Tag: bharti airtel

SBI, Bharti Airtel seen as top Muhurat session picks for 2021, BFSI News, ET BFSI

Personal Finance

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Mumbai, Stocks of State Bank of India as well as Bharti Airtel have topped the list of scrip that have been recommended as the top Muhurat session picks by leading brokerage houses.

According to Motilal Oswal Financial Services (MOFSL), in terms of technical and derivatives picks for Samvat 2078, the rollover of SBI stock has been intact at 93 per cent from the last 2 months which indicates longs are upright in the scrip with more than 10 per cent price increase in the October series.

“One can look for ‘Bull Call Spread‘ opportunity here by buying at Rs 510 call and selling at Rs 540 call of the November series at a net premium cost of around 10 points.”

Other top stock picks from MOFSL are Larsen & Toubro, Trent, and Bata.

For Samvat 2078, the brokerage house expects a boost coming to sectors such as travel and tourism, real estate, and ancillary industries.

“Equity markets had a historical journey in Samvat 2077, as it touched new life time highs with Nifty and Sensex surpassing 18,000 and 60,000 mark, respectively, for the first time in history.”

“The recent sprint (in Nifty) to 15,000 in Feb ’21 and 18,000 in Oct ’21, from pandemic lows of 7,600 in Mar ’20 – amid lockdowns and other health challenges – has been led by a benign global liquidity, containment of Covid-19 cases, significant pickup in the pace of vaccination, sharp recovery in corporate earnings and a market-friendly budget.”

Besides, HDFC Securities have recommended Bharti Airtel as a top pick this Muhurat trading session.

As per HDFC Securities: “Pricing competition with Reliance Jio, regulatory and technological changes and adverse currency movement are key risks faced by the company. However, strong market position in the domestic mobile and non-mobile segment, diversification across businesses, healthy operations in Africa, high financial flexibility makes Bharti Airtel attractive for investment.”

“We feel Investors can buy the stock at LTP and add on dips to Rs 623 for a target of Rs 810.”

Furthermore, the brokerage house said that last year before Diwali, India was grappling with the aftermath of the first Covid-19 wave.

“There were considerable uncertainties on how the pandemic will impact India and the globe. Stock markets recovered from a steep Covid-19 induced fall and benchmark Nifty was pushing near pre-Covid all-time highs of 12,000 levels. Last year’s Diwali picks were issued in such an uncertain environment.”

“From those turbulent times to this Diwali, the pendulum has swung the other way. Markets have rallied 50 per cent since last Diwali and many stocks have zoomed to new all-time highs.”

The brokerage house also recommended Alembic Pharma, Cadila Healthcare, Credit Access Grameen, Gujarat Gas, ICICI Bank, Infosys, and Mphasis.

The special Muhurat trading session, held every year on Diwali day, is considered to be auspicious for stock market trading.

The trading during the special session will commence from 6.15 p.m. and end at 7.15 p.m. on Thursday.

It is believed that the Muhurat trading on this day brings wealth and prosperity throughout the year.

This ritual has been observed for ages by the trading community.

The Indian equity market will be closed on Friday, November 5, to mark Diwali Balipratipada.

–IANS

rv/sn/vd



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DoT may return Rs 14,000-crore bank guarantees to Vodafone Idea, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: The government plans to return bank guarantees worth Rs 14,000 crore to Vodafone Idea (Vi) and Rs 8,000 crore to Bharti Airtel if they opt for a four-year moratorium on payment of spectrum dues, a person aware of the development said.

The development is expected to drastically reduce Vodafone Idea’s non-fund exposure to banks that have been hesitant to furnish fresh bank guarantees (BGs) to the loss-making telco due to its precarious financial position.

“BGs in deferred annual instalment against spectrum bought in earlier auction will be returned to telcos opting for moratorium,” the source told ET. “Vi stands to get about Rs 14,000 crore and Airtel about Rs 8,000 crore.”

Bharti Airtel chairman Sunil Bharti Mittal on Thursday said the telco will opt for the moratorium while cash-strapped Vodafone Idea too is widely expected to opt for it.

Experts said return of bank guarantees will allow banks more leeway to lend to Vodafone Idea in the future.

