Presentation on ET News<br />Presented By:-<br />Harjeet Kaur<br />MBA 2C<br />
CAG warns DoT against bailout for new telecom<br /><ul><li>The public accounts watchdog has warned the telecom ministry against bailouts to mobile phone firms in violation of rules, a rare pre-emptive intervention by a constitutional body whose relations with the government are increasingly growing testy.
Recently, telecom minister A Raja, who is under fire for selling mobile licences and wireless spectrum to a clutch of new operators in 2008 too cheap, held out hopes of a ‘bailout’ for these firms, risking a fresh storm of corruption allegations against him and the government.
Many of the new entrants are battling for survival as tariff wars in India’s ultra-competitive mobile market have significantly lowered average revenues per customer, making their businesses unviable. </li></li></ul><li><ul><li>The Comptroller and Auditor General of India (CAG) told the department of telecom (DoT) that allowing the new entrants to merge with incumbent cellphone companies will result in the combined entity holding more airwaves than permitted under current rules.
Allowing companies to exit without fulfilling their rollout obligations would violate existing regulations, said RP Singh, director-general of audit (post & telecommunications) at CAG, in a letter dated September 15 to the telecom ministry.
Such a step, the letter said, would amount to letting off ‘companies that hoarded a valuable national resource (airwaves) without paying any revenue share to the exchequer’. </li></li></ul><li>Coke & Pepsi sales dip as rains hit impulse buying.<br /><ul><li>Incessant and prolonged rains have dampened sales for beverage majors Coca-Cola and PepsiCo. Sales of both firms — that were growing at a healthy 20-25% over the past eight-ten quarters — are down to poor single digits now.
“This is possibly the first time that production lines have been halted in a season for a prolonged period because of lack of demand and over supply,” said a beverage industry official, who did not want to be named.
Coca-Cola has 23 company-owned plants, 22 are operated by franchisees and additionally it has 11 contract packing units. PepsiCo has 36 beverage bottling plants, of which 23 are owned by franchisees. </li></li></ul><li><ul><li>Lack of demand, in fact, has also resulted in huge amounts of unsold stocks — which has led to the companies pushing these products in modern trade at least in metros.
Since the rains have forced people to stay at home, impulse buys of soft drinks through kirana stores have been hit. Companies are now hoping to push sales through modern trade channels, where consumers buy grocery in bulk and less as impulse purchases.
The rains, additionally, have impacted off take of PepsiCo’s latest launch — Pepsi Max. “Sales of Pepsi Max are below expectations on account of rains,” a PepsiCo official, not authorised to speak to media, said. Max, which had been rolled out in August, was one of PepsiCo’s most ambitious launches this year. </li></li></ul><li>Rolls-Royce Eyes Expansion of $245,000 Deluxe Ghost Line.<br />Rolls-Royce Motor Cars Ltd plans to expand the $245,000 Ghost model line that went on sale last year as Bayerische Motoren Werke AG’s ultra-luxury nameplate aims to double sales in 2010. <br />Rolls-Royce, which competes with Volkswagen AG’s Bentley and Daimler AG’s Maybach, is known for its hand-craftsmanship and what enthusiasts call a “magic carpet” ride because of the car’s smooth on-the-road handling. Munich-based BMW bought the rights to Rolls-Royce cars for 45 million pounds ($70 million) in 1998 and re-launched the brand at a new factory in 2003. <br />The Ghost is Rolls-Royce’s second product line after the stately Phantom, which starts at $380,000. Even with its cheaper price tag, the smaller model, which is 5.4 meters (17.7 feet) in length, will boost operating profit, Mueller-Oetvoes said. <br />
The Ghost has spurred growth for the exclusive marque after the financial crisis depressed sales 17 percent in 2009. Rolls- Royce delivered 1,467 cars through August, already surpassing the record since BMW took over of 1,212 in all of 2008. The company aims to sell at least 2,000 cars in 2010, after delivering 1,002 last year. <br />
Bharti adds Huawei to vendor list for 3G<br />Bharti Airtel, India’s largest telecom company by revenue and customers, has ended its dependence on western vendors by awarding China’s Huawei a part of the telecom gear contract to supply 3G equipment.<br />Sweden’s Ericsson and Finland-headquartered Nokia Siemens Networks have been Bharti’s exclusive telecom gear partners in India since early 2000. Ericsson manages Bharti's networks in 15 circles while Nokia Siemens handles the rest. So far, the Indian operator has signed five major outsourcing deals each with these companies. India has 22 telecom circles. <br />The Chinese equipment major will provide 3G equipment to Bharti in 3 circles, an executive aware of the development told ET. Huawei will also manage and maintain Airtel’s networks in these regions, the executive added. <br />
2G licences issued without proper verification<br /><ul><li>Amid raging controversy over distribution of 2G licences at throw away prices in 2008, Director General of Audit said licences were granted to some companies without proper verification of their eligibility and other credentials.
Most of these licensees exited the sector after merging with other operating companies. It is also understood that a concept of a bail out is being mooted for certain new licensees who could not successfully implement their business models and that such a proposal is likely to be submitted to the full Telecom Commission for consideration,” RP Singh, DG, Post & Telecommunication, said in a letter to DoT. </li></li></ul><li><ul><li>Recently, a top official of DoT said some of the new operators have approached them to surrender their licence and exit the sector. The new operators were finding it difficult to battle it out in a market where about 13 mobile service providers operate.
With tariffs hitting rock bottom and average revenue per users coming down, the new operators were struggling to maintain a healthy margins. About eight new operators including Datacom, Unitech, STel, Loop Telecom and Swan got licences in 2008. </li></li></ul><li>THANK YOU<br />