Valuation to too many demands: Why Snapdeal-Flipkart merger is dragging

The Snapdeal-Flipkart merger has turned into the most complex acquisition negotiation

Indian Companies News : In the universe of Snapdeal and Flipkart everyone is hopeful, but of different things. Japanese telecom giant SoftBank and US hedge fund major Tiger Global are hopeful of merging the two e-commerce players. Snapdeal’s board members, such as Nexus Venture Capital, and smaller shareholders are hopeful of a better-valued exit, and the co-founders Kunal Bahl and Rohit Bansal are hopeful of holding on to their company.

The clash of hopes is what has kept the ‘biggest consolidation in Indian e-commerce history’ from becoming a reality. After five months of discussions, the Snapdeal-Flipkart merger has turned into the most complex acquisition negotiation.

Stonewalling deal

In his last email to FreeCharge employees as the top boss, Bahl, buoyed by the sale of the mobile wallet to Axis Bank, said the deal provides them the necessary boost in resources to continue the journey towards building an e-commerce platform.

Axis Bank last week announced it had bought the mobile payments wallet provider from Snapdeal for Rs 385 crore ($60 million).

According to sources close to Snapdeal, the co-founders are actively working towards a ‘Plan B’ and have taken into confidence most of their senior management. According to sources, the two have been fighting SoftBank, the biggest investor in the company, 'tooth and nail’ to prevent the deal from happening.

“They are going to fight the deal till they can. The kind of U-turn SoftBank took last year has left them flabbergasted. First SoftBank asked them to rebrand, spend money on marketing, promising all along that more investments are on way and then they suddenly left them high and dry.(more)

Kalanithi Maran vs Ajay Singh: Blow for SpiceJet as SC dismisses petition

Had earlier moved a confidence motion in the Bihar Assembly to prove the majority of his new govt

Indian Companies News : In a blow to Ajay Singh-led low-cost carrier (LCC) SpiceJet, the Supreme Court on Friday dismissed its appeal challenging the Delhi High Court order that directed it to deposit Rs 529 crore in relation to a share-transfer dispute with media baron Kalanithi Maran.

The Bench headed by Justice Rohinton Nariman heard the counsel to Ajay Singh, who now controls SpiceJet, as well as Abhishek Singhvi, who was appearing for Maran, before rejecting the appeal. SpiceJet is now obliged to deposit Rs 250 crore in cash and Rs 329 in bank guarantees. The payment schedule was to start in August.

According to SpiceJet, the high court order was not only wrong in law but harsh as it amounted to infliction of 'civil death' on the company. It pleaded that the order would have an effect of undoing all efforts of the new management and saddle the company with huge liabilities with fatal consequences.

ALSO READ: Who owns SpiceJet? Kalanithi Maran claims deal with Ajay Singh is dead

Maran, the former promoter of the airline, had transferred his 58.46 per cent stake in the airline to Singh in February 2015, changing the ownership of the LCC. Under the agreement, Maran was to receive redeemable warrants in return for Rs 690 crore spent on SpiceJet towards operating costs and debt payment. However, this allegedly did not happen because the necessary approvals were not obtained from the Securities and Exchange Board of India.

SpiceJet’s petition said the liabilities were over Rs 2,200 crore, which was substantially more than the amount purportedly brought in by Maran and KAL Airways. This amount was, in fact, utilised for the purpose it was brought in. "It is with great effort, perseverance and skill that the company under its new management has been able to revive itself and come out from the severe financial strain that it was facing under the management of Maran and others," the appeal stated.

ALSO READ: Share transfer dispute: SpiceJet must deposit Rs 579 cr, Delhi HC rules

In separate proceedings, Maran has moved the arbitration tribunal demanding compensation from SpiceJet for causing losses and failing to honour the agreement.

Jio 4G handset is virtually free for users; what's the game plan?

This handset could rattle older rivals, but experts are sceptical about mass conversions for Jio

Indian Companies News : In a move that may rattle its older rivals, already destabilised by some of the disruptive plans and freebies offered by it in the past months, Mukesh Ambani-backed Reliance Jio on Friday unveiled its ultra-low-cost 4G feature phone.

