18

DELHI

THE HINDU

FRIDAY, FEBRUARY 3, 2012

BUSINESS

Shocked telcos may go for review

They have been unfairly treated, claim the companies
NEW DELHI: Jolted by the Su-

When you make a wrong call

Raghuvir Srinivasan
CHENNAI: Following the

preme Courts judgment that cancelled 122 telecom licences issued in 2008, new operators on Thursday expressed shock over the verdict and indicated that they may le review petition. The affected companies whose licences are cancelled include Uninor (joint venture between Unitech and Telenor of Norway), SistemaShyam (joint venture between Shyam Telecom and Sistema of Russia), Videocon, Loop Telecom, Idea Cellular, Etisalat DB (joint venture between DB Realty and Etisalat of UAE). Sistema-Shyam, which offers mobile services under the MTS brand and UnitechTelenor joint venture that provides services under brand Uninor have made huge investments for rolling

out the services across the nation. The companies have said that they have been unfairly treated claiming that they simply followed the government process for acquiring licences. Sistema-Shyam is still awaiting the full text of the judgment... The company would like to state that being a law abiding organisation, it reserves the right to protect its interests by using all available judicial remedies, SSTL said in a statement. Uninor expressed shock on the verdict and said, We have been penalised for faults the court has found in the government process. The new licences bundled with 2G spectrum were issued by former telecom minister A. Raja in January 2008 for Rs.1,651 crore for a pan-

Cancellation may free 500 Mhz of 2G spectrum Penalised for faults in government process
India licence. On this, the government auditor CAG had assumed a presumptive loss of revenue of up to Rs.1.76lakh crore to the Exchequer. According to estimates, cancellation of these licences may free about 500 Mhz of 2G spectrum which may be auctioned by the government. Leading service provider Idea Cellular said the company was unnecessarily caught in this situation of cancelled licences just because they were granted in January, 2008, which was as late as 18

months from the date of application. It is unfortunate that a senior incumbent operator like Idea Cellular is being made to suffer due to this cancellation of licences, despite being fully compliant at each stage of the licence allocation process, Idea Cellular said in its reaction. Norway-based Telenor, majority stake holder in Uninor, said, We look to the government to arrive at a fair outcome that doesnt jeopardise our lawful investments. Sistema-Shyam claims to have invested over $2.5 billion (about Rs.12,500 crore) so far for acquiring licences and rolling out services. Telenor claims to have already invested over Rs.6,100 crore in equity and over Rs.8,000 crore in corporate guarantees as a foreign investor that trusts a licence

stamped by the Government of India. Reacting to the Supreme Court verdict, UAE-based Etisalat said, The company will work closely with Etisalat DBs management and legal counsel to understand the judgment, its ramications on the operations of the company, particularly its customers and employees as well as its right to a review of the Supreme Court decision. Meanwhile, Aircel and Vodafone said that their licences have not fallen under the list. DB Realty is in the business of real estate development and has no direct or indirect shareholding in Etisalat DB, DB Realty said in a statement. STel said that after the Supreme Court verdict, we feel like a victim caught in a riot. PTI

Supreme Courts judgment in the 2G case there is a fear that prospective foreign investors will be put off. Such fears seem misplaced. If anything, the verdict brings clarity and stability to government policy as rightly observed by Telecom Minister Kapil Sibal in todays press conference. Of course, with this line of argument he was trying to put a spin on the verdict to deect the heat from his government but thats another matter. Whether it is Telenor (67 per cent owner of Uninor), or Etisalat (45 per cent equity holder in Etisalat DB) or Bahrain Telecom (investor in S-Tel) or NTT, Tatas partner, they have

only themselves to blame for the situation that they nd themselves in now. Call it greed or misplaced faith in their partners or even the belief that the Indian system could be worked any way, these foreign investors walked into their partners arms with their eyes wide open. One of them even remarked when the scam rst broke out that his company was not worried because the alleged events happened before it acquired equity in the Indian company. What kind of an argument was that? The verdict not only provides clarity on the policy the government should adopt now but it also sends out a clear signal that the rule of law shall prevail ultimately in the country. Coming so soon in the wake

of the path-breaking verdict in the Vodafone tax case, this judgment underlines the integrity and supremacy of the judicial system in the country, something that should gladden the hearts of prospective investors. The likes of Telenor and Etisalat are not the only ones to be blamed for bad judgment; we can include the banks that have lent to these companies too in the list. Precise gures are not available yet but at least a couple of thousands of crore, if not more, seems to be at risk of turning bad for a set of banks that have lent to these companies. That this includes Indias premier bank, State Bank of India, certainly does not lend condence in the project assessment capabilities of the lenders.

