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Sunday,20-September-2020

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Rs 25,000 crore, rights issue not enough for Vodafone and Idea

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As telecom major Vodafone Idea (VIL) opened its rights issue on Wednesday for the next two weeks with an aim to raise Rs 25,000 crore, sector experts say the fund would not be enough for the company given its high debt and the highly-competitive market.

In the meantime, Bharti Airtel too has announced that on April 24 its committee for fund infusion would decide on the shareholders who would be able to participate in its rights issue for around Rs 25,000 crore.

Analysts say Airtel is in a better financial position than Vodafone Idea and unlike the newly-merged entity, the amount raised from the rights issue by Sunil Bharti Mittal-led Airtel would be sufficient for the time being.

Vodafone Idea is offering 2,000 crore shares at a price of Rs 12.50 apiece. The entitlement ratio of the issue, which will close on April 24, has been fixed at 87 rights shares for every 38 currently held.

Under rights issue, existing shareholders are offered to purchase additional stock shares, known as subscription warrants, in proportion to their existing holdings.

In a rights offering, the subscription price at which each share may be purchased is generally discounted relative to the current market price. Rights are often transferable, allowing the holder to sell them in the open market.

“Vodafone idea is very stretched because their Ebitda has fallen to about $650 million(around Rs 4,495 crore), their debt is also quite high and their leverage as measured by debt-to-Ebitda too is high,” Nitin Soni, Director for corporate ratings at Fitch Ratings, told IANS.

He said that Airtel is a diversified company and has operations in Africa as well while Vodafone Idea is a telecom-specific company which has severely deteriorated its financials.

“In that light, their (Airtel’s) equity injection is sufficient and they are going to raise another $3 billion from African IPO and sale of assets, but for Vodafone idea it is insufficient and they might have to raise more money in future because their capex plan is about $3.5-4 billion,” Soni said.

He added: “They (Vodafone Idea) need to invest heavily to avoid any network congestion and their Ebitda has fallen much more than Bharti’s. So all in all they would probably need more equity, or stake or sale of other assets”.

According to the company’s promoter shareholders, Vodafone Group and Aditya Birla Group have confirmed their participation of up to Rs 11,000 crore and up to Rs 7,250 crore, respectively, in the rights issue.

“It is not compulsory that the rights issues of companies are fully subscribed over time, it is up to the market conditions and existing shareholders, and whether they rely on the management and the future expansion plans of the company,” said Manish Yadav, Head of Research, CapitalAim.

Amit Gupta, Co-Founder and Chief Executive Officer at Trading Bells, said the fund would work for two or three quarters but the company would require additional infusion after that.

“Vodafone Idea has a overall debt of Rs 1,23,000 crore with a gross debt-to-Ebitda (earnings before interest, tax, depreciation and amortisation) ratio of 33.30. After infusion of the equity capital through the rights issue, the debt would reduce to Rs 98,000 crore and its debt-to-Ebitda ratio would decline to 26.50 which would still be higher than that of its competitors Bharti Airtel and Reliance Jio,” Gupta said.

The company is also looking to sell its 11.5 per cent stake in Indus Towers in the next two to three months and raise around Rs 5,500 crore.

Off late, apart from loss in revenue, Vodafone Idea has also lost a large number subscribers to both Bharti Airtel and Reliance Jio.

Vodafone Idea, the largest telecom operator in terms of subscribers, lost 35.87 lakh users taking its total base to 41.52 crore while both Jio and Airtel added to their subscriber base.

From the industry perspective, Prashant Singhal, Emerging Markets TMT Leader at Ernst & Young, said that although the rights issue would help in reducing the debt, the sector being a capital intensive industry, companies would continue to need capital for expanding and investing their networks.

He said that rationalisation of tariffs, which are extremely low currently, would give a much-needed boost to the sector, apart from the capital infusion.

Business

Hyderabad Airport gets AIC’s health accreditation for safe travel

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Hyderabad-airport

Hyderabad International Airport on Sunday said it has achieved the Airport Council International’s Airport Health Accreditation for safe travel.

Airport operator GMR said this recognition comes when passenger safety is the topmost priority of airport operators due to the Covid-19 pandemic.

Hyderabad is among the first airports in the Asia Pacific region to have received this coveted accreditation.