However, the success of the new Reliance Jio mobile phone would be pegged on 2G phone customers doubling their present monthly bill on mobile services.

For that to happen, the country’s average revenue per user (Arpu) – currently at Rs 80 for feature phone users and pegged at around Rs 104 overall – will have to go up substantially.

To enable that, Jio is offering users an attractive preposition – unlimited calls (earlier the feature phone users had only limited call time), as well as unlimited data with a cap of 0.5 GB per day (earlier they had no or minimal data usage) on a Rs 153 pack. Also, Jio is offering applications that include videos as well as live TV and YouTube, which will only help customers move to higher data usage and, thereby, larger packs.

In fact, the company has also ensured that customers will not have to pay for the new handset at all if they commit to Jio for the long haul. Reliance Jio is offering the device at a deposit of Rs 1,500, which will be paid pack after three years. While this helps the company garner a huge amount of money upfront, the effective cost for the customer is only the notional interest that he would forgo on an amount of Rs 1,500, which is negligible of course.

Unlike in the case of the earlier Monsoon Hungama plan (phone bundled with services at Rs 501) offered in 2003 by the erstwhile Reliance Infocomm (now Reliance Communications), there will be no risk of the customer running away with the phone this time. The user will remain sticky for at least three years, as not only is the device locked to Jio, but he also needs to continue using Jio for availing of money back. Read more

Jio disruption: Feature phone to cost Rs 0 with Rs 1,500 refundable deposit

Jio feature phone offered free voice, SMS, unlimited data at Rs 153/month

Reliance Industries Limited (RIL) on Friday held its 40th AGM or annual general meeting for shareholders today, at Birla Matushri Sabhagar in Mumbai. During the event, Reliance announced the launch of its 4G feature phone. Along with that the telco has announced its cable TV device. The JioPhone will be available for free but buyers will have to deposit a fee of Rs 1500 which will be refundable after three years. This means the phone will be available at an effective price of zero.

The phone, targeted at 50 crore feature phone users in the country, will be available for pre-booking from August 24 on payment of a refundable security deposit of Rs 1,500.

Indian Companies News : This deposit will be refunded after 36 months on return of the phone, he said, adding that the price of the phone will be "effective zero".

He used the occasion to introduce his twin children, Akash and Isha, who presented the phone features that include calls and text messaging on voice command, Internet surfing and cable to connect the device to TV to view content, including videos.

Also Read :

• Jio disruption: Feature phone to cost Rs 0 with Rs 1,500 refundable deposit
• RIL AGM: Mukesh Ambani announces 1 bonus share for every 1 share held
• Reliance unveils zero cost 4G phone, aims to further disrupt telecom sector

"JioPhone will make the 2G feature phone obsolete," Ambani claimed, adding that the company is looking to bring 5 million phones to the market a week.

The JioPhone will be available for user testing in beta mode from August 15 and for pre-booking from August 24.

"Reliance democratised the equity culture in the past. Now, Jio will democratise the digital culture in India," he asserted. "Digital Life will no longer be the privilege of the affluent few."

Out of the 78 crore phones in India, Ambani said, 50 crore are feature phones that cannot be used for Internet or data usage. The new phone would give "affordable" device to these 50 crore users and "end the digital exclusion in India". Read more full article.

IUC report: Reliance Jio alleges Rs 100,000 cr bonanza to incumbents

Says bonanza due to IUC suggestions not being carried out by Trai

Stepping up its attack on incumbents, Reliance Jio has alleged that three major operators benefitted by over Rs 100,000 crore in the past five years owing to non-implementation of the telecom regulator’s 2011 recommendations on interconnect usage charges (IUC), or terminating charges.

In an affidavit to the Supreme Court in 2011, the Telecom Regulatory Authority of India (Trai) had recommended that the IUC charges be cut to half from 20 paisa and gradually shifted to the ‘bill and keep’ model — which means zero charge — by 2014. But in 2015, the IUC was only brought down to 14 paisa with the mandate that it would be revised after two years.

