Mumbai | New Delhi: The Tata Group has agreed to sell its mobile business to Bharti Airtel for free, ending the salt-to-software conglomerate’s long-standing attempts to rid itself of this lossmaking venture while bolstering the market share and 4G airwaves capacity of the Sunil Mittal-led company.
The deal, which has been done on a ‘debt-free, cash-free basis’ will intensify the consolidation process underway in the telecom industry, which has now come to be dominated by three players — the Idea-Vodafone combine, Bharti Airtel and Reliance Jio. Once the Idea-Vodafone merger is closed, Airtel will slip to the No. 2 position in the Indian market, Calling Card Bharti Airtel Tata Tele (In Million)
Combined: (In %)
Revenue Profit/Loss
Idea & Voda
Combined:
Subscribers Rev.Mkt Share (In Cr) 4G-ready spectrum in 850 MHz, 1800 MHz & 2100 MHz outgo, no liability of Tata Tele’s 31,000-cr debt part of spectrum liability and the acquisition of Tata Teleservices’ wireless operations will help it to narrow the gap with the merged entity. The news about the deal was first reported on
of Tata Tele’s loss-making wireless biz
No cash Only small Separates it
from stronger fixedline and broadband, and enterprise biz www.economictimes.com on Thursday afternoon, ahead of the formal announcement.
The expectation had been for inflation of 3.5% and industrial growth of around 2.5%. The numbers will buoy the government, which has been at the receiving end of a spate of criticism for its economic management after growth fell to 5.7% in the April-June period, triggering a raft of downgrades in FY18 growth estimates by multilateral institutions, the Reserve Bank of India and brokerages. The government had been considering a stimulus programme to help revive growth, something the Economic Advisory Council to the prime minister had weighed against on Wednesday.
Experts welcomed the signs of recovery but want to watch the data for a few months before calling a turnaround.
“These are early signs that will dispel the gloom that had set in. This seems to signal a turnaround in economic activity,” said Saugata Bhattacharya, chief economist at Axis Bank, while pointing out that primary goods and electricity had contributed in a big way to the recovery. HDFC Bank senior economist Tushar Arora said, “Manufacturing growth is better than expected but it does not mean that we will change our forecast because it was prompted by a favourable base in mining and electricity and GST restocking.”
Advance indicators such as car sales and the purchasing managers’ indices for September have also been buoyant, suggesting some strength ahead of the festival season.
“Three successive impressive growth rates would indicate a real recovery. Or else, it would be more a case of the restocking impact of the GST (goods and services tax),” said Madan Sabnavis, chief economist at CARE Ratings.
The government has maintained that the economy bottomed out in the AprilJune quarter and that it will revive, a view endorsed by RBI that last week pared gross value added (GVA) growth to 6.7% from 7.3% estimated earlier. It said GVA growth will rise to 7.7% in the March quarter. The IMF had on October 10 cut India’s growth forecast for FY18 to 6.7% from 7.2% estimated earlier, attributing the slowdown to GST, implemented on July 1, and demonetisation.
MINING AND ELECTRICITY BOOST
The industrial recovery in August was boosted by electricity (8.3%) and mining (9.4%), while manufacturing grew 3.1%. Capital goods production, an indicator of investment activity, was up 5.4% in August while a 6.9% rise in output of consumer non-durables or fast-moving consumer goods (FMCG) indicated strength in the rural economy. Consumer durables, which has a more urban consumption bias, were up a modest 1.6% in August. The data suggests manufacturing and demand are returning to normal after the disruption caused by the GST rollout, though not as strongly as anticipated.
“The key support to IIP growth has come from mining and electricity. This shows that manufacturing is still down and out. Even more disheartening is the growth of consumer durables at just 1.6% in August,” said Sunil Kumar Sin- ha, principal economist, India Ratings.
Thirteen out of the 23 sub-sectors of manufacturing with a weight of 27.0% in the IIP recorded a contraction in August 2017. “In our view, while the impact of post-GST restocking may have started to fade, inventory building prior to the festive season is likely to have bolstered manufacturing growth in the justconcluded month. Nevertheless, given the somewhat unfavourable base effect, we expect the IIP growth to ease in September 2017 relative to print of 5.0% in September 2016,” said Aditi Nayar, principal economist ICRA.
September’s consumer inflation of 3.28% matched that of August, which was revised down from 3.36% estimated earlier, as food inflation slowed to 1.25% from 1.52% in the month before and 3.96% in the year ago.
However, most independent economists ruled out the possibility of a rate cut in December when the RBI governorled Monetary Policy Committee (MPC) meets to review key policy rates.
“Core inflation… continues to outpace the headline reading, which might reinforce the central bank’s neutral stance. Risks on the fiscal front will also play on the central bank’s hand,” said Radhika Rao, India economist, DBS Bank. The MPC kept rates unchanged at its last meeting earlier this month.
The staggered impact on the housing index of the CPI due to the increase in the house rent allowance (HRA) of central government employees is likely to push up housing inflation further over the coming year.
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