The Airport Health Accreditation (AHA) programme was launched by the ACI in July to assess the new health measures and procedures adopted by airports as a result of the pandemic.

In accordance with the recommendations of the International Civil Aviation Organisation (ICAO) Council’s Aviation Recovery Task Force, the programme assesses procedures like cleaning and disinfection, physical distancing, staff protection, physical layout, passenger communications and passenger facilities.

The ACI assessment covered the health and safety measures undertaken by the Hyderabad International Airport for passengers and staff in all the terminal areas including departures, arrivals and transfers, transportation services, food and beverage services, escalators and elevators, lounges, facilities, baggage claim area etc.

The assessment also captured the initiatives that the airport took for safety and well-being of employees and stakeholders.

According to the airport operator, with the growing passenger confidence, the airport is steadily seeing an increase in passenger traffic. The airport handles an average 16,000 domestic passengers and over 170 domestic air traffic movements daily.

The airport also regained its 50 domestic destinations till August 31 out of 55 pre-Covid destinations.

The top five destinations in terms of passenger footfall are Delhi, Kolkata, Chennai, Bengaluru and Mumbai.

“ACI Airport Health Accreditation emboldens our commitment and consistent drive towards the safety of passengers and the entire airport community. This has been a collaborative effort and we thank everyone at the airport who have put in their heart and soul throughout this period of global pandemic,” GHIAL CEO Pradeep Panicker said.

He said during the extraordinary times, Hyderabad Airport has been agile and adaptive to the latest government regulations and norms to ensure airport operations are running even during the lockdown, keeping essential services active with utmost level of health and hygiene for everyone with consistency and quality assurance.

“We congratulate the Rajiv Gandhi International Airport for being accredited through ACI’s Airport Health Accreditation programme which demonstrates that they are focused on the health and welfare of travellers, staff, and the public. Public confidence in air travel will be crucial as our industry prepares to sustain continuing operations, and the Rajiv Gandhi International Airport is leading the way by providing to passengers and employees high globally-recognized standards on health and hygiene,” ACI World Director General Luis Felipe de Oliveira said.

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Business

Andhra Pradesh’s second Kisan Rail chugs off for Delhi with tomatoes, fruits

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Kisan-Rail

Eleven days after the virtual flagging off of the first South Indian Kisan Rail from Anantapur in AP, the second one chugged off on Sunday morning from the southern state, laden with tomatoes and fruits to Nagpur and New Delhi.

“Second rake of Kisan Rail has started from Anantapur station in the early hours of Sunday to reach Adarsh Nagar in New Delhi,” said a South Central Railway (SCR) zone official.

Loaded with 262 tonnes of agricultural produce, the Kisan train is ferrying 239 tonnes of tomatoes and 23 tonnes of fruits such as papaya and others.

Expected to reach the national capital on Monday, the 12-parcel van train will unload three vans carrying 67 tonnes of tomatoes in Nagpur in Maharashtra, enroute to Delhi.

Nagpur is 882 km north of Anantapur while New Delhi is roughly 2,000 km north of the Rayalaseema town.

Kisan Rail is Indian Railways bit to fulfil Prime Minister Narendra Modi’s vision of doubling farmers’ income in India.

“An announcement was made in the Union Budget 2020 – 21 about the operation of Kisan trains and accordingly Kisan Rails were started,” he said.

These trains are enabling farmers to ship their produce to places where there are markets to buy their wares.

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Business

Diesel prices fall again on easing global crude prices

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Petrol

Diesel prices continued to decline for the fourth consecutive day on Sunday on the back of falling global crude prices.

In the national capital, diesel was priced at Rs 71.58 per litre, down from Rs 71.82 on Saturday.

Similarly in the other metros of Mumbai, Chennai and Kolkata, the fuel was sold for Rs 78.02, Rs 76.99 and Rs 75.09 on Sunday, respectively, against the previous levels of Rs 78.27, Rs 77.21 and Rs 75.32 per litre.

The recent fall in transport fuel prices comes in the wake of softening of global oil prices as an extended run of Covid-19 has depressed demand and created a glut in the market.

Prices of petrol, however, remained unchanged for the second straight day at Rs 81.14, Rs 87.82, Rs 84.21 and Rs 82.67 per litre across Delhi, Mumbai, Chennai and Kolkata, respectively.

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