VOL.XLIII NO. 16 I 20 PAGES I Rs 5.00 NEW DELHI l TUESDAY l MARCH 21 l 2017 READ TO LEAD IOC will look at all possibilities of mergers and acquisitions Chairman B Ashok supports govt’s integrated oil companies decision Page 2 Total subscriber base Subscriber market share (%) Idea 16.9 266 Bharti 23.58 Revenue market share (%) Idea 19 FinancialExpress.com Total spectrum holding Bharti 35.6 205 Vodafone+Idea 1850 MHz Bharti 1489 MHz 191 Combined revenue R80,000 cr R R R twitter.com/FinancialXpress Implied Valuation R82,800 cr Combined debt Bharti Vodafone Vodafone 18.16 Vodafone Idea 23 Jio 1100 MHz Money&Markets,Page10 International, Page 16 P U B L I S H E D F R O M : A H M E DA B A D, B E N G A LU R U, C H A N D I G A R H , C H E N N A I , H Y D E R A B A D, KO C H I , KO L K ATA , LU C K N OW, M U M B A I , N E W D E L H I , P U N E (million) MAHILA BANK, SBI MERGER TO HELP WOMEN: GOVT PM MAY TO TRIGGER UK BREXIT CLAUSE ON MARCH 29 R1.07 lakh cr *Vodafone+Idea R72,200 cr facebook.com/TheFinancialExpress Idea’s 21.1% stake in merged entity valued at R72.5 per share Balance 4.9% will get transferred to it at R108 per share In next 3 years it will buy additional 9.5% from Vodafone at R130 per share If it buys after 3 years, then it has to be at the then prevailing share price Idea, Voda dial it up to No. 1 ■ Outline roadmap for $23-billion no-cash merger to create behemoth Indian telco fe Bureaus Mumbai/New Delhi, March 20 V In the news INDICES Closing Up/down S&P BSE Sensex 29,518.74 ▼130.25 CNX Nifty ▼ 33.20 9,126.85 Berkshire’s Lubrizol to take majority stake in India JV LUBRIZOL, a unit of Berkshire Hathaway, said on Monday it plans to take majority control of its Indian joint venture with Indian Oil, reports Reuters. This will boost its stake to 74% from 50%. It did not disclose the terms, but expects to complete the deal in a few weeks. Rupee scales new 16-month high THE rupee regained its dominance after a brief consolidation phase and ended Monday at a fresh 16-month high of 65.36 against the dollar, reports PTI. A weak dollar overseas and abundant capital inflows supplemented further strength to the rupee. ODAFONE India and Idea Cellular on Monday unveiled the contours of a $23-billion no-cash merger which will create India’s biggest telecom company with revenues of over R80,000 crore, 400 million customers and a 41% revenue market share. The share swap implies an enterprise valuation for Vodafone India of R82,800 crore and that for Idea Cellular of R72,200 crore. This valuation excludes Vodafone’s 42%stakeinIndusTowersandIdea’shold- JOINING HANDS TO BEAT JIO SEE EDIT: PAGE 8 ing in the tower company of 11.15%. With 1850 MHz of spectrum in its kitty , the new entity should be better positioned to take on Reliance Industries’ RJio, which has disrupted the market with a low-priced data offering and which is chasing a 50%-plus revenue market share target by FY21. The 1850 MHz of spectrum includes 1645 MHz of liberalised spectrum capable of building substantial mobile data capacity utilising the largest broadband , spectrum portfolio with 34 3G carriers and 129 4G carriers. Vodafone chairman Vittorio Colao indicated at a press conference the merger would result in savings of $2.1 billion annually by the fourth year post-completion as resources including people, networks and spectrum are shared. Analysts nevertheless believe some capital infusion would be required sooner Aditya Birla Group chairman Kumar Mangalam Birla with Vodafone Group CEO Vittorio Colao after a press conference in Mumbai on Monday PHOTO: NIRMAL HARINDRAN rather than later. The merger will lead to a breach of spectrum caps — 25% in a circle and 50% in a band — in five circles: Kerala, Gujarat, Haryana, Maharashtra, and Uttar Pradesh (West) in the 900 MHz band and in Gujarat and Maharashtra also in 2500 MHz, necessitating the surrender of excess spectrum. Moreover, the 50% cap on revenue market share would also be breached in Haryana, Kerala, Maharashtra, and UP (West). However, once Reliance Jio Infocomm starts charging subscribers and gains revenue market share, this problem should ease. By pooling their spectrum in the 900 MHz band, Vodafone and Idea can create a 10-MHz block in seven of the 22 circles without harmonisation. These would be Delhi, Gujarat, Haryana, Kerala, Maharashtra, Mumbai, and UP (West). Likewise, in the 2100 MHz band, they would be able to create a contiguous block of 10 MHz or more in Gujarat, Kerala, Kolkata, Maharashtra, and Mumbai without harmonisation. In circles like Rajasthan, Tamil Nadu and UP (East), they can create a block of 15 MHz post-harmonisation. In 2500 MHz, the duo would be able to create a 20-MHz block in 13 of the 22 circles. In terms of the merger specifics, Idea Cellular will issue 180 crore new shares to Vodafone at an implied value of R72.50 per share, the price on January 27, leaving the Aditya Birla Group with a 21.1% stake in the new entity The AB Group will buy an. other 4.9%, at a price of R108 per share, the closing price on Friday March 17, to take , its stake up