Dont worry, TRAI tells consumers

Special Correspondent
NEW DELHI: Following the Su-

SBI has Rs.4,500 cr exposure to affected telcos

NEW DELHI: State Bank of India (SBI) on Thursday said it had an exposure of Rs.4,500 crore in the telecom companies whose licences had been cancelled by the Supreme Court in connection with the 2G scam. The other lenders including Punjab National Bank, Corporation Bank, Oriental Bank of Commerce too have exposure in these telecom companies. I dont think we will be affected much by the verdict. We have a fund-based exposure of Rs.1,100 crore in ve accounts, while another Rs.3,400 crore are non-fund based, which is based on a guarantee of roll-out. Now that the licences are cancelled that guarantee is not fullled, SBI Deputy Managing Director Santosh Nair said. For the Rs.1,100 crore, all the accounts are from corporate houses with whom we have long term relationships. The corporate house behind

preme Court judgment, cancelling all 122 telecom licences issued in 2008, the Telecom Regulatory Authority of India (TRAI) on Thursday said it would discuss and deliberate on how to implement the apex court directions of fresh auction of spectrum. The telecom sector regulator also said it would ensure that no mobile subscriber was affected by the cancellation of licences. Pointing out that the TRAI had already recommended that all new licences should be issued under Unied Licensing (UL) regime, its Chairman J. S. Sarma told journalists here that spectrum would be delinked from licence and radio waves auctioned to realise its real value. Under the new licensing re-

gime, telecom companies will have to pay a price for the spectrum determined through auction, he said. In future, all licences will be Unied Licences. This has been discussed by the Telecom Commission as wellit is at an advanced stage of consultation in the government. All these issues will be discussed and decided shortly, Mr. Sarma said, and hinted that the proposed auction of vacated spectrum would be open to all, including the incumbent players. Asked how the subscribers of companies whose licences have been cancelled will be affected by the court order, Mr. Sarma said they would not be impacted much. Subscribers have option to port out through MNP (mobile number portability)we will instruct operators to inform their subscribers and come

out with an advertisement. Less than 5 per cent of the total subscribers (89.38 crore as on 2011-end) are there with operators who got licences in 2008, he noted. Mr. Sarma also said that the TRAI would keep a close eye on any upward revision of mobile tariffs that was expected due to high price of spectrum. The eight companies that got 122 licences in 2008 are: Uninor (a joint venture between Unitech and Norways Telenor), Sistema Shyam (joint venture between Sistema of Russia and Indias Shyam Group), Etisalat DB (joint venture between Etisalat of the UAE and DB Group, formerly Swan), S Tel (a joint venture between Bahrain Telecommunications and Siva Group), Videocon, Tata Telecom, Idea Cellular and Loop Telecom.

the licensee will help us or we also expect them to bid again at the time of the new auctions, which can secure our funds, Mr. Nair said. Punjab National Bank said its exposure for roll out under 2G was limited to Rs.508 crore. However, the bank had not given any loan for seeking licence. PNB has a total exposure of Rs.10,923 crore towards the telecom sector. Of this, the banks exposure to the government sector is Rs.1,016 crore, the bank said in a statement. It also said Rs.173 crore was fully secured by banks deposits. Largest private sector lender ICICI Bank said it was unaffected from the cancellation of 2G licences. ICICI Bank does not have any exposure at risk on account of cancellation of 2G licenses, the bank spokesperson said. However, Corporation Bank said it had exposure of Rs.146 crore in one of the telecos hit by the order. We

ICICI Bank does not have any exposure PNBs exposure is at Rs.508 crore
have Rs.146-crore exposure to Videocon Mobile. Though it is a secured funding we are a bit worried as to how it will pan out post the Supreme Court verdict, Corporation Bank Chairman and Managing Director Ajay Kumar said. We have to review the account in the light of this development though this has been a standard asset so far, Mr. Kumar said.