Company Business News : The additional money that the big three incumbents have made, according to Jio’s allegations, is based on the net present value (which includes interest income) and reflects the excess recovery made by them over the actual cost that they have to incur for terminating a call. The presentation was given by Jio to the Trai on Tuesday.

Jio also said that India was moving against the global trend of reducing IUC. It said that IUC as a percentage of blended retail mobile price is currently 1 per cent in China, 9 per cent in UK, 11 per cent in France, and 13 per cent in Japan. But in India, IUC, which constituted only 10 per cent of the average tariff in 2003, has now climbed up to 45 per cent.

Jio argued that the value of surplus recovery for the three incumbents was to the tune of Rs 20,624 crore in the financial year ended 2017.

Making a strong case for shifting to the bill and keep model, Jio stated that the cost of delivering voice on an IP network was practically nil and it seemed that new operators were merely subsidising the incumbents because of their ineffeciencies and older networks. Read more full article

UDAN scheme: TruJet to add 10 destinations with 7 aircraft

The airline started operations in July 2015, currently catering to 7 destinations with 16 flights

Hyderabad-based TruJet, one of the private airlines, which has bagged travel routes under UDAN (Ude Desh ka Aam Naagrik) scheme is planning to add 10 destinations with seven aircraft.

The airline started operations in July 2015 and is currently catering to seven destinations with 16 flights.

Antara Dey, spokesperson of the airline said that over the next two years, the airline is planning to add 10 destinations with seven aircraft. Of this, five will be under UDAN scheme, including Mysore, Bidar, Hosur, Salem and Vidya Nagar.

Alliance Air, the regional arm of Air India, SpiceJet and TruJet have won rights to operate flights under the government's regional air connectivity scheme, which seeks to give people from Tier-II and Tier-III cities a chance to fly at a ticket price of Rs 2,500.

Company News : Airlines operating under the UDAN scheme have to ensure that the prices of at least 50 per cent of the seats on their flights are available at a price of Rs 2,500 each for an hour of flying.

The Centre and state will provide viability gap funding for the airlines operating on the UDAN routes to ensure profitability of these flights.

Trujet is planning to deploy ATR72-500/600 with a 72-seat capacity.

Dey, mentioned earlier, said that the airline is looking at 77 per cent PLF (passenger load factor) and expects to make money in a year.

She added that the airline is funded directly by promoters and do not have any plans immediately to look at external funding. (more)

At Reliance AGM, Jio financials, 4G feature phone would be the focus

Street to also watch for details on home-to-fibre, fuel and organised retail segments

In September last year, Reliance Industries (RIL) Chairman Mukesh Ambani shared the roll-out plan for Reliance Jio’s telecom services at the company’s annual general meeting (AGM). This Friday, shareholders and investors will look for details on revenue generation from these services.

RIL is slated to announce its earnings for the April-June quarter (Q1) on Thursday and hold its AGM the day after. Analysts expect the focus, both in terms of the June quarter numbers and the AGM, would be on the company’s telecom business.

The details are important and will reflect on investor sentiment, which is on the rise. On Friday, the RIL stock scaled to a nine-year high.

Company News : While Jio started offering its services in September last year, these services have largely been provided free till March and continue to be offered at discounted prices. Among other details, analysts and shareholders would look for data on revenue generation and the profitability timeline for this business. “Telecom would be the topmost thing to watch, as details on other business like the oil and gas segment have been already spelled out,” said an analyst with a domestic brokerage firm.

Last week, the company extended its promo offers for Jio services, adding to scepticism on any meaningful revenue addition in the current financial year. “We see downside risk to our Jio financial year 2017-18 revenue estimate of $2.7 billion, due to extension of the promotional offers. We are unsure if our FY18 revenue estimate for Jio holds any weight, given that Jio has been capitalising its revenue/expenses thus far,” a Morgan Stanley report dated July 11, said.

In addition to financial details, analysts and investors will look out for official comments on plans for low-cost 4G phones. “While every AGM has the usual expectations on bonus issue (the previous bonus issue was in FY 2009-10), expectations this time are high on another large announcement in telecom, especially 4G feature phones,” analysts with JPMorgan wrote in a report dated July 12. Read more