RCom: Will the monetisation plan work?

RCom has also talked about monetising its real estate but that is easier said than done

Anil-Ambani led Reliance Communications' offer to lenders to take control of the company by converting Rs 7,100 crore of its debt into a 51 per cent equity stake is perhaps the telecom major's best bet. If the latest rescue attempt goes through, lenders led by SBI will hold at least 51 per cent in the telco and promoters stake will be halved to around 26 per cent.

RCom has said it will get about Rs 17,000 crore by monetising its assets. The plan includes selling its tower business, fibre network, and media convergence nodes and it will estimates another Rs 10,000 crore through real estate sales in eight cities. Post debt monetisation, the company said it would have only Rs 6,000 crore of debt left. Moreover, another Rs 4,000 crore taken from unsecured creditors like Ericsson needs to be negotiated with.

So how prudent is this monetisation plan?*

Under its earlier plan, RCom had said it would cut its debt by half by December through a merger with Aircel and sale of majority stake in its tower business to Canada-based investment firm Brookfield Infrastructure for Rs 11,000 crore, valuing the business at Rs 20,000 crore. However, now that the Aircel deal is off and RCom shutting down its 2G business, which constitutes for a bulk of its subscribers, the deal valuation is likely to be revised downwards. In essence, the telecom tower deal is subject to a new valuation given that Aircel’s tenancies will not be included in the deal anymore. Moreover, RCom now runs the risk of losing at least half of its 2G subscribers.

Also Read : New Year disruption plan: Now, Reliance Jio moves to broadband, TV space

Analysts say that even if RCom sells the entire 100 per cent stake in its 43,600 tower assets to Brookfield it will not fetch them more than Rs 8,000 crore.

RCom is hoping that it will be able to rake in Rs 14,000 crore from its spectrum sale though the value of the spectrum is Rs 26,000 crore, which includes spectrum it got from the merger of MTS. However, analysts are of the view that there is already a huge oversupply of spectrum, and that the paper price might not be reflected in reality. RCom may also not find many takers for its spectrum given how things went down with Telenor and TTSL which gave their spectrum virtually free to Bharti Airtel. (more)

Full text: Why Tata Sons lost confidence in Cyrus Mistry

Even as both camps in the Tata vs Mistry boardroombattle get ready for the impending extraordinary general meetings of various Tata group companies to oust former Tata Sons chairman Cyrus as director, the war of words through statements and counter-statements do not seem to end. On Sunday, while the Ratan Tata camp alleged that Mistry misled the selection committee to become the chairman of Tata Sons, Mistry’s office stated that Ratan Tata had been repeating the same lie a thousand times and hoping it to become a truth.

ALSO READ: Mistry misled to become chairman, says Tata Sons

Here is the full text of the Tata group’s letter to stakeholders explaining why the group lost its confidence in Cyrus Mistry:

AN APPEAL FROM THE TATA GROUP TO ALL STAKEHOLDERS OF TATA COMPANIES

Extraordinary General Meetings of various Tata Companies are coming up over the next few weeks. We, at Tata Sons Ltd., the principal shareholder and promoters of the various Tata Companies, would like to thank you for your continued support. In order to assist you to exercise your shareholder rights in an informed manner, it would be appropriate to bring to your attention some key facts which resulted in the loss of confidence in Mr. Cyrus P. Mistry by Tata Sons.

1. Mr. Cyrus Mistry misled the Selection Committee set up in 2011 for selecting a Chairman of Tata Sons to succeed Mr. Ratan Tata, by making lofty statements about his plans for the Tata Group and more importantly indicated an elaborate management structure for managing the Tata Group, given its diversity of business, by suggesting a management structure aimed at dispersal of authority and responsibility. These statements and commitments from Mr. Cyrus Mistry played an important role in the Selection Committee’s final selection of Mr. Mistry as Chairman. After waiting for a period of four years, almost none of these management structures and plans have been given effect to. Clearly, in our opinion, the Selection Committee was misled in its choice of Mr. Mistry. Read more

Tamil Nadu: Blow for Karunanidhi family's business interests?

Tamil Nadu: Blow for Karunanidhi family's business interests?

Thursday’s state election results are likely to make the fortunes for some businesses and mar for some others. The biggest and most prominent loser of the day was from the family of DMK chief M Karunanidhi. On the day of the results, the Sun TV stock lost Rs 2,229 crore in market value. Its market capitalisation fell from Rs 16,845 crore at its close on Thursday to Rs 14,616 crore at the end of the day. By virtue of his 75 per cent holding, DMK chief M Karunanidhi’s grandnephew Kalanithi Maran would take three-fourths of that hit.