Even Oriental Bank of Commerce (OBC) said the bank had disbursed loans to telecom companies whose licences had been cancelled. Loans had been given to all leading players. However, there were some concerns over the loans given, a senior ofcial of OBC said. According to Indian Overseas Bank Chairman and Managing Director M. Narendra, the bank did not have exposure in these telecom companies. We have got exposure of 1.21 per cent of total loans in the telecom sector including telecom infrastructure, Mr. Narendra said, adding that the bank had sanctioned Rs.2,200 crore to the telecom sector. Following the Supreme Court order, Bank of Baroda said the bank did not fund the affected telecom companies. We have not funded any of the 2G licence holders, Bank of Baroda Executive Director R. K. Bakshi said. Even Axis Bank said the

bank did not have any exposure to companies for acquisition of the 2G licenses or for the rollout of services on these licenses. Another private sector lender, IndusInd Bank, also said it had not disbursed loans to telecom companies named in the order. Earlier during the day, the Supreme Court cancelled 122 2G spectrum licences granted by former telecom minister A Raja on the ground that they were issued in a totally arbitrary and unconstitutional manner. The apex court also imposed a ne of Rs.5 crore each on three telecom companies, which ofoaded their shares after getting the licenses and directed regulator Telecom Regulatory Authority of India (TRAI) to make fresh recommendations on allocation of 2G licences. Meanwhile, a senior executive at IDBI Bank said it did not have much of exposure to the affected companies. PTI

New Mines Bill for House panel

Special Correspondent
NEW DELHI: The New Mines

Unitech, DB Realty take a beating, Bharti Airtel rises on bourses

Special Correspondent
CHENNAI: Even as the benchmark 30-share sensitive index (Sensex) of Bombay Stock Exchange (BSE) closed Thursday 131.27 points higher at 17,431.85, the shares of new telecom licensee companies took a heavy hammering in the wake of the Supreme Court ruling cancelling 122 2G licences issued by former Telecom Minister A Raja. Shares of public sector banks such and the State Bank of India (SBI) and Punjab Na-

BHARTI AIRTEL
393 385 377 369 361 353 Jan 27

Rs.385.95

RCom
103 100 97 94 91

Rs.96.85

and Mineral Development and Regulation (MMDR) Bill has been referred to Parliamentary Standing Committee with the hope that it would be taken up for passage during the budget session of Parliament. The MMDR Bill has been referred to Parliamentary Standing Committee. The Committees suggestions, after in-depth scrutiny, are expected by March-end and we are hopeful that the Bill would be passed in the second-leg of the Budget session, Union Mines Minister, Dinsha Patel said here. Once the law is enacted, it would help bring more transparency and boost foreign direct investment in the space, Mr. Patel said on the sidelines of a geological convention here.

Feb 2

88

Jan 27

Feb 2

tional Bank (PNB), which have huge exposure to the telecom sector, too, fell early in the day. As the trading progressed, the bank shares cut their losses towards the end of the trading session. The

banking sector, according to a rough estimate, has reportedly an exposure of a whopping Rs.90,000 crore to the telecom sector at the moment. The shares of older telecom players such as Bharti Airtel

levels. Shares of realty rm Unitech, one of the promoters of Uninor, were the 28 worst hit. The settled the day 26 7.04 per cent down at Rs. 24 25.10 on the BSE, after dropping as much as 14 per cent 22 intra-day. DB Realty, which 20 had lost 8.62 per cent during Jan 27 Feb 2 the day, trimmed most of the and Idea Cellular, however, losses and closed the day 0.48 saw smart gains. Some recov- per cent lower at Rs. 62.30. ery was seen during the later Videocon ended at Rs. 171.95, part of the day in the earlier- down 0.92 per cent. The Subattered telecom stocks as preme Court judgment is a well, as some investors saw big blow to all the telecom buying opportunity at lower companies whose licences
UNITECH
30 Rs.25.10

are cancelled. Bharti, however, is clear winner, as it was not entangled in all these issues. Bharti Airtel and Idea Cellular outperformed the broad-based selling pressure witnessed in the some of the telecom-related stocks. Shares of Bharti surged 6.88 per cent to close the day at Rs. 385.95, becoming the best performer among the 30share sensitive index. Similarly, the shares of Idea, too, went up by 2.68 per cent. Shares of Reliance Communications, which had lost 9.31

per cent during the day, pared most of the losses and settled at Rs. 96.85, down 3.54 per cent.

SBI, PNB trim losses

The shares of State Bank of India, the countrys largest bank, lost nearly ve per cent during the day. In intra-day, however, they managed to pare much of the losses to end at Rs.2,072.65, down 0.21 per cent on the BSE. The shares of Punjab National Bank closed the day 0.21 per cent lower at Rs.953.50.