“A large part of our exposure (to Vi) is towards bank guarantees to the DoT (Department of Telecommunications),” a lender said on the condition of anonymity. “If those are returned, it gets cancelled and our exposure towards Vodafone Idea will drop significantly.”

Re-rating of the company could also lead to refinancing of existing loans at lower rates.

“We will have to see how this evolves, but in all likelihood, when the operating metrics of the telco improves, we will be able to offer them lower rates and rework loan covenants depending on how the cash flow situation improves,” the lender said.

Banks have a total exposure of a little over Rs 35,000 crore to the company, of which funded exposure is close to Rs 13,800 crore while the remaining is non-funded.

Vodafone Idea had a gross debt of Rs 1.9 lakh crore at June end – mostly in obligations to the government towards deferred spectrum charges and adjusted gross revenues (AGR)-related dues – while its cash and cash equivalents are only Rs 920 crore.

The government on Wednesday rolled out a four-year moratorium on the statutory dues of telcos and opened up the automatic route for 100% foreign direct investment in the sector, which is expected to help attract global investors.

Bank guarantees have long been a bone of contention between telcos and DoT.

Airtel’s Mittal has been propagating scrapping the practice of taking BGs. “Bank guarantee is something which the DoT must reconsider because those are from historical times,” he had told ET in a recent interview. “Now that you have exposure of tens of thousands of crores of spectrum payments to these operators without any such instruments, why bother about these small bank guarantees?”

Mittal also pointed out that the Reserve Bank of India (RBI) norms mandate provisioning of that much capital allocation, thus reducing the capital pool, and the cost of bank guarantee has quadrupled.

The government had on Wednesday cut bank guarantee requirements against statutory dues such as licensee fees to 20% from 100%, and said the financial instrument won’t be required anymore to secure instalment payments in upcoming auctions.

This was over and above a four-year moratorium on AGR and spectrum payments, approved redefining AGR to exclude ‘non-telecom’ items and cut the spectrum usage charge (SUC) to zero — both prospectively — as part of wide-ranging reforms to improve the health of the debt-laden sector and make sure the market has at least three private players.

Vi stock has jumped about 30% in two days to close at Rs 11.25 on the BSE on Thursday.

Govt can also turn part of dues into equity after four-year period.



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Bharti Airtel | HDFC Bank: Would HDFC Bank, Bharti Airtel make good bets now? Sandip Sabharwal answers, BFSI News, ET BFSI

Banking & Finance

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If insurance stocks correct more, then they could give an opportunity for investors who are looking to invest for one or two years, says Sandip Sabharwal of asksandipsabharwal.com.

We have seen a bit of traction come by this week, specially in HDFC Life. There are two parts of this story in insurance as a whole — life and general. What is your take on the insurance stocks in India?
On one side, the long-term growth prospects are very strong because of the fact that insurance penetration in India is still suboptimal. It is not as suboptimal as it used to be a decade back but it still has a long way to go because there are still lots of uninsured people. Secondly, the way insurance was sold in the past and the changes that are getting made, are yet to play out. So that is one part of the story.

The second part of the insurance story has to do with the valuation story and the provisioning required because of Covid etc, which is event based and cannot be extrapolated because that does not impact the long-term mortality rate of the country.

But on valuations, these stocks are not cheap and that is the key issue. At this point of time, as far as insurance companies go, because the valuations of most of these companies — be it HDFC Life, ICICI Pru — which used to be cheap but is no longer cheap — or SBI Life are very expensive taking into account annualised premium equivalent or the new business premium into account, moving into the COVID hit quarter of last year.

Growth adjusted, these stocks are not cheap but they tend to be contrarian movers to the market. So when markets are weak, these stocks typically hold on and they do not do as well when the markets are moving up. In a corrective move, they could hold on but not absolute gain wise. I would still think that if these stocks correct more, then they could give an opportunity for investors who are looking to invest for one or two years.

For investors with a longer term horizon of say five to ten years, they will still make money even if they buy at these rates.

