Friday, June 4, 2010
Friday, August 28, 2009
3G auction: Which companies may gain?
The government on Thursday (August 27) rolled out its roadmap to the 3G and WiMax auctions. The auctions will not only pave the way for next generation technology over voice communication but will also help an already-desperate-for-cash government rake in about Rs 25,000 crore and help ease the fiscal deficit situation.
“Five 3G slots will be auctioned. Among the five, one slot has already been auctioned to BSNL and MTNL so the remaining four would be auctioned. The base price for pan-India would be Rs 3,500 crore,” Telecom Minister Anthony Raja said, adding, “Since the number of slots is only four, the auction price will be more and I feel the department will easily fetch Rs 25,000 crore.” The minister also said the auction would be completed within 90 days. The 3G auction has been delayed for over a year now. The Department of Telecom was earlier looking at a base price of Rs 2,020 crore while the Finance Ministry wanted it doubled.
Who wins, who loses?
Reactions poured in immediately after the auction announcement with big GSM players like Bharti welcoming the auction. Bharti and Vodafone with an easy cash position would be looking forward to the auctions. However, the relatively smaller players like Idea, Reliance Communication and Aircel will need to dig deep into their pockets to pay up. Another player that stands to lose is MTNL, which will — as per the norm set by the government — need to match the highest bids in the Delhi and Mumbai circles where it operates. MTNL, already a loss-making government entity, does have enough cash reserve but if required to shell out Rs 800 crore — as expected — it may be negative for the stock.
The CDMA players are the worst-hit. Reacting to the 3G auctions, SC Khanna of the Association of Unified Telecom Service Providers of India (AUSPI), a CDMA operators’ body consisting of Reliance Communication, Tata Indicom and Sistema Shyam, said he was disappointed with the auction because of both the high reserve price and the limited number of slots.
“The high reserve price will impact the 3G service’s affordability. Also, the government is creating artificial scarcity by auctioning just four slots,” Khanna said, adding that the government should have auctioned all the slots, the number being seven or eight.
The government on Thursday (August 27) rolled out its roadmap to the 3G and WiMax auctions. The auctions will not only pave the way for next generation technology over voice communication but will also help an already-desperate-for-cash government rake in about Rs 25,000 crore and help ease the fiscal deficit situation.
“Five 3G slots will be auctioned. Among the five, one slot has already been auctioned to BSNL and MTNL so the remaining four would be auctioned. The base price for pan-India would be Rs 3,500 crore,” Telecom Minister Anthony Raja said, adding, “Since the number of slots is only four, the auction price will be more and I feel the department will easily fetch Rs 25,000 crore.” The minister also said the auction would be completed within 90 days. The 3G auction has been delayed for over a year now. The Department of Telecom was earlier looking at a base price of Rs 2,020 crore while the Finance Ministry wanted it doubled.
Who wins, who loses?
Reactions poured in immediately after the auction announcement with big GSM players like Bharti welcoming the auction. Bharti and Vodafone with an easy cash position would be looking forward to the auctions. However, the relatively smaller players like Idea, Reliance Communication and Aircel will need to dig deep into their pockets to pay up. Another player that stands to lose is MTNL, which will — as per the norm set by the government — need to match the highest bids in the Delhi and Mumbai circles where it operates. MTNL, already a loss-making government entity, does have enough cash reserve but if required to shell out Rs 800 crore — as expected — it may be negative for the stock.
The CDMA players are the worst-hit. Reacting to the 3G auctions, SC Khanna of the Association of Unified Telecom Service Providers of India (AUSPI), a CDMA operators’ body consisting of Reliance Communication, Tata Indicom and Sistema Shyam, said he was disappointed with the auction because of both the high reserve price and the limited number of slots.
“The high reserve price will impact the 3G service’s affordability. Also, the government is creating artificial scarcity by auctioning just four slots,” Khanna said, adding that the government should have auctioned all the slots, the number being seven or eight.
Nifty f&o
Nifty (September) future premium decreased from 9.6 pointsto 5.45 points and around 13.85 lakh shares were added inopen interest. Total open interest in the market was Rs73,293 crore andRs6,725 crore were added in open interest. Nifty call option added 33.45 lakh shares in open interest,whereas put option added 44.75 lakh shares in open interest. Great Eastern Shipping Company (61%), Bank of Baroda (53%),Hindustan Zinc (37%), Gujarat State Petronet (35%) and PrajIndustries (32%) were the top open interest gainers in themarket. Colgate Palmolive (-27%), Sun TV (-24%), Dabur India (-21%)and Cipla (-18%) were the top open interest losers in the market.Market ViewNew high for 2009At 0955 hours, the opening bell, Nifty was almost flat and in thefirst half the market saw aggressive selling pressure. In the secondhalf, the market made a turn around, recovered smartly from thelow of 4650 and finally closed at the new high for the year 2009—at 4732 with gains of 44 points. Volume in Nifty future was higherthan the average traded volume. Around 13.85 lakh shares wereadded in open interest with decrease in the cost of carry, indicatingfresh short position building up at higher levels. On the optionfront, implied volatility has increased by about 100-200 basis pointsindicating that the market will trade with positive bias and 4700will act as good support in the short term.