Oil companies resume fuel supplies to Air India

End of weekly food ination data

Special Correspondent
NEW DELHI: The governments

In todays

Kobelco unit on stream

Special Correspondent
CHENNAI: Kobelco Cranes In-

dia Pvt. Ltd (KCI), a part of Kobelco Cranes Co., Ltd (KCL), Japan, has commenced production at its hydraulic crane manufacturing plant at Sri City, Tada, Andhra Pradesh. The plant would produce 90 units comprising 100-tonne, 150 tonne, and 250-tonne class cranes during the current year. Addressing a press conference here on Thursday, Shinsuke Dean Izumi, President and Director, KCI, said the capacity of the new plant was 100 units per annum. He said the Indian plant would soon cater to the neighbouring countries. The company was hoping to garner a market share of more than 20 per cent by 2015. The cranes would have a price range of Rs.2.50-10 crore.

NEW DELHI: State-owned oil

companies have resumed jet fuel supplies to Air India after the national carrier promised to pay Rs.268 crore in dues on Friday. Oil company ofcials said the supplies were being resumed after Air India promised to clear dues by Friday. All the three oil companies Indian Oil, Bharat Petroleum and Hindustan

Petroleum had jointly stopped air turbine fuel (ATF) supplies to Air India in Delhi, Mumbai, Kolkata, Chennai, Thiruvananthapuram and Kochi from Thursday. The carrier had failed to honour payments even after the 90-day credit period. Earlier, Civil Aviation Secretary Nasim Zaidi told PTI that he had asked the Petroleum Secretary not to stop the jet fuel supply to the carrier. I have spoken to the Petroleum Secretary not to disrupt (aviation turbine fuel) supplies and he has assured me, Civil Aviation Secretary Nasim Zaidi said. Senior Air India ofcials had claimed that the airline owed Rs.260 crore to the oil companies for the credit peri-

decision to do away with the practice of releasing weekly food ination data came into effect on Thursday. Announcing the discontinuance, in an ofcial statement, the Ministry of Commerce and Industry, which releases the weekly food ination numbers, said: Consequent upon the decision of the Cabinet Commitod and we are well within the tee on Economic Affairs held on January 24, 2012, weekly credit limit. Overall, Air India owes release of Wholesale Price Inover Rs.4,170 crore to public dex (WPI) for the commodsector oil companies in un- ities/items under the Groups paid jet fuel bills, according to Primary Articles and Fuel & gures tabled in Parliament. Power is discontinued with The oil companies decided immediate effect. to stop ATF supplies, saying Air India had not honoured Monthly data Instead, as has been the its commitment to make payments for jet fuel it bought practice, the government will from the oil companies even continue to release the after expiry of the 90-day monthly headline ination data. credit period. Apart from the ination The government had last year asked us to give a 90-day numbers for manufactured credit period to Air India, items, the monthly WPI data which we diligently did. As contains the break-up for all per that, payments for ATF other article segments, insold to Air India in mid-Octo- cluding food, non-food and ber were due on January 22 fuel. The headline or overall but it did not make any pay- ination data for January ment, an oil company ofcial 2012 is to be released on February 14. said. PTI

Hitherto, the Ministry of Commerce and Industry used to release the WPI weekly ination data on primary food articles, fuel and power on every Thursday of each month. However, it was felt that instead of presenting a real price situation for every week gone by, the gures tended to display extreme volatility which was more of an aberration and created confusion when compared with the monthly gures. While the release of monthly ination data is in line with standard global practice, the base year for calculating WPI was also changed in September 2010 to 2004-05 from 1993-94. Also, to make the WPI more representative, while some items were dropped, 241 more items were added to take the total number of items in the basket to 676 as compared to 435 earlier.

Love in the age of marketing

Marketers turn to mush to peddle their wares. Come Valentines Day and you have fragrant discs, special spas for just two of you, fancy lingerie and bridal nightwear...

Upward move?
Tata Elxsi broke through a bottom reversal pattern on Thursday. What will happen next? Check out its technical prospects in Todays Pick

Tata Elxsi
310 280 250 220 190 160 Feb 2, 11

Rs.221 return -12%

Feb 2, 12

Farmers turn away from bitter sugar

Sugarcane growers in Andhra Pradesh, who declared a crop holiday, are not going to stop farming next season. Instead, they are switching to palm oil, maize and sunower.
For more, read todays Business Line.
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...ND-ND

CPI-based ination
Also, from this month onwards, the government will come out with a retail ination data based on the all-India Consumer Price Index. The rst nationwide CPI numbers for the month of January will be released on February 21.