How do you think the market is reading into fundraising plans of Bharti Airtel? Seems like not quite well. looking at the price action in the stock today?
On one side, we have lots of IPOs getting lapped up at very high valuation. On the other side, we have a company which is actually on the verge of a growth cycle in earnings, where the market has not reacted well to its fundraising. That is fine. I would agree with the fact that fund raising by Bharti of a reasonable size could actually help it strengthen its balance sheet; secondly, gain market share in key segments and also get ready for 5G. The market is at an all-time high.

The Bharti Airtel stock went to a new high before correcting 5-6% from the top. So it is perfectly fine. I don’t think that it is a bad move. It depends on the way they are structuring whether they are getting in more money from Singtel or who is investing or whether it is going to be a QIP or rights issue. We still need to see these things but I would think that it is not a bad move to strengthen the balance sheet as the industry has gone through a very tough phase. The pricing discipline should come in but it has not yet come in.

The stock could obviously remain somewhat weak in the near term till the fund raising gets through but longer term the stock should do well.

What happens to banks? While ICICI Bank and SBI are showing leadership amongst the large banking names, HDFC Bank looks ready to play catch up then to ICICI Bank and SBI and form part of the leadership gang within banks?
The HDFC Bank stock performance will depend more on how the new management executes growth strategy and whether they can do it by managing the NPAs in a manner which was there under Aditya Puri’s leadership. The first signs over the last couple of quarters do not seem to indicate that and to that extent, it is an open competition. The challenge for most of the banks now are twofold; one, the overall credit growth in the system is just 6% and everyone is grappling for growth. So, some banks which were used to growing at 15-20% like HDFC Bank, how do they grow like that when the system wide growth is just 5-6% without taking risk as that could lead to an NPA spike. So that is a challenge.

The overall banking sector is challenged to that extent because there is no growth. There were initially some moves in a lot of these financial schemes because the NPA spike up due to the first wave of Covid was not as much as what people were expecting and the second wave actually has led to some NPA spike. So I would think that the overall financial space is at a stage where more consolidation is needed and it could still underperform as the markets correct.

In the case of HDFC Bank, they need to execute to retain the premium and for that, we will have to wait for two to three quarters. The initial bump up has happened as some restrictions got removed by RBI but that move is more or less through now. It will depend on growth and the NPA picture.



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SC directs DoT not to invoke Airtel bank guarantees for non-payment of Videocon’s AGR dues, BFSI News, ET BFSI

Banking & Finance

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The Supreme Court on Tuesday directed the telecom department not to invoke bank guarantees of Bharti Airtel for three weeks over non-payment of adjusted gross revenue (AGR) dues of defunct telco Videocon Telecommunications (VTL).

A three-judge bench led by Justice L Nageswara Rao allowed Bharti Airtel to go to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) for relief over the issue.

“We’ve made it clear we will not review the (main AGR) judgement. He (Airtel) wants to file an application. We will allow. He (Airtel) says after dues are added now, so you hold your hands for some time till he goes before TDSAT,” the bench also comprising Justice SA Nazeer and Justice MR Shah told Solicitor General Tushar Mehta.

Mehta was arguing that the recovery notice served by the Department of Telecommunications (DoT) on Airtel was as per the court’s AGR dues order. He added that he would contest the jurisdiction of the TDSAT to decide the issue.

The DoT had issued a demand notice on August 17, 2020, asking Bharti Airtel to pay AGR dues assessed at Rs 1376 crore within a week or have the bank guarantees invoked. The dues were of Videocon Telecommunications, whose spectrum was acquired by the Sunil Mittal-led carrier in 2016. Videocon had sold rights to use spectrum in the 1,800 MHz band in six circles to Airtel in 2016 for Rs 4,428 crore.

The Sunil Mittal-led telco said that it had so far paid the government Rs 18004 crore by way of AGR dues, which was more than 10 percent of dues to have been paid by March 31, 2021, as per the top court’s order. DoT has demanded Rs43,980 crore from Airtel towards AGR dues.

Senior advocate Shyam Divan, representing Airtel, said that Airtel was not responsible for Videocon’s dues on account of the spectrum trading deal as the law states that the ‘seller shall clear all dues prior to concluding any agreement for spectrum trading’.

“Our agreement date is 16th March 2016. I am the buyer and the effective date is 18th May 2016. If there was a liability not known to parties at the time, the government has discretion to recover jointly or severely. In our case, it’s common ground between us that it was known liability, so we are not in the realm of unknown liability,” argued Diwan. “The liability is of Videocon, full liability is of the seller.”