Nifty (September) future premium decreased from 9.6 pointsto 5.45 points and around 13.85 lakh shares were added inopen interest. Total open interest in the market was Rs73,293 crore andRs6,725 crore were added in open interest. Nifty call option added 33.45 lakh shares in open interest,whereas put option added 44.75 lakh shares in open interest. Great Eastern Shipping Company (61%), Bank of Baroda (53%),Hindustan Zinc (37%), Gujarat State Petronet (35%) and PrajIndustries (32%) were the top open interest gainers in themarket. Colgate Palmolive (-27%), Sun TV (-24%), Dabur India (-21%)and Cipla (-18%) were the top open interest losers in the market.Market ViewNew high for 2009At 0955 hours, the opening bell, Nifty was almost flat and in thefirst half the market saw aggressive selling pressure. In the secondhalf, the market made a turn around, recovered smartly from thelow of 4650 and finally closed at the new high for the year 2009—at 4732 with gains of 44 points. Volume in Nifty future was higherthan the average traded volume. Around 13.85 lakh shares wereadded in open interest with decrease in the cost of carry, indicatingfresh short position building up at higher levels. On the optionfront, implied volatility has increased by about 100-200 basis pointsindicating that the market will trade with positive bias and 4700will act as good support in the short term.
tv18
We have reviewed the annual report of Network 18 Media & Investments (Network18)for FY2009. The highlights of the same are presented below.Operating highlights Fiscal year 2009 was an extremely difficult year for the Network18 group. Withthe majority of its businesses being in an investment/expansion mode, thedownturn in the advertisement market affected the group’s operating performanceadversely. Thus while the company recorded an increase of 17% year on year (yoy)to Rs760.2 crore, it had an operating loss of Rs200 crore and a net loss of Rs181.9crore for the year.Performance of
Performance of key subsidiaries
Company Revenues % yoy Net profit % yoy
TV18* 489.8 23 -166.4 -
IBN18* 182.7 39 -92.0 -
Homeshop18 24.0 - -49 -
Setpro18 65.1 - 3 -
*Not comparable yoy as in FY2009 TV18’s numbers included Infomedia18’s numbers and IBN18’s numbers included
IBN7’s numbers, 50% in IBN Lokmat and share of loss in associate Viacom18 for part of the year respectively.
As is visible from the above table, in FY2009 Television Eighteen (TV18)’s reported
a hefty loss due to stagnant revenues in business news segment and substantial
tapering of the growth rate in the revenues of Web18 and Newswire18. On the
other hand, the cost structure continued to increase due to increase in competition
in the news business and launch of in.com during the year. For IBN18 the bright
spot is the performance of the Hindi general entertainment channel (GEC) Colors
(housed in Viacom18 in which IBN18 has a 50% stake). The channel has managed
to be consistently amongst the top two channels in the genre and promises hefty
advertising and subscription revenues going ahead.
Fund mobilisation in Network18
To ensure adequate funds for new ventures during the year the company raised
~Rs204 crore through the issue of partly convertible preference shares and another
~Rs50 crore through the conversion of one crore warrants by promoters. The debt
as on the Balance Sheet date increased by ~Rs300 crore to Rs1,385 crore in FY2009.
Also, after FY2009 the company has raised another ~Rs525 crore till date through
the placement of equity/convertible instruments to promoters and qualified
institutions, and its debt level has increased to ~Rs1,800 crore. Thus, the equity of
the company has expanded 2.25x FY2008 till date. On the one hand, the company
has managed to raise funds to sustain the growth momentum of the businesses in
gestation, on the other hand, the recent equity infusions have led to the trimming
down of its gearing ratio from 2.9x as on March 31, 2009 to 1.7x as on date.
While the cash and bank balances, and liquid investments as on Balance Sheet
date were ~Rs340 crore, with the equity infusions after March 31, 2009 and the
incremental debt, the cash level is believed to have increased to ~Rs1,150
crore. We believe that this is sufficient to meet the funding requirements in
the near term.
Included in the FY2009 consolidated Balance Sheet are two important investments
made by the group during the year (other than the investments made in the
We have reviewed the annual report of Network 18 Media & Investments (Network18)for FY2009. The highlights of the same are presented below.Operating highlights Fiscal year 2009 was an extremely difficult year for the Network18 group. Withthe majority of its businesses being in an investment/expansion mode, thedownturn in the advertisement market affected the group’s operating performanceadversely. Thus while the company recorded an increase of 17% year on year (yoy)to Rs760.2 crore, it had an operating loss of Rs200 crore and a net loss of Rs181.9crore for the year.Performance of
Performance of key subsidiaries
Company Revenues % yoy Net profit % yoy
TV18* 489.8 23 -166.4 -
IBN18* 182.7 39 -92.0 -
Homeshop18 24.0 - -49 -
Setpro18 65.1 - 3 -
*Not comparable yoy as in FY2009 TV18’s numbers included Infomedia18’s numbers and IBN18’s numbers included
IBN7’s numbers, 50% in IBN Lokmat and share of loss in associate Viacom18 for part of the year respectively.