This notional loss could be an indicator of the bad news in store for the family’s business interests that extend beyond media. While Maran was among the first in the family to get into organised business through his venture into broadcast media in the early 1990s, there were others who have followed in his footsteps. After a brief break-up in relations with the Marans, Karunanidhi’s immediate family members floated Kalaignar TV in 2007. At the time Karunanidhi’s wife Dayalu Ammal owned 60 per cent, while his daughter Kanimozhi owned 20 per cent. Karunanidhi’s grandsons, from his sons Stalin and Azhagiri have also built interests in a range of businesses from real estate to movies to granite mining.

The management of Sun TV has often maintained that its business is independent of the government in power, but the market seems to be understanding it differently. A second term of the AIADMK could prove to be tougher for the family as it does not have the cushion of a friendly regime at the Centre. Read more.

Airtel strikes gold with 4G girl Sasha Chetri

Sasha Chettri, Airtel’s 4G girl, is the ad world’s newest poster girl. Chettri has gone viral on social media, ever since Airtel kicked off its 4G campaign last July, and, in the process, has delivered for brand Airtel what no other campaign has - high recall value. With her unconventional and provocative approach, 21-year-old Chettri has firmly put brand Airtel on the country’s 4G landscape.

Today, 4G in India means Airtel just the way years ago Coca-Cola staked claim on the entire soft drinks category through its Thanda Matlab Coca-Cola campaign with Aamir Khan.

Read more from our special coverage on "AIRTEL"

• Airtel to sell more than 5% stake in telecom tower unit

Given that the next generation of mobile broadband, or 4G, is about speed, the television commercial showing two girls racing their phones on a terrace in Lucknow was an unusual way to break the clutter on television. Given that other telcos have not come up with such high-decibel campaigns, Chettri has become a shorthand for 4G as a category.

In advertising parlance, the success of a campaign is measured through top-of-the-mind awareness and Chettri has helped Airtel increase this score by 13 per cent compared to other campaigns such as Har Ek Friend Zaroori Hota Hai.

It isn't just the brand recall value that has shot up, Airtel's revenue market-share touched a six-year high of 31.4 per cent in December 2015. In the five key data markets - Mumbai, Delhi, Karnataka, Tamil Nadu and Kerala - Airtel increased its marketshare by 140 basis points in the nine months ending December 2015. According to CLSA, Airtel is upping the ante on data offerings. On the ground, Bharti Airtel has stepped up its 4G data offering through a slew of industry firsts on product as well as distribution. The company has deployed long-term evolution, or LTE, using carrier aggregation in Kerala, enabling speeds of up to 135mbps on its 4G network.

The campaign has many firsts to its credit. For starters, Airtel went with an unknown face to launch a big shift in broadband technology and secondly, it showed the gumption to use a young woman for this.

Explains Chettri, “In India, women are still used to endorsing soaps and shampoos but not technology as stereotypes still exist.” Agnello Dias, chairman and co-founder of Taproot, the agency behind the campaign, says: “Sasha is right and she is both loved and trolled at the same time for breaking stereotypes, but there is little doubt that the campaign has embedded Airtel's ownership of 4G in the public consciousness. While the campaign has resonated strongly right through several SECs, it has allowed the brand to own 4G like no one else.”Read More.

Five years after split, Honda rides strong but Hero remains No 1

Japanese automobile major Honda has consolidated its two-wheeler presence in the five years since its split from Indian partner Hero while remaining away from the coveted numero uno slot. The company was aspiring to overtake Hero by 2015/2016. Hero's solo journey has been marked by higher profitability but a declining market share, a function of its dependence on motorcycles. Against a flat to low-single digit growth performance by motorcycles, scooter sales have grown by double-digit for three consecutive years, benefiting Honda.

It was in end-March 2011 that the two partners effectively ended their 26-year partnership. Both had their unique challenges. Hero had all along depended on the partner for technology and had to focus on developing in-house research and development (R&D) capabilities. For Honda, developing mass products and expanding of network was key. While having a partnership with Hero, Honda had started selling scooters about 15 years ago independently. In subsequent years, motorcycles were also launched under its own brand.

