the affordable housing segment is a critical step forward. We welcome these changes and feel that this will help create greater momentum in the stock movement. This step will definitely create greater confidence and credibility and may, in due course, encourage private segments to extend their support in last-mile funding , helping the beleaguered sector to go over this period of a slowdown”.

Meanwhile, Siddhartha Mohanty, managing director and CEO of LIC Housing Finance hailed the government’s decision as a masterstroke.

“The Rs 25,000 crore alternate investment fund (AIF) announced by the government on Wednesday to help complete the stalled housing projects is a “masterstroke” by the Centre as it addresses the issues of developers as well as homebuyers.”

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Centre wants ecommerce companies to help kirana stores grow, says report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Department for Promotion of Industry and Internal Trade (DPIIT) has written to ecommerce companies asking them to come up with plans to work with small retailers to help boost the neighbourhood stores, reported The Economic Times, citing three senior industry executives, who also said that this indicated a policy may be in the works regarding the same.

According to one of the executives cited in the report, the government, through this, is seeking to address the concerns of small retailers over online discounting.

The executive said that the Centre has taken note of the fact that the ecommerce business is constantly growing in the country and has, in fact, delivered decent growth this festive season despite the consumption space witnessing a slowdown overall, the report said.

“Hence, it wants to create a policy framework whereby small retailers and businesses can also be part of this growth story,” the executive was quoted as saying in the report.

When contacted by the paper, Flipkart, Amazon, Zomato, Swiggy and Big Basket didn’t respond to queries.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow