Samsung becomes first smartphone company to hit $10 bn revenue in India

Source: Business Standard, Dec 03, 2019

New Delhi: Samsung India has become the first smartphone and consumer electronics company to achieve $10 billion in revenues in the country, according to the latest regulatory filings made to Registrar of Companies (RoC). The milestone comes at a time when Samsung is heading into its 25th year of operations in India.

The South Korean technology giant, also the world’s biggest maker of smartphones, reported a revenue of Rs 73,086 crore in 2018-19 on the back of solid performance across its smartphones and consumer durable divisions, according to RoC data.

Samsung India posted a 20 per cent jump in revenue in FY19, doubling its growth rate of 10 per cent achieved during FY18.

According to RoC filing, Samsung India’s revenue in FY18 stood at Rs 61,066 crore.

Samsung India’s smartphone division contributed a major chunk to the overall revenues, with mobile phone sales amounting to Rs 43,087 crore or nearly 60 per cent of overall revenue.

Samsung India’s TV as well as home appliances divisions also performed with double digit sales growth, according to RoC documents.

Samsung entered the Indian market in 1995 and currently operates the world’s biggest mobile manufacturing unit at its Noida facility. It has another factory in Tamil Nadu.The South Korean giant has five R&D and one design centres in the country. Samsung is also one of the biggest employers in the country with over 70,000 employees.

After $13-bn AGR hit, future of India's tattered telecom hinges on govt aid

Source: Business Standard, Nov 28, 2019

New Delhi: The Indian government’s win of a long-contested dispute over telecom fees could end up a Pyrrhic victory, as the billions of dollars in levies now owed are seen as burdens too big to bear for two of the country’s three main carriers.

Vodafone Idea Ltd, India’s biggest carrier by user numbers, is widely regarded as most on the ropes, with parent Vodafone Group calling the situation “critical” after the unit was saddled with about $3.9 billion in fresh payments due.

That is the biggest portion of the $13 billion incurred by the sector after India’s Supreme Court last month sided with the government in how spectrum usage and licence fees are calculated.

Bharti Airtel, the No 3 provider which must pay roughly $3 billion under the ruling, has also flagged distress, saying the decision casts much doubt on “its ability to continue as a going concern.”

To industry executives and analysts alike, there’s only one solution for the sector which was even before the current crisis debt-ridden and battered by a brutal price war: significant government financial support.

Hopes have been raised after the government deferred upcoming spectrum payments for the next two financial years until March 2022. Finance Minister Nirmala Sitharaman also said this month that relief is under consideration although no final call had been made.

“If the government does provide some measures, there is still some chance for (Vodafone Idea) to continue as a going concern. It all depends on what kind of relief measures the company will get,” said Umesh Mehta, head of research at Samco Securities.
 

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Finland’s Salcomp buys Nokia’s defunct unit near Chennai for Rs 215 cr

Source: Business Standard, Nov 25, 2019

Chennai: After nearly six years, the doors of Nokia’s Chennai plant, shut due to a tax dispute, are expected to reopen as Finland-based Salcomp, one of Apple’s major suppliers, has agreed to buy the unit for around $30 million (Rs 215 crore).

The factory has been shut since 2014 after a dispute between the Finnish mobile handset maker and tax authorities.

Confirming that the company had reached an agreement with Salcomp for the sale of its facility in Sriperumbudur, Chennai, a Nokia spokesperson said the firm was hopeful of “continuing” support from the authoritities in securing the necessary clearances to complete the sale.

Salcomp is expected to begin operations at the plant by next year, and is likely to invest around $300 million over the next five years. Nearly 10,000 people are expected to get jobs once the factory goes full steam.

The factory, once the largest Nokia mobile manufacturing unit worldwide, was shut in 2014 and some 15,000 direct employees have lost jobs. Earlier, HTC, Foxconn and Essar had evinced interest in the unit but did not pursue the matter.

The Nokia Manufacturing facility, which employed over 30,000 employees directly and indirectly, was freezed by the Income Tax department following a Rs 210-billion income tax dispute. Following this the Finnish company, which sold the mobile handset business to Microsoft in between, suspended operations at the unit in November 2014. After the Nokia unit was shut, almost all the ancilliary companies, including Foxconn stopped operations in the SEZ.

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Govt allows telcos to defer spectrum dues

Source: LiveMint.com, Nov 21, 2019

NEW DELHI : The Union cabinet on Wednesday gave beleaguered telecom operators Bharti Airtel Ltd and Vodafone Idea Ltd a breather by allowing them to defer payments for spectrum purchases by up to two years.

The move to defer payments for 2020-21 and 2021-22 will be a relief to these companies while helping Reliance Jio Infocomm Ltd as well. It follows the Supreme Court’s 24 October ruling that directed older telecom firms to pay at least ₹92,000 crore in past dues to the government within three months.

“Department of Telecommunication will give an option to the Telecom Service Providers (TSPs) to defer payment of the spectrum auction instalments due for 2020-21 & 2021-22, either for one or both years. These deferred amounts bill be spread equally in the remaining instalments to be paid by TSPs. Interest as stipulated while auctioning of the concerned spectrum will however be charged so that NPV (net present value) is protected,” the government said.

Vodafone Idea and Bharti Airtel suffered record losses in the September quarter, hit by the apex court’s ruling that upheld the government’s broader definition of revenue on which it calculates levies on telecom operators. Bundling of unlimited free voice services with very cheap data prices by Reliance Jio had forced Bharti Airtel and Vodafone Idea to match tariffs, leading to an erosion in earnings.

“The decision for deferring spectrum payment instalments for two years will be implemented within a fortnight. Amendment to the license shall be issued expeditiously with the approval of hon’ble minister of communications,” the government statement added.

This also comes at a time when Bharti Airtel, Vodafone Idea and Reliance Jio are raising tariffs, indicating that a three-year-long price war that led to an unprecedented industry consolidation is nearing an end. “Deferment of spectrum auction instalments will ease the cash outflow of the stressed TSPs and facilitate payment of statutory liabilities and interest on bank loans. Continued operation by TSPs will give a fillip to employment and economic growth. Improved financial health of TSPs will facilitate maintenance of quality of services to consumer,” the statement said.

Multiple policy flip-flops push telecom industry to a corner

Source: LiveMint.com, Nov 13, 2019

NEW DELHI : Those who cannot remember the past are condemned to repeat it,” goes the saying. Government policy for India’s telecom sector over the past 25 years has left much to be desired. Not only have mistakes been repeated, but the industry has also had to grapple with various flip-flops in policy.

The upshot: exactly two decades after the government’s relief package for the industry through the New Telecom Policy of 1999, the present government is considering another relief package for the industry. Besides, from the looks of it, Indian telecom seems headed towards a duopoly market again, which is ironic given that this is how it all began for the industry.

THE FIRST CRISIS

Back in 1994, when the P.V. Narasimha Rao government opened the doors for private companies to offer cellular mobile services, it restricted licences to two in each service area.

The market, as was envisaged then, was duopoly by design. The companies who won the initial licences were selected through a Beauty Parade, which evaluated aspiring telecom companies on technical and financial parameters. But those who came out shining through this process soon found that subscriber numbers, as well as usage by customers, were nowhere near what they had anticipated.

As a result, the fixed licence fee they had agreed to pay the government was found to be excessively high in hindsight. Representations were made through the Cellular Operators 20191113-11Association of India (COAI) for a relief package, not unlike the situation at present. Besides, the government was taken to court by a number of licence holders because of unrealistic calculations of the revenue potential of a licence. Read the rest of this entry »

Smartphone shipments in July-September

Source: Financial Express, Nov 12, 2019

New Delhi: The domestic smartphone market registered one of its best performances 20191113-6during third quarter of calendar year 2019, carrying a shipment size of almost 47 million units with handsets in the Rs. 21,000-35,500 range emerging as the fastest growing segment.

Attractive schemes and discounts aided the mid-range segment (Rs. 14,000-35,000) during the quarter to increase its share at the expense of the low-end price category.

As per the latest numbers by IDC, the smartphone market shipped a record 46.6 million units in the Q3 2019, with 26.5% quarter-on-quarter growth and 9.3% year-on-year, driven by multiple online sales festivals, new model launches, and price corrections on a few key models by various brands.

“While the low-end price segment of $200 (Rs. 14,000) still accounted for 80% of overall India smartphone market in Q3 2019, its share dropped 5 percentage points year-on-year at the cost of the mid-range segment of $200-500, gaining 5 percentage points to 18.9%,” IDC said.

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MTNL to become BSNL arm, merged entity to raise ₹15,000 crore via bonds

Source: LiveMint.com, Nov 01, 2019

New Delhi: The government will transfer its 56.89% shareholding in Mahanagar Telephone Nigam Ltd (MTNL) to Bharat Sanchar Nigam Ltd as a first step to revive the two loss-making companies, the former said in a notice to the BSE on Friday. The merged entity would also raise ₹15,000 crore via sover20191104-4eign bonds to restructure their debt.

The MTNL communication to the exchange comes after the Union Cabinet’s 23 October decision to hand over the reins of MTNL to BSNL in the hope that a leaner pan-India state-owned telecom service provider would be better placed to take on nimbler private sector rivals in a cut-throat sector.

The Cabinet had approved a package which included a generous voluntary retirement scheme for all staff of the two companies aged 50 and above.

For employees currently more than 55 years of age, on opting for VRS the pension will be commuted only when they attain 60 years (current retirement age). For those currently 55 years old and less, on opting for VRS, the pension will be commuted in the sixth year i.e. 2024-25.

The Department of Telecommunications will allot spectrum to BSNL/MTNL for providing 4G services through capital infusion by the government. The payment of GST on the spectrum cost will be paid through budgetary support.

The combined company will also undertake monetization of non-core assets that could include divestment of land, building, tower and fiber. A committee has been formed to oversee the monetization exercise. It comprises principal advisor to the Prime Minister, cabinet secretary, secretary (department of economic affairs), telecom secretary, disinvestment secretary and housing and urban secretary.