The bench intervened, saying “We know where you are heading, but we are not going to review this judgement.”

To this, Divan responded: “We don’t want to review the judgement.”

He added that Rs1376 crore were Videocon’s dues and must be paid by that company. “In fact, DoT has claimed this from Videocon in insolvency proceedings,” said Divan.

Divan said that DoT’s “precipitate action,” “totally affects our working” and sought a stay on the government’s demand notice.

The DoT had filed an affidavit in the SC in April, 2021, saying that Airtel had refused to pay the AGR-related dues of Videocon, despite its demand.

In its response, Airtel, through letters dated 16.10.2020 and 4.3.2021, said that DoT’s demand has “no basis in law” and that Airtel cannot be held responsible for Videocon’s past dues given that the buyer of spectrum is not responsible for dues which were ‘known’ at the time of trade.

As per the DoT affidavit, Airtel added that contrary to its current stance, DoT had never raised such demand from Airtel in the past and maintained its position that these dues were solely recoverable from Videocon.

“…given the clear and categorical findings of the Hon’ble Supreme Court, the trading guidelines issued by DoT and DoT’s own understanding, along with the fact that such demand was never raised on Airtel, is ample testimony to the fact that Airtel is not liable for any outstanding dues of Videocon pertaining to the outstanding AGR dues. i.e. License Fees and Spectrum Usage Charges of M/S Videocon,” Airtel said, as per the DoT affidavit.



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Voda Idea Q1 net loss widens to Rs 7312.9 crore; ARPU falls to Rs 104, BFSI News, ET BFSI

Personal Finance

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Vodafone Idea (Vi) posted a net loss of Rs 7312.9 crore in the fiscal first quarter compared to Rs 6985.1 crore in the previous quarter, hurt by slowdown in economic activities which dragged down the revenues of the debt laden telco.

The third-largest operator reiterated its viability concerns unless it manages to raise funds, which in turn depends on the status of statutory dues that it owes the government, and also on other factors such as negotiations with lenders on better terms for repayment.

“The Company’s financial performance has impacted its ability to generate the cash flow that it needs to settle/ refinance its liabilities and guarantees as they fall due, which along with its financial condition, is resulting in material uncertainty that casts significant doubt on the Company’s ability to make the payments mentioned therein and continue as a going concern.,” India’s only loss-making private operator said.

Total quarterly revenue for the cash-strapped operator fell to Rs 9152.3 crore in the April-June from Rs 9,607.6 crore when compared sequentially, the company said in a notice to the stock exchanges on Saturday.

Adjusted gross revenue (AGR), is the moot issue between Department of Telecommunications (DoT) and Vi, and the telco has has filed a review petition in the Supreme Court against DoT’s calculation “errors”.

The DoT has asked for Rs 58,254 crore from Vi, of which the telco has paid Rs 7,854 crore. The telco Saturday said that as of June end, its AGR liabilities, including interest, stood at around Rs62,180 crore, according to DoT’s calculations.

Vi said that the total debt of the Group stands at Rs 191,588.8 crore of which the next instalment of the AGR liability – of around Rs9,000 crore – and debt amounting to Rs 16,853.4 crore is payable in next 12 months.

The results are the first after Aditya Birla Group chairman Kumar Mangalam Birla quit as Vodafone Idea non-executive chairman and as a director on the boad. His resignation had come less than two months after he wrote to the government that he is willing to give up his stake in Vi to any government entity, which can ensure the telco’s survival.

Funds are now the telco’s lifeline and the operator on its attempts to raise Rs 25,000 crore said ” We continue to focus on executing our strategy to keep our customers ahead, and our cost optimization plan remains on track to deliver the targeted savings. We are in active discussion with potential investors for fund raising, to achieve our strategic intent,” said Ravinder Takkar, MD & CEO.

Both parents – Vodafone Group and the ABG – though have refused to infuse fresh equity into the cash strapped telco. The company had cash & cash equivalents of Rs. 9.2 billion at June end.