Both have moved ahead. Honda has expanded from about 800 sales outlets to a reasonably strong 4,500 touch points. The wider product portfolio, improved network and booming scooter market have helped Honda move up from a share of 15 per cent at the time of split to 26 per cent. Honda's biggest gain seems to have come from Bajaj Auto, which also vacated the No 2 slot for the Japanese firm. In the past five years, Bajaj's share in the domestic two-wheeler market has slipped from 20 per cent to 11.5 per cent.

Hero has seen its market share dip from 44 per cent to 39 per cent, as rural uncertainties and successive sub-normal monsoons impacted motorcycles sales. But, the company has made significant progress on the R&D front. It has set-up its first dedicated Rs 850-crore R&D centre last month. The 247-acre facility near Jaipur will have 600 engineers by the end of this year. Hero had a tiny three-acre R&D setup before the Jaipur centre came up. The centre will be led by Hero's chief technology officer Markus Braunsperger, who came from BMW in 2014 after a 25-year-long stint in R&D, production and strategy roles.

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Tata Tiago trains guns on the Celerio, i10 at Rs 3.39 lakh

India's biggest vehicle manufacturer Tata Motors today launched the compact hatchback Tiago at Rs 3.39 lakh petrol (ex-showroom, Mumbai), while the diesel is priced at Rs 4.18 lakh.

The Tiago (formerly named Zica) will compete against Hyundai i10, Maruti Celerio, Maruti Wagon R to name a few in the B Segment space.

The Tiago, promoted by ace footballer Lionel Messi, is built on an all-new platform and will fill the product gap between the Nano and the Bolt as the ageing Indica is now increasingly pushed for commercial usage. 

The Tiago will feature two new engines, petrol (1.2 litre) and diesel (1.05 litre). The 1.2 litre, three cylinder petrol is a new ground up naturally aspirated engine generating peak power of 85ps. This is the first new engine from the gasoline family of Tata Motors. The petrol version has a claimed mileage of 23.84 kmpl

The diesel version, meanwhile, carries the smallest engine yet developed by Tata Motors for passenger application, a 1 litre three cylinder, turbo-charged mill that develops peak power 70ps. The diesel version of the Tiago has a claimed mileage of 27.28 kmpl.

Features like bottle holders on all doors, iPad or tablet holding tray inside the glove compartment, hands-free telephony above the drivers’ head, new fabric for upholstery are not seen on other models.

The Harman-developed but Tata Motors-funded entertainment system is the Tiago’s biggest draw. With eight speakers (a first in the segment) the compact hatchback is made to appeal to the music loving youth. The car will have five variants each of both fuels.

The car will have a multi-drive mode — City and Eco — a feature also seen on the Zest sedan though it has one more drive option Sport. The two drive modes are supported by an advanced Engine Management System.

Tata Motors team spent three years in developing the car and was originally slotted for a commercial launch in January, just before the Auto Expo. Though the car was showcased at the Expo it was not commercially launched.

The Tiago is the first car to flaunt the new Impact design philosophy. The car is developed with inputs from Pune, UK and Italy design studios.

Eager to cash in on demand for automatic transmission Tata Motors will be offering AMT technology on the Tiago as well in later months.

The Tiago will be the third all-new product launch by Tata Motors in 20 months, Zest and Bolt being the two products. Last financial year the company launched the updated Nano called GenX Nano with a host of new features, new styling and an added automated manual transmission (AMT) variant.

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GoAir and SpiceJet woo passengers with discounts

Two airlines are giving offers of cheaper tickets and discounts at hotels/cafes.GoAir is offering discounts up to 50 per cent at select hotels, cafes, spas and gift outlets through its boarding pass privilege scheme. SpiceJet has launched a pre-paid-cum-loyalty card called SpiceClub, which gives members discounted and free tickets on occasions such as birthdays and anniversaries. 

GoAir said its customers could avail of the discounts on presenting their boarding passes at any of the partner outlets within 30 days of their travel. SpiceJet said their card, designed to enhance engagement with frequent flyers, while also targeting new customers, offers privileges such as a free ticket on one's birthday, up to 50 per cent off on domestic air tickets for two on an anniversary, free vouchers, priority check-in and updates about new offers. The loyalty card membership has a minimum fee of Rs 599 and customers can avail of benefits worth Rs 5,999.

Amit Srivastava, vice-president at SpiceJet, said: “We are always looking at ways and means to serve our customers better. Customer satisfaction automatically translates into highest Passenger Load Factor (over 90 per cent here for the past 10 months) and higher ancillary revenue.”Read More.