India's Fiscal Deficit Close To Target, Yuan Hits Decade Low et al

Good evening reader,

 

In the spirit of peace and harmony, let us begin today by presenting two somewhat contrasting narratives on the Indian telecom landscape emanating from the ongoing 'India Mobile Congress'. While Airtel's Sunil Mittal sees headwinds, Reliance Chairman Mukesh Ambani beams optimism.

 

Mr. Mittal underlines financial stress points such as heightened telecom levies as high as 37%, towering spectrum and license fees, and a lofty 18% GST as key challenges stifling growth. Mr. Ambani in contrast highlights the enormous runway up for grabs as India marches towards a 4G/5G world, of course to be deservedly vanquished by the one offering the "most affordable price". A clear case of defense vs. offense? Or perhaps a mere reflection of their moods, one an aging accomplished veteran, the other a youthful contender ready to displace him (not to be taken literally).

 

We have seen this 'new-entrant' movie before in the US with T-Mobile, and in Canada with Wind Mobile. Both having subsequently seen consolidation. There are similar tales in other international telecom markets as well. But is Jio different? Well, for one thing it is bankrolled by the biggest business conglomerate in India, and ready to bleed chips till the game is won.

 

As India's telecom sector shakes off its first wave of consolidation, it is set for an exciting new chapter of growth which one hopes will remain competitive over the longer run. The customer will win. At least in the short term.

 

On that note, time to present today's Top 6 Business Stories through our End Of Day Wrap Up:

 

INDIA

 

ArcelorMittal wins bid for debt-laden Essar Steel after offer of upfront payment of INR42,000cr.

The Committee of Creditors (CoC) selected ArcelorMittal’s bid to buy out Essar Steel, even after company promoters tried to make last minute settlements with lenders, offering to clear all dues and asking for withdrawal of the Insolvency Bankruptcy Code (IBC) case.

ArcelorMittal altered its offer from INR35,000cr as upfront payment to INR42,000cr which outdid Vedanta’s bid, as Numetal stayed ineligible. The company also proposed to infuse INR8,000cr as capital into Essar Steel to enhance production and profitability.

 

IL&FS Board to monetize road, power assets amidst lack of funds.

The Government-appointed Board of Infrastructure Leasing & Financial Services (IL&FS) is set to submit a revival plan to National Company Law Tribunal (NCLT), for sale of its road and power assets, the proposal for which will also be run through the company’s shareholders.

Stakes of IL&FS Financial Services and IL&FS Energy Development may also be up for sale.

 

India’s fiscal deficit breaches 95.3% of its full year target in six months.

India’s fiscal deficit has reached 95.3% of its INR6.24tr target for this year within the first six months, worse than 91.3% at the same time last year. The govt. will have to rein in its expenditure to INR295bn in the remaining six months to stay within the estimated numbers, as per ICRA.

Direct tax collection grew by 16.9% this year, whereas indirect tax collection fell 2.8%.

 

NBFC liquidity under duress, Centre plans early capital infusion to support financial markets.

Department of Financial Services (DFS) with top officials of Finance Ministry are in the course of preparing a plan to ease the strain on financial markets, on back of NBFC liquidity crunch.

This plan could entail capital infusion in Public Sector Banks (PSBs), in light of RBI's refusal to ease Prompt Corrective Action (PCA) norms putting operational and lending restrictions on banks.

 

US/INTERNATIONAL

 

Amazon reports profit of $2.88bn, sales and share price slumps.

US-based Amazon posted a profit of $2.88bn, 11 times of what it earned last year. The share price dropped on back of lower-than-estimated revenue growth. Sales were reported at $56.58bn, lower than estimates.

The company’s cloud service, Amazon Web Services (AWS) however generated revenues of $6.68bn, accounting for 12% of Amazon’s total topline.

 

Chinese Yuan edging towards a decade low against the Dollar owing to US-China trade war.

The Chinese Yuan hit 6.9725/USD, its lowest value since 2008, amid trade tensions between the two countries. Head of China's foreign exchange regulator assures fundamentals are healthy.

The currency devalued against USD each day of this week and saw c. 7% selloff this year.

 

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