BSNL scraps 4G equipment tender to keep Chinese companies at bay

Source: Business Standard, Jul 02, 2020

New Delhi: After banning Chinese apps, the government has decided to scrap its March 23 tender to source fouth-generation (4G) equipment for network upgrade of state-owned Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL).

According to sources, BSNL has been asked to re-tender the order, which will have specifications regarding encouraging domestic telecom equipment makers to participate, but the move is being seen as keeping the Chinese gear makers — Huawei and ZTE at bay.

According to an earlier BSNL notification, the tender was “for planning, engineering, supply, installation, testing, commissioning, and annual maintenance of 4G mobile network in north, east, west, and south zones of BSNL and Delhi, and Mumbai LSA (licensed spectrum access) of MTNL on turnkey basis”.

According to a senior official, BSNL has been asked to re-tender the contract for 50,000 BTS (base transceiver station) for network upgrade. BSNL is in the process of upgrading its network to 4G and BTS that facilitates wireless communication plays a crucial role in it.

Last month, after 20 soldiers were killed by Chinese troops in Galwan Valley of Ladakh, the Department of Telecommunications had directed BSNL to exclude Chinese gear makers from supplying 4G telecom equipment.

In May, BSNL employees had approached Prime Minister Narendra Modi to stop domestic telecom gear makers from scuttling the firm’s revival plan by putting a spanner in the tender for sourcing 4G equipment.

In a letter to Modi, BSNL staff said the issue raised by industry body Telecom Equipment and Services Export Promotion Council (TEPC) was a ploy to stall the 4G equipment procurement and launching of 4G services by BSNL.

All private operators, including Reliance Jio, Airtel, and Vodafone Idea are procuring their 4G equipment from multinational companies like Nokia, Ericsson, ZTE, Huawei, and Samsung, among others.

BSNL would be the last of the telecom companies to join the 4G bandwagon as the company prepares to compete with the likes of Reliance Jio, Bharti Airtel, and Vodafone Idea. The exclusion of Chinese telecom equipment suppliers will further delay the 4G journey for BSNL.

A Bloomberg report on Thursday said the government is likely to advise other telecom operators to shun Chinese equipment, too. The report, quoting people with knowledge of the matter, said the telecom ministry had approached private firms, including Bharti Airtel, Reliance Jio, and Vodafone Idea on their use of Chinese network equipment. A telecom ministry spokesperson was not immediately available for a comment. The telecom ministry met the private operators recently and sought their views on the impact of banning Chinese equipment on costs for roll-out of their proposed 5G networks, the people said.

Trai releases list of telemarketers, SMS codes

Source: LiveMint.com, Jun 25, 2020

The Telecom Regulatory Authority of India (Trai) has released a list of registered telemarketers and their short message service (SMS) codes used for unsolicited commercial communication (UCC) to subscribers. The list will help subscribers directly raise grievances against telemarketers who harass them through SMSes and calls.

Spam messages and calls by telemarketers such as bank and insurance agents, car salesmen and credit card sellers, among others, have troubled subscribers over the years, which have led to complaints by them to their respective telecom service providers.

Though Trai, over the years, has taken several actions such as unregistering, blacklisting and imposing penalty on telemarketers, it did not share their names and codes till now.

According to Trai, Bharti Airtel/Bharti Hexacom, Reliance Jio Infocomm, Vodafone Idea, Aircel/Dishnet Wireless, Bharat Sanchar Nigam Ltd (BSNL), Mahanagar Nigam Telephone Ltd (MTNL), Reliance Communication, Tata Teleservices/ Tata Teleservices (Mah), Reliance Telecom, Quadrant Televentures and V-CON Mobile & Infra are the only services providers, or access providers, in the country that facilitate telemarketers.

Trai’s telecom commercial communications customer preference regulations (TCCCPR), 2018, allow assigning alpha-numeric headers to telemarketers–business or legal entities–for sending commercial communication using SMS.

“Currently, these headers are also prefixed by two alpha characters separated by a hyphen from the header and it is used to identify originating access providers (OAP). Fixed length of six alpha-numeric characters are being used to assign headers and total nine characters including prefixes and separator are being used. However ,regulations permit length to go up to 11. Headers are also known as sender ID,” Trai said. The regulator has also released area-wise codes for 22 cities, regions and states in the country, including Delhi, Mumbai Uttar Pradesh (east and west), West Bengal, Maharashtra, Karnataka, Kerala, northeast, Tamil Nadu, among others.

Telcos told to stop sourcing 4G telecom equipment from Chinese firms

Source: Business Standard, Jun 18, 2020

New Delhi: The Department of Telecommunications is learnt to have directed state-owned Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL) to exclude Chinese gearmakers from supplying 4G telecom equipment. Private telecom operators have been asked to consider staying away from such Chinese firms.

The decision was taken during a meeting of the telecom department, late on Wednesday evening, sources said. It is learnt that BSNL and MTNL representatives were not part of the meeting, but have been informed about the decision. When contacted, the private operators said they were unaware of any such decision by the DoT.

Last month, BSNL staff had written to Prime Minister Narendra Modi to stop domestic telecom gearmakers from scuttling the company’s revival plan by putting a spanner in the tender for sourcing 4G equipment. In the letter, they had alleged that the issue raised by the industry body, Telecom Equipment and Services Export Promotion Council (TEPC), was a ploy to stall the 4G equipment procurement and the launch of 4G services by BSNL.

The major private operators — Reliance Jio, Bharti Airtel, and Vodafone Idea — are procuring their 4G equipment from multinational companies, such as Nokia, Ericsson, ZTE, Huawei, and Samsung.

BSNL would be the last company to join the 4G bandwagon as the company prepares to compete with the private telecom companies.

The exclusion of Chinese telecom equipment suppliers may delay the 4G journey for BSNL.

Private telcos, such as Bharti Airtel and Vodafone Idea, will also be under pressure to not buy from Chinese vendors, even as contracts for their equipment may be cheaper compared to European manufacturers. Ahead of the 5G auction, such a development may come as a challenge for the financially stressed telecom industry.

In fact, Bharti chairman Sunil Mittal had batted for a Chinese manufacturer at a conference last year. He had said Huawei products were superior to those made by European companies.

Smartphone brands to pump ₹1,200 crore in advertising as demand grows

Source: LiveMint.com, Jun 16, 2020

NEW DELHI: Smartphone brands have stepped up their advertising spends, which are expected to touch ₹1,200 crore this fiscal, as demand has started picking up with easing of lockdown curbs and rising e-commerce deliveries of non-essentials.

The advertising blitzkrieg is led by Chinese smartphone brands such as Vivo, Oppo, OnePlus, Xiaomi and Realme, which have begun promoting new launches and offers through above-the-line (ATL) and digital-led marketing activities.

Media buyers estimate the smartphone category, which spent ₹1,500– ₹1,700 crore in advertising last year, will continue to pump money into ads as smartphones emerged as an essential product during the nationwide lockdown.

Industry experts believe that the lockdown has created pent-up demand and made consumers realise that technology is important, especially when they are working from home, and thus, they will continue to invest in tech products.

“If live cricket resumes and IPL (Indian Premier League) is held in October-November then the spends could be as much as last year. Otherwise, there could be a drop of 15%-20% but nonetheless this category will remain active for the rest of 2020,” said Navin Khemka, chief executive officer (CEO), MediaCom South Asia.

Vivo India, which relies heavily on cricket as title sponsor of popular T20 Indian Premier League (IPL), recently launched a new ad campaign with actor Aamir Khan. The campaign promotes new smartphone model V19 of its camera-focused V-series.

The company has witnessed a fairly positive response from customers since the lockdown has been lifted, said Nipun Marya, director – brand strategy, Vivo India.

“The demand is picking up and if the coronavirus outbreak remains controllable then business should move in the positive direction,” he added.

Meanwhile, Xiaomi India has also been heavily promoting its products through online and social platforms. The company also launched Redmi Creators Academy, an online series on smartphone skillsets and how to better them to engage with users. “During the lockdown, over a few weekends we sold in about 50% of our offline stores in Kerala and saw 2X of the usual demand, which was validation of mobile phones being an essential commodity during such conditions,” said a Xiaomi spokesperson.

India online smartphone share to touch record 45% in 2020: Report

Source: Business Standard, Jun 16, 2020

New Delhi: Online channels are likely to account for a highest-ever 45 per cent share of smartphone sales in 2020 owing to the Covid-19 situation as people would prefer to buy devices online to maintain social distancing, a new report has said.

Among the online channels, Flipkart is likely to hold top position while Amazon will grow the fastest.

“Xiaomi is likely to lead the online brand rankings while Realme will be the fastest-growing brand in the online space in 2020,” according to the latest report from Counterpoint Research.

In Q1 2020, Flipkart led the overall online market with a 50 per cent share but its shipments declined 7 per cent (YoY). However, Amazon grew in Q1 2020 with a 3 per cent (YoY) growth.

“The Covid-19 crisis had little impact in the March-ending quarter. However, during the lockdown, the market has come to an almost complete standstill, massively impacting all aspects of the smartphone market including both online and offline channels,” said Prachir Singh, Senior Research Analyst.

While all sales volume is set to decline, sales through online channels will only decline by 5 per cent while sales through offline channels are expected to decline by 19 per cent.

“This means the share of sales through online channels will reach around 45 per cent of total volume this year,” Singh informed.

In Q1 2020, Xiaomi remained the market leader in online channels with 48 per cent share, followed by Realme with 18 per cent share.

Realme regained its top position on Flipkart. Among the top 10 online brands, Realme grew the fastest compared to the previous quarter.

However, the brand is also expanding in offline channels. It registered 269 per cent (YoY) growth in the offline channel shipments, said the report.

“Online channels remained strong during Q1 2020 due to multiple sales promotions on both Flipkart and Amazon. In terms of the price band, more than 60 per cent of the smartphone shipments on Flipkart were below Rs 10,000 while 80 per cent of the smartphones sold on Amazon were above Rs 10,000,” informed Shilpi Jain, Research Analyst.

Smartphone brands are hurriedly evolving their business models and updating channel strategies to cope with the new reality.

“We have already seen multiple brands adopting an online to offline (O2O) model and hyperlocal delivery to help their offline channel partners,” said Singh. Xiaomi has launched Mi Commerce, Vivo has launched Vivo Smart Retail (VSR) and Samsung has partnered with payments startup Benow to help its offline retailers.

Telecom AGR dues case: The story so far

Source: Business Standard, Jun 11, 2020

New Delhi: The Supreme Court today directed the telecom companies to file affidavits giving details about they will pay the Adjusted Gross Revenue (AGR)-related dues dues to the government. The road map would have to include a deadline by which the staggered payment would have to be made, along with submission of securities.

What exactly is AGR?

AGR is the basis on which the Department of Telecom calculates levies payable by operators. Basically, it is a metric calculated from a company’s gross revenues and is used to determine the levy that be imposed on the teleincome.

The AGR issue is a 14-year-old case that had mobile operators locked in a legal battle with the government over the definition of of the term. While the telecom providers insisted that AGR should only include revenue from core operations and that other sources should be excluded, the Department of Telecom (DoT) maintained that AGR also embraced non-core revenue from the sale of assets, interest on deposits, rental income and such like.

Ending this legal tussle, the Supreme Court on October 24, last year rejected telcos’ definition of adjusted gross revenue (AGR) and held that telecom service providers have to now pay fines and penalties on the unpaid fees, other than termination fee and roaming charges.

The apex court allowed the Centre to recover over Rs 92,000 crore from the already financially stressed telecom industry within three months. The order came as a major blow to the two incumbent operators, Vodafone Idea and Bharti Airtel, forcing them to hike tariffs.

In February, the Supreme Court slammed mobile carriers for non-payment of dues and threatened them with contempt proceedings if they didn’t pay up by March 17.

Today, the apex court had also come down heavily on the DoT for allowing companies to re-assess what they owed the government, and said its October 24, 2019 order on revenues for calculating dues was final.

How much do the telcos owe?

Bharti Airtel’s total due is at Rs 43,980 crore. The company has paid Rs 18,004 crore so far; the balance to be paid is Rs 25,976 crore. Vodafone Idea’s dues are at Rs 58,254 crore. The company has paid Rs 6,354 crore; the balance left Rs 51,400 crore.Tata Group dues for Tata Telecom Services Ltd (TTSL) are pegged at Rs 16,798 crore. It has paid Rs 4,197 crore; balance is Rs 12,601 crore Now, the two companies- Bharti Airtel and Vodafone Idea, sought some time to make the balance AGR payments, agreeing to have their licences cancelled in case they failed to meet the deadline. Justice Mishra said the court can’t grant an extension based on a ‘gentleman’s promise’. Vodafone Idea pleaded that it does not have enough money to pay and should be given some time. It added that its licence could be cancelled if it failed to pay up.

DoT plans to transform India into manufacturing, export hub of 5G gear

Source: Business Standard, Jun 02, 2020

New Delhi: In a bid to transform India into a manufacturing and export hub of 5G equipment, the department of telecommunications (DoT) has called a meeting on Wednesday to discuss with key stakeholders a plan to roll out a productivity-linked incentive (PLI) scheme for telecom equipment.

The move will encourage global telecom gear makers like Ericcsson and Nokia as well as Huawei (provided it gets FDI permission) to export from the country.

The proposed scheme is in line with PLI schemes which have been earlier cleared by the Cabinet for manufacture of electronics and mobile devices.

The PLI scheme under discussion provides incentives to manufacturers between 4 per cent and 6 per cent for a period of five years. But international companies must make incremental investment of over Rs 600 crore in four years and export products between Rs 1,000 crore to Rs 3,000 crore per annum. The scheme will help manufacturers reduce the cost disadvantage they face in India compared with China, which is at 17-20 per cent, and Vietnam (8-11 per cent), the two key competitors.

The meeting was called after the Cellular Operators Association of India (COAI) communicated, on May 14 to the DoT, that there was no industry consultation on the proposed draft being prepared by the ministry.

Under the scheme, international companies could make specified telecom products in India. These include 5G next generation radio access network equipment and associated systems, 5G base station and core equipment, switches, routers, optic fibre cables and digital microwave radios, among others.

Homegrown companies will also get similar incentives under the PLI scheme. However, the condition for investment for these companies is only Rs 40 crore for five years. Sales of products should be a minimum of Rs 100 crore in the first year to Rs 300 crore in the fifth year.

India currently is heavily dependent on import of telecom equipment. It imports equipment of over Rs 1.30 trillion while exports are a mere 11,500 crore. This clearly shows the huge opportunity that exists.

Currently, Nokia and Ericsson have manufacturing facilities and undertake some exports. However, homegrown companies that have been pushing for support from “Make in India” could also take advantage of the proposed plan.

The scheme will require an outlay of Rs 17,616 crore to pay for incentives. However, it is expected to generate incremental export revenues of Rs 2.17 trillion in just five years, making India a key manufacturing destination for telecom equipment. It can also generate over 100,000 jobs based on estimates.

There is a similar scheme for mobile devices. It provides incentives to international manufacturers in case they export phones worth over $200 million. Also, they have to invest Rs 1,000 crore incrementally and sell between Rs 5,000 crore and Rs 25,000 crore per annum during a five-year period.

This has already attracted the big boys that include Apple, which is planning to shift some capacity from China, and South Korean giant Samsung.

Icra expects moderate participation in spectrum auctions up to Rs 60,000 cr

Source: Business Standard, May 27, 2020

Mumbai: Rating agency ICRA expects moderate participation for the upcoming spectrum auctions at Rs 55,000-Rs 60,000 crore due to the limited financial flexibility of the industry.

The Telecom Regulatory Authority of India (TRAI) has recommended auctions with one of the largest quanta of spectrum on offer – more than 8,500 MHz, which at reserve price, is valued at around Rs 5.7 trillion. However, ICRA expects a relatively muted participation fetching around only Rs 55,000 – Rs 60,000 crore to the exchequer.

“This, along with the impending AGR dues, are expected to result in further elevation of the industry debt to around Rs 4,60,000 crore as on March 31, 2021 despite sizeable deleveraging done by the telcos as well as the anticipated improvement in cash flow generation post the tariff hikes,” ICRA said in a study on Wednesday.

“Such a high valuation is on account of high reserve prices and high quantity of spectrum for the newer bands i.e. 700 MHz and 3300-3600 MHz, which are primarily expected to be used for 5G. The 700 MHz was put to auction in October 2016 where it went unsold and thereafter the price for this band has been revised downwards for the forthcoming auction.”

According to ICRA’s Assistant Vice President for Corporate Ratings Ankit Jain, the ratings agency foresee minimal participation in the 700 MHz band and expects relatively better participation in the 800 MHz and 1800 MHz bands, that beholds significant expiries for incumbents in 2021, and thus the telcos will acquire it for continuation of 4G services.

The Centre has budgeted Rs 1.33 trillion as non-tax receipts from the telecom sector for FY2021.

“While the regular receipts – license fee and spectrum usage charges – are expected to fetch around Rs 20,000 crore, the telcos will have to pay Rs 20,000-25,000 crore as upfront payment for the forthcoming spectrum as per ICRA expectations,” the statement said.

