GSM service provider Idea Cellular will invest an additional $400 million (Rs 1,600 crore) for rolling out telecom services in four new circles - Mumbai, Bihar, Tamil Nadu and Orissa - for which it has received spectrum from the Department of Telecommunications.
The Reserve Bank of India is expected to do a balancing act by further liberalising limits on the foreign exchange outflow to tackle the capital inflow and its impact on inflation. The central bank was likely to raise the limit on corporate investment abroad and the ceiling on individual remittances overseas. RBI has liberalised limits on the overseas investment by companies from 200% to 400% of their networth. Liberalisation is proposed since India has good forex situation.
Datacom Solutions, promoted by consumer electronic goods maker Videocon Industries, is close to roping in South African telecom major MTN group as a partner for its GSM foray in the country. According to sources, Datacom, which was scouting for a partner to bring in investments and technology, has short-listed MTN. Discussions with the South African company are in the final stage and a deal is expected to be signed soon.
There may not be any legal obstacles to the State Bank of Saurashtra's merger with the State Bank of India but it is the United Progressive Alliance's political compulsions that are holding back the deal, which is expected to pave the way for merger of the other six SBI associates with the parent. In response to the law ministry's objections, the RBI has told the government that the Centre could go ahead with the merger without any immediate legal glitches.
The initiative could help a large number of the alleged FERA violators get away with just financial penalties instead of criminal charges. The government's advisory, informed sources said, will not apply to all the cases as the RBI will decide on a case-to-case basis.
The Department of Tele-communications is close to allocating start-up spectrum in seven more circles, in addition to Tamil Nadu, where the process is set to begin next week. According to the telecom ministry's plan, the companies would get 4.4 MHz each and the allocation would be completed within a fortnight.
The Department of Telecommunications is considering a proposal to allocate spectrum, the radio frequencies that enable wireless communications, for third-generation or 3G services to state-owned Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd ahead of other operators. The move is expected to frustrate private players since this will give BSNL and MTNL a head-start in rolling out high-value 3G services that offer video calls, music downloads and games.
The Insurance Regulatory and Development Authority (Irda) may allow up to 25 per cent investment to a single group of companies as part of the group exposure norms for unit-linked insurance plans (Ulips).While in the normal course, the regulator is likely to cap the investment of such polices at 20 per cent, the ceiling can be relaxed by another 5 per cent with prior approval of the board through what is called discretionary limits.
With the government issuing 120 more licences to over 10 players that are expected to roll out their networks soon, telecom companies fear a major talent crunch over the next 12 to 18 months. Telecom HRD analysts said attrition rates across levels is expected to go up to 25 per cent from 18 to 20 per cent. Companies expect salaries to jump 15 to 40 per cent, depending on the level, as the great hunt for new recruits takes off.
Struggling US telecom giant Motorola is exploring the possibility of shifting part of the manufacturing facility it is closing in Singapore to India. China and Thailand are also on the radar. Top sources said India is high on the list since Motorola already has a plant in Chennai and a large domestic mobile phone base of over 120 million phones annually.
Exchangeable bonds are instruments that allow a holding company or the parent company of a group to raise funds from the overseas market for use by any of the group companies. The bonds will then be converted into shares of the company for which funds were raised. RBI has sent a cautionary note to the government stating that the rules for exchangeable bonds will have to be aligned with the norms for external commercial borrowings.
India will finally sign an investment treaty - the Bilateral Investment Promotion and Protection Agreement (BIPA) - with Myanmar in the first week of April. The pact is going to be of critical interest to a host of oil majors looking at investments in the resource-rich country.According to sources, the treaty will be signed with the approval of Prime Minister Manmohan Singh. The Cabinet ratification, they say, will come later.
The government has initiated a comprehensive review of external commercial borrowings (ECB) policy. While the details are yet to be thrashed out, the government and the Reserve Bank of India are set to raise the ceiling for the current financial year from $22 billion to $28-30 billion. Sources said the move was prompted due to a breach in the existing ceiling.
In November last year, Communications Minister A Raja had announced the implementation of MNP, which permits users to change the operator without giving up their existing mobile number, by the fourth quarter of 2008. "The department of telecommunications has to form a consortium of operators, which, in turn, has to set up a central database of operators and their subscribers. "This is a long-drawn process," an official in the government pointed out.
The Anil Ambani group company is in advanced talks with France Telecom for a branding, marketing and franchisee agreement. The company plans to launch the brand by the second quarter of FY09, according to sources close to the development. Initially, the Orange may be launched on RCom's CDMA network -- spanning across 23,000 towns and 5 lakh villages in India -- and later extended to its 8 GSM circles. The Indian company has a total of 44.5 million subscribers in India.
The income tax authorities have put banks and companies disclosing losses in their foreign exchange derivative structures under the scanner. Banks and companies have been called to explain the extent of losses and structures initiated in both Indian and overseas markets through their branches and subsidiaries. The income tax department will then ascertain whether banks and companies entered into transactions to hedge their portfolio or for purely speculative purposes.
The operators believe that the industry is not ready for these services, even though such plans are good for users in Singapore. The service charges in the country are already lowest in the world and will not slide further for sometime. Moreover, this is also against the existing practice of an operator trying to match every scheme launched by competitors.
Citing the need for a more liberal regime for the banking and financial sector, RBI has opposed bilateral trade agreements. With no multilateral pacts with the WTO, the government had entered into free trade agreements, whose scope was later expanded to services, investment and even bilateral tax treaties. RBI has urged other countries such as UK, US and Europe to show reciprocity in granting branch licenses to Indian banks as they expect a similar treatment from India.
Consumer durables major Videocon Industries has firmed up its telecom plans and is making an initial investment of Rs 6,000 crore for rolling out GSM services, notwithstanding spectrum and legal issues besieging the sector. The services will be launched through its subsidiary, Datacom Solutions, by May. In case of a delay in spectrum allocation, the company may opt for taking spectrum on lease.
Richard Branson, after a dramatic launch of Virgin mobile in India, is keen on his India venture and is also exploring the possibilities of using bio-fuel for his aviation arm.
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