to 26% in the combined entity . Kumar Mangalam Birla, chairman, AB Group, said on Monday that the Idea scrip had been trading at R72.50 on the day the news of the merger leaked and consequently this price had been considered for issuing shares to Vodafone. Following the merger, Vodafone will hold 45%, Idea’s promoters 26% and the public 29%. The AB Group also has the option to pick up additional shares at a price of Rs 130 per share — within three years — to equalise its stake with that of Vodafone’s. Until the stakes are equal, voting rights for the partners will be capped at 26%. The new entity’s revenues of R80,000 crore, while smaller than Bharti Airtel’s consolidated revenue of R96,532 crore (FY16), is nonetheless bigger than Bharti’s India revenues of R70,843 crore. The deal is expected to be closed in calendar year 2018. ■ Continued on Page 2 ■ Related reports on Page 6 Edit PAGE 8 TPP & RCEP: CONFUSED TO CONVERGE? Clockwise:AmitChandra,MD,BainCapital;LeoPuri,MD,UTIAssetManagement;RSeshasayee,chairman,Infosys;PradipShah, chairman,IndAsiaFundAdvisors;andYMDeosthalee,chairman,L&TFinanceHoldings PHOTOS:AMIT CHAKRAVARTY Exclusive PAGE 16 FULL TANK Why too much oil in storage is weighing on prices THE MILLION DOLLAR QUESTION OF AD VIEWABILITY QUICKPICKS Cabinet clears four GST draft Bills THE Cabinet on Monday cleared four GST-related Bills, paving the way for their introduction in Parliament as early as Tuesday, reports fe Bureau in New Delhi. The four drafts — Compensation Law, Central GST, Integrated GST and Union Territory GST — would likley be introduced in the House as money Bills. Last week, the GST Council approved five draft laws, including the above four and the state GST Bill, which needs to be approved by all state assemblies (likely by April-end). ■ P2 US tells India no significant change in H-1B visa regime THE US has conveyed to India that there is no significant change in the H-1B visa regime, commerce minister Nirmala Sitharaman said on Monday, reports PTI. She said India is articulating its concerns regarding the visa policy vigorously with the Trump administration. However, she said, there is no significant change in the H-1B visa regime. “The fear, at least for 2017, is not proved to be correct. They are saying their current priority is to deal with the illegal immigrants,” she said. Flipkart’s valuation down to $10 bn, to raise $1 bn FLIPKART Online Services has completed a $1-billion fundraising and aims to raise as much as $1 billion more over the next few months, giving it capital to battle back against rising competition, reports Bloomberg. Flipkart secured its latest funding on Friday at a valuation of about $10 billion, said the people, asking not to be named. Backers in this round so far included Microsoft, EBay and Tencent Holdings, but the valuation was a decline from Flipkart’s $15.5 billion in 2015. ■ P7 THE JURY IS IN, COUNTDOWN TO FE CFO AWARDS BEGINS FE Specials China would be keen on it for gaining preferred access to all major regional markets AmitenduPalit FinancialExpress/Apps fe Bureau Mumbai, March 20 C ORPORATE India has gone through a lean patch in the last couple of years but even in these tough times there are those companies that have excelled. To judge these performances — as part of the FE CFO Awards 2017 — a jury headed by R Seshasayee, chairman, Infosys, YM Deosthalee, chairman, L&T Finance Holdings, Leo Puri, managing director, UTI Asset Management, Amit Chandra, MD, Bain Capital, and Pradip Shah, chairman, IndAsia Fund Advisors, spent the better part of a morning last week. Picking winners from hundreds of companies across a variety of sectors isn’t easy; after all, every sector has its own set of challenges and each operates in a different business cycle. Even if broadly categorised between manufacturing and services and sliced into segments based on revenues, it is hard to compare performances. Much of the heavy lifting had been done by the team at Deloitte which sifted through the numbers and ran the checks to make sure nothing had been missed. Several parameters were taken into account including profitability current ratios, leverage and return , on net worth — and weightages were assigned — to come up with a manageable shortlist. The jury members, while using the data as a basic tool, brought in their perspective; several other metrics were put to use depending on which one was felt to be the most apt. More importantly, other factors were considered — the pedigree of course, management quality and corporate governance standards. It’s the better managements that usually have strong financial track records. Every candidate’s performance was discussed in detail and these companies were compared. More often than not, the contest was a keen one but in a couple of instances, there were clear winners. Those companies that walk away with the awards can be sure they’ve done a good job given their performances have been judged by a very experienced and highly competent team of professionals.
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