As is visible from the above table, in FY2009 Television Eighteen (TV18)’s reported
a hefty loss due to stagnant revenues in business news segment and substantial
tapering of the growth rate in the revenues of Web18 and Newswire18. On the
other hand, the cost structure continued to increase due to increase in competition
in the news business and launch of in.com during the year. For IBN18 the bright
spot is the performance of the Hindi general entertainment channel (GEC) Colors
(housed in Viacom18 in which IBN18 has a 50% stake). The channel has managed
to be consistently amongst the top two channels in the genre and promises hefty
advertising and subscription revenues going ahead.
Fund mobilisation in Network18
To ensure adequate funds for new ventures during the year the company raised
~Rs204 crore through the issue of partly convertible preference shares and another
~Rs50 crore through the conversion of one crore warrants by promoters. The debt
as on the Balance Sheet date increased by ~Rs300 crore to Rs1,385 crore in FY2009.
Also, after FY2009 the company has raised another ~Rs525 crore till date through
the placement of equity/convertible instruments to promoters and qualified
institutions, and its debt level has increased to ~Rs1,800 crore. Thus, the equity of
the company has expanded 2.25x FY2008 till date. On the one hand, the company
has managed to raise funds to sustain the growth momentum of the businesses in
gestation, on the other hand, the recent equity infusions have led to the trimming
down of its gearing ratio from 2.9x as on March 31, 2009 to 1.7x as on date.
While the cash and bank balances, and liquid investments as on Balance Sheet
date were ~Rs340 crore, with the equity infusions after March 31, 2009 and the
incremental debt, the cash level is believed to have increased to ~Rs1,150
crore. We believe that this is sufficient to meet the funding requirements in
the near term.
Included in the FY2009 consolidated Balance Sheet are two important investments
made by the group during the year (other than the investments made in the
NIFTY ABOVE 4700
After struggling for days, on the very first day of the
September series, the stock market closed at all-time high
for the year. Further, the weekly positive close after the
previous bullish hammer indicates that bulls continue their
grip on the market. In the first half of today’s session the
market traded within a range, however in the second half
it broke out above 4700 level, which had acted as strong
resistance two times earlier. The icing on the cake was
that the breakout was supported with good volumes. After
two days of flat closing, Nifty managed to close higher
and above the close of the outside bar, which suggest
more strength in days to come. This will open the gates
for our short-term target. On the Sensex, the daily chart
‘bullish island’ had been formed with support at the lower
band ie 15275, a bullish sign for the market. Nifty is
currently trading above 20 daily moving average (DMA)
and 40DMA ie 4561 and 4479 respectively, which are crucial
support levels going forward. The momentum indicator
(KST) has given positive crossover and trading above the
zero line.
On the hourly chart, Nifty is trading above 20 hourly moving
average (HMA) and 40HMA ie 4667 and 4576 respectively,
which are strong support levels in the immediate run.
Our short-term bias is up with reversal at 4350 and target
at 4780. The market breadth was positive with 675
advances and 584 declines on the NSE and 1,534 advances
and 584 declines on the BSE.
For the day, Nifty and BSE ended 44 points and 141 points
higher respectively. Of the 30 stocks that constitute the
Sensex, DLF (up 5%) and Bharti Airtel (up 4%) were the
top gainers, while Tata Power (down 1.5%) and Ranbaxy
Laboratories (down 1.5%) were the top losers. Metal and
Infrastructure scrips saw buying interest today.
After struggling for days, on the very first day of the
September series, the stock market closed at all-time high
for the year. Further, the weekly positive close after the
previous bullish hammer indicates that bulls continue their
grip on the market. In the first half of today’s session the
market traded within a range, however in the second half
it broke out above 4700 level, which had acted as strong
resistance two times earlier. The icing on the cake was
that the breakout was supported with good volumes. After
two days of flat closing, Nifty managed to close higher
and above the close of the outside bar, which suggest
more strength in days to come. This will open the gates
for our short-term target. On the Sensex, the daily chart
‘bullish island’ had been formed with support at the lower
band ie 15275, a bullish sign for the market. Nifty is
currently trading above 20 daily moving average (DMA)
and 40DMA ie 4561 and 4479 respectively, which are crucial
support levels going forward. The momentum indicator
(KST) has given positive crossover and trading above the
zero line.
On the hourly chart, Nifty is trading above 20 hourly moving
average (HMA) and 40HMA ie 4667 and 4576 respectively,
which are strong support levels in the immediate run.
Our short-term bias is up with reversal at 4350 and target
at 4780. The market breadth was positive with 675
advances and 584 declines on the NSE and 1,534 advances
and 584 declines on the BSE.
For the day, Nifty and BSE ended 44 points and 141 points
higher respectively. Of the 30 stocks that constitute the
Sensex, DLF (up 5%) and Bharti Airtel (up 4%) were the
top gainers, while Tata Power (down 1.5%) and Ranbaxy
Laboratories (down 1.5%) were the top losers. Metal and
Infrastructure scrips saw buying interest today.
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