“The said assumption of going concern is essentially dependent on its ability to raise additional funds …successful negotiations with lenders for continued support/additional funding, monetisation of certain assets, outcome of the review petition filed … Supreme Court and clarity of the next instalment amount, acceptance of its deferment request by DoT and generation of cash flow from its operations that it needs to settle/renew its liabilities/guarantees as they fall due,” Vi said.

It added, “As result of earlier rating downgrades, certain lenders had asked for increase of interest rates, and additional margin money/security against existing facilities. The Group has exchanged correspondences and continues to be in discussion with the lenders for the next steps/ waivers”. Also, the company needs to provide additional bank guarantees of Rs 975.7 crore to avail additional moratorium of one year on spectrum installments for November 2012, February 2014 and October 2016 auctions, amounting to Rs 6439.2 crore. Guarantees amounting to Rs 13,358 crore are due to expire during the next 12 months.

In its review petition, Vi said it has “outstanding utilised facilities” of approximately Rs 47,000 crore from banks, non-banking finance companies (NBFCs) and mutual funds, of which Rs 25,000 crore is from public sector banks, over and above the amount due to DoT.

The company said its subscriber base declined by 12.3 million to stand at 255.4 million subscribers as against rivals Jio and Airtel who have 440.6 million and 321.23 million, respectively. The telco said pandemic related lockdowns impacted gross additions but despite that, its 4G user base was steady at 112.9 million 4G customers.

Its quarterly earnings before interest, tax, depreciation & amortization (Ebitda) reduced to Rs 3,707.7 crore from Rs4,408.7 crore.

Ebitda margins contracted to 40.5% from 45.9% in the previous quarter.

The operator’s average revenue per user (ARPU) was Rs 104, lower than Rs 107 clocked in the previous quarter. Rivals Bharti Airtel and Reliance Jio, have posted an ARPU of Rs 146 and Rs 138.4 respectively in the April-June quarter.



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CEO to staff, BFSI News, ET BFSI

Personal Finance

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Need for secure digital payments and nearby access to banking during COVID-induced lockdowns fuelled the growth momentum of Airtel Payments Bank, which turned profitable for the first time in July, according to a top company official. In a communication to the employees, Airtel Payments Bank Chief Executive Officer Anubrata Biswas has said over the last four years, the bank has grown rapidly, doubling every 18 months.

“Today, the bank is a significant player in the financial and digital inclusion ecosystem of the country,” Biswas said.

He said that the bank has turned profitable for the first time in its history, and termed it a “cherished milestone” in the 55th month of operations.

He, however, did not mention the financial details.

The onset of the pandemic in early 2020 resulted in a “very challenging period” for the country, Biswas recalled.

“It was equally challenging for us as a team. Yet, we have been relentless, focused, indeed unstoppable. The momentum gained from people’s need for secure digital payments, and neighbourhood access to banking during lockdowns, gave us an opportunity to accelerate in a very cost-effective way,” he said in the recent outreach to employees.

Recently, Bharti Airtel Chief Executive Officer Gopal Vittal, during the telco’s post-earnings call had said that Airtel Payments Bank currently has a monthly transacting user base of close to 30 million users, an annualised GMV of over Rs 1,00,000 crores, and a merchant base of over seven million.

“I am also pleased that Airtel Payments Bank is now on the verge of hitting a 1000 crore annualised revenue run rate and has broken even in the month of July,” Vittal had said.

He had also highlighted that Airtel Payments bank is being fully integrated into all Airtel digital channels, both consumer app as well as retailer app making it one of the few companies that can collect cash for any service at the point of sale, online and offline.



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Banks to DoT, BFSI News, ET BFSI

Banking & Finance

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Conversion of debt of the stressed telecom player Vodafone Idea Ltd (VIL) into equity could be an option to emerge out of the crisis, lenders led by State Bank of India (SBI) have suggested to Department of Telecommunications (DoT). DoT had called senior bank officials on Friday to discuss the stress in the telecom sector arising out of the Supreme Court order last month on the adjusted gross revenue (AGR)-related dues payable by telecom majors, including Vodafone Idea and Bharti Airtel, sources said.

The top court has given a time period of 10 years to telecom service providers struggling to pay Rs 93,520 crore of AGR-related dues to clear their outstanding amount to the government.

Bankers also told senior DoT officials that conversion of debt of VIL into equity is an option but not a sustainable one, sources said, adding that since VIL had not defaulted on its debts so far, they cannot take any action yet.

In a bid to keep a company a going concern, banks have used the option of converting debt into equity in many stress cases in the past.

Capital infusion by promoters is the best option in the given scenario, sources said quoting bankers.

The UK-based Vodafone has a 45 per cent stake while Aditya Birla Group owns a 27 per cent stake in the VIL.

Lenders, both public and private, stare at a loss of Rs 1.8 lakh crore in case VIL collapses. A large part of the loans to the lender is in the form of guarantees with public sector banks having a lion’s share of the debt.

Among the private sector lenders, Yes Bank and IDFC First Bank may be impacted the most. As a precursor, some private lenders with a funded exposure have already started making provisions.

For example, IDFC First Bank has marked the account of VIL as stressed and has made provisions of 15 per cent ( Rs 487 crore) against the outstanding exposure of Rs 3,244 crore (funded and non-funded).

“This provision translates to 24 per cent of the funded exposure on this account. The said account is current and has no overdues as of June 30, 2021,” the lender had said in its Q1 FY’22 investor presentation, referring to the account as “one large telecom account”.

According to official data, VIL had an AGR liability of Rs 58,254 crore out of which the company has paid Rs 7,854.37 crore and Rs 50,399.63 crore is outstanding.

The company’s gross debt, excluding lease liabilities, stood at Rs 1,80,310 crore as of March 31, 2021. The amount included deferred spectrum payment obligations of Rs 96,270 crore and debt from banks and financial institutions of Rs 23,080 crore apart from the AGR liability.

In a backdrop of such large liabilities, both the promoter Vodafone (45 per cent stake) and Aditya Birla Group (27 per cent stake) expressed their inability to bring in additional capital.

Writing a letter to Cabinet Secretary Rajiv Gauba in June, Aditya Birla Group Chairman Kumar Mangalam Birla said investors are not willing to invest in the company in the absence of clarity on AGR liability, adequate moratorium on spectrum payments and most importantly floor pricing regime being above the cost of service.

“It is with a sense of duty towards the 27 crore Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity-public sector/government /domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern,” Birla said in the letter.

Birla has quit the post of non-executive chairman post of the floundering telecom giant last week. PTI DP ANZ ANS ANS



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Govt may have to take the biggest hit if Vodafone Idea fails, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: With outstanding dues of nearly Rs 1.6 lakh crore in spectrum payments and AGR dues, the government may be the biggest loser in case Vodafone Idea collapses under crippling losses and heavy debt.

The hit for the government just doesn’t stop here. If one adds the outstanding Rs 23,000 crore owed to the banks, the impact could be one of the biggest in corporate history as a large part of the loans (65-70%) is extended by state-run lenders. The banks have further extended guarantees worth thousands of crores to the company, which also run the risk of defaults.

“The telecom department and the national exchequer would lose the most in case of a collapse of Vodafone Idea. The picture looks grim considering the poor recoveries and unrealised outstanding after the collapse of Anil Ambani’s Reliance Communications and Aircel, where too several thousands of crores of rupees remain locked. Taxpayers stand to lose the most,” an analyst with a leading brokerage told TOI.

Cumulatively, the company currently has a debt of Rs 1.8 lakh crore, and has been bleeding financially with losses pegged at Rs 7,000 crore during the March quarter. The debt tops Rs 1.8 lakh crore, according to ICICI Securities. “We see payment of liabilities coming soon, while fund availability remains a challenge,” it said.

According to numbers sourced from various analysts and Vodafone Idea’s financial results, at Rs 107, the company remains precariously placed with the lowest average revenue per user (Arpu) among its peers. Reliance Jio reported Arpu of Rs 138 and Bharti Airtel at Rs 145, though the latter has said time and again that at least Rs 200 Arpu is needed to nurse the capital-intensive sector back to health.

Vodafone Idea’s poor outlook was evident after the SoS calls given by its promoters, who have refused to make any further investments into the company, and are asking the government to support its survival. Goldman Sachs said that it expects capex for Vodafone Idea to remain under pressure, “resulting in continued market share loss”. It said that between December this year and April of 2022, the company has about Rs 22,500 crore of dues (debt, AGR and spectrum) payable.



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Airtel Payments Bank hopeful of break-even in FY22; logs surge in biz volumes amid pandemic, BFSI News, ET BFSI

Banking & Finance

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New Delhi: Airtel Payments Bank has seen a surge in business volumes in FY21 as lockdown curbs and migrants heading back to villages spurred new accounts as well as transactions, and the company is eyeing a break-even this fiscal, a top official said. Factors like growth in revenues, expanded scale of operations, and higher realisation per user from cross selling of products are expected to drive break-even in the current financial year.

The pandemic and subsequent lockdown curbs fuelled uptake as customers, both in rural interiors and urban cities, sought banking solutions closer home, opting for convenient and secure digital payment options. The bank witnessed a strong traction for its diversified product offerings such digital payments, money transfers, insurance, direct benefit transfer credits, Aadhaar-enabled payment system and collection management services.

A senior company official, who did not wish to be named, said Airtel Payments Bank is “confident” of a break-even this year, having reached the “right level of scale” with its large base of users.

A mail sent to the company did not elicit a response.

Meanwhile, the official said the company has build an adequate infrastructure, backed by investments in technology, to serve consumers and hence fixed costs and incremental investments are expected to remain in check.

The current user base of 5.5 crore reflects a large distributed cost base across customers for the company, the official said noting that the losses too have nearly halved in Q4 of FY21, compared to the year ago period.

Losses for full year FY21 were at about Rs 420 crore, while the fourth quarter losses stood at nearly Rs 70 crore. The company logged over 32 per cent growth in revenue at almost Rs 627 crore for FY21 from Rs 474 crore in previous fiscal.

COVID induced movement restrictions and curfews in different parts of the country had made it difficult for those living in villages as also migrants returning to their hometowns, to access conventional bank branches located some distance away to withdraw money.

Airtel Payments Bank – which has one of largest retail networks with over 500,000 neighbourhood banking points – saw marked increase in new accounts opening during the FY21, as transactions too rose, the company official said. At present, one in six villages in the country is being served by Airtel Payments Bank.

The company expects the digital payment momentum to continue, even accelerate in coming times, the official said.

Earlier this year, Airtel Payments Bank announced its customers will get an increased interest rate of six per cent per annum on savings account deposit of over Rs 1 lakh. The move, announced in May this year, followed Airtel Payments Bank becoming the first payments bank to implement an enhanced day-end savings limit of Rs 2 lakh, as per the Reserve Bank of India (RBI) guidelines. The interest rate is at 2.5 per cent per annum for a deposit up to Rs 1 lakh.



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Airtel Payments Bank launches gold investment platform in partnership with SafeGold, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: Airtel Payments Bank Thursday launched gold investment platform ‘DigiGold’ in partnership with SafeGold, a provider of digital gold, as part of its growing bouquet of digital services,

The DigiGold investment platform will enable Airtel Payments Bank’s saving account customers to invest in 24K gold using the Airtel Thanks App, and they will also be able to gift DigiGold to their family and friends, who have a savings account with Airtel Payments Bank.

The gold purchased by customers is stored securely by SafeGold free of cost and can be sold through the Airtel Thanks app at any time conveniently, the payments bank said in a statement and added that there is no minimum investment value requirement and customers can start with as low as one rupee.

“DigiGold is the latest addition to our neo-banking proposition of simple, secure, and value-driven products. Our customers can now invest in gold through a seamless digital journey on our app. We also plan to introduce Systematic Investment Plans to enable customers to invest regularly,” said Ganesh Ananthanarayanan, Chief Operating Officer, Airtel Payments Bank.

“Gold has seen a resurgence over the past year as the instrument of the savings of choice, and we are proud to have partnered with Airtel Payments Bank to offer customers a range of digital gold-related products in the manner and value of their choice,” added Gaurav Mathur, MD, SafeGold.

Airtel Payments Bank recently increased its savings deposit limit to Rs 2 lakhs in line with RBI guidelines. It now offers an increased interest rate of 6% on deposits between Rs 1-2 lakhs.



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