In addition, the telcos are required to pay Rs 90,000 crore as AGR dues as per the Supreme Court order, but the payment terms are yet to be finalised in the court. “If the telcos are required to pay this amount upfront, the Government will meet its target for FY2021, while in case of staggered payment terms stretching to 20 years, there will be a sizeable shortfall in the GoI collections.”

Indian smartphone maker Lava plans to shift production to India

Source: LiveMint.com, May 15, 2020

NEW DELHI: Indian smartphone manufacturer Lava has said it will shift the production base of all of its phones meant for exports to India from China. The company will also shift its design centre to the country, chairman and managing director of Lava International told Business Standard (BS).

The move is thanks to the government’s new production linked incentive (PLI) scheme for mobile manufacturers in the country. Industry executives say that it gives manufacturers here a 6% cost advantage, something they didn’t have earlier. Rai told BS that the “cost disadvantage” Lava had as compared to China, is eliminated by the PLI scheme.

Since the proliferation of Chinese smartphones in the Indian market, companies like Lava, Micromax, Karbonn, among others, had found themselves at a disadvantage. However, Lava is among the few Indian players who had been able to move into other countries and sell phones there. The company also moved most of its business towards the manufacturing and design side of things.

The company had also benefited from the recent US-China trade war, gaining a sudden influx of business last year. Reports suggest that US telcos AT&T, T-Mobile and Sprint had handed orders worth approximately ₹2,500 crore to companies like Lava and Micromax, thanks to rising tensions between the two countries.

India has often been cited as a viable alternative to China, though countries like Vietnam remain in contention too. At the moment, companies bring semi knocked down (SKD) units into the country and assemble them here, whereas companies are now expected to move towards component manufacturing here, so that completely knocked down (CKD) units can be brought into India. Recent reports also suggest that iPhone giant Apple is planning to move much of its manufacturing to India in the next five years. The company is expected to export smartphones up to $40 billion from the country, after moving about a fifth of its production here.

Vista Equity Partners to invest Rs 11,367 crore in Jio platforms for 2.32% stake

Source: The Economic Times, May 08, 2020

New Delhi: Private equity firm Vista Equity Partners will invest Rs11,367 crore in Jio Platforms for a 2.32% stake, the third deal after Facebook and Silver Lake’s share acquisition plans over the last two weeks.

“This investment values Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore,” Reliance Industries said in a statement on Friday.

With the latest deal, Jio Platforms is set to net a combined Rs 60,596 crore for the unit of Reliance Industries which comprises mainly its telecom business under Reliance Jio Infocomm, which is the largest in the country with over 388 million subscribers. Reliance’s other digital properties and investments such as Jio Cinema, Jio Saavn and Haaptik are housed under Jio Platforms.

The transaction is subject to regulatory and other customary approvals, the company said.

“Like our other partners, Vista also shares with us the same vision of continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians. They believe in the transformative power of technology to be the key to an even better future for everyone,” RIL Chairman Mukesh Ambani said in the statement.

“In Robert and Brian, whose family hails from Gujarat, I found two outstanding global technology leaders who believe in India and the transformative potential of a Digital Indian Society. We are excited to leverage the professional expertise and multi-level support that Vista has been offering to its investments globally for the benefit of Jio,” he added.
This is Vista’s first sizable investment in India, RIL said. Currently, Vista portfolio companies have a significant presence in India with over 13,000 employees.

Vista will become the largest investor in Jio Platforms after RIL and Facebook. Facebook said on April 22 it would invest $5.7 billion in Jio Platforms for a 9.99% stake. Then on May 4, US private equity firm Silver Lake said it will invest Rs 5,655.75 crore ($747 million) in Jio Platforms for a 1.15% stake.

Vista is the world’s largest exclusively tech-focused private equity fund, and has over $57 billion in capital commitments and 20 years of investments exclusively in enterprise software and technology companies.

Robert F. Smith, Founder, Chairman and CEO of Vista, said that the PE firm believes in the potential of the digital society that Jio is building for India.

“We are thrilled to join Jio Platforms to deliver exponential growth in connectivity across India, providing modern consumer, small business and enterprise software to fuel the future of one of the world’s fastest growing digital economies,” he added.

RIL added that the investment reaffirms 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,” the Indian oils-to-telecom conglomerate said.

Morgan Stanley acted as financial advisor to Reliance Industries and AZB & Partners and Davis Polk & Wardwell acted as legal counsels. Kirkland & Ellis LLP and Shardul Amarchand Mangaldas & Co served as legal counsels to Vista.