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Bharti pulls out of MTN talks
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RCom dials MTN
BSNL 3G services by year-end
NBC picks 26% in NDTV
Aviation Notes
Investor Guidance
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Bharti pulls out of MTN talks
New Delhi, May 24 Bharti Airtel, which has been in exploratory talks with MTN over the possible buying of majority stake or merging of the two companies, issued a statement this morning announcing its decision to pull out after talks over the new structure presented by the MTN board failed late last night. It said that the decision to pull out of the talks had also been conveyed to the MTN board. Bharti Airtel seems to have been taken by surprise by the new structure which was presented by MTN and was completely different from the structure which was agreed upon by the two lead bankers in the negotiations on May 16 and was presented to the South African telecom operator on May 21. The new structure envisaged Airtel becoming a subsidiary of MTN and exchange of majority shares of Bharti Airtel held by the Bharti family and Singtel, in exchange for a controlling stake in MTN. "Bharti believes that this convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity," the statement said. "Further and more importantly, Bharti's vision of transforming itself from a home grown Indian company to a true Indian multinational telecom giant, symbolising the pride of India, would have been severely compromised and this was completely unacceptable to Bharti". Discussions were on till late last night without a breakthrough. Accordingly, Bharti has decided to disengage from the ongoing talks and has conveyed the same to MTN, the statement said. Bharti Airtel was looking to buying the controlling stake in the MTN,which operates with 68.2 million mobile subscribers in South Africa and 20 other countries spread over the African continent and middle-eastern region. The statement said, a few weeks ago and at the invitation of MTN board, Bharti had entered into exploratory discussions on the possibility of combining the two 'emerging market' telecom giants. A number of structures were discussed and evaluated between the lead bankers on both sides. An in-principle agreement was also reached on May 16 and a term sheet was initialled between the two lead bankers. The Bharti statement also pointed out that the reference price at which MTN shares were to be transacted was agreed and frozen at the point of starting the discussion and Bharti would like to confirm that there was no further discussion on the share price of MTN, at any point. Bharti had obtained letters of confidence from over a dozen internationally reputed bankers from the US and Europe to provide funds of over $60 billion to facilitate the proposed merger.
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RCom dials MTN
New Delhi, May 24 Reports suggest that the Anil Ambani group’s RCom has initiated talks with MTN Group for acquiring majority stake in the company. RCom officials are said to have formally approached the MTN executives on Thursday and started discussions for a possible takeover. This follows Bharti Airtel, which was in "exploratory" talks with the South African company, pulling out of the deal. When contacted, an RCom spokesperson declined to comment. This is the second attempt by RCom to acquire MTN Group, as earlier last year the company had initiated talks with the South African company. RCom chairman Anil Ambani had met MTN chief executive officer Phuthuma Nhleko last year, even though the talks were not "successful".
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New Delhi, May 24 The statement comes after telecommunications and IT minister A Raja had yesterday announced that 3G policy guidelines would be issued by next month and the services would be rolled out by end of this year or January 2009. ''We are ready with plans and will provide 3G network soon by end of this year,'' BSNL chairman-cum-managing director Kuldeep Goyal told reporters here. The minister had said an agency will be appointed, after the guidelines are issued, which will conduct the auction. ''Most operators are 3G ready. So, once spectrum is made available, they will be able to roll out the services. I am sure before my government completes its tenure, 3G services will reach the consumer,'' Raja told reporters yesterday on the sidelines of a conference. The PSU is also geared up for the next generation network to connect rural India with wireless communication linkages to provide broadband access initially to 23,000 district headquarters, panchayats etc, Goyal said. BSNL also plans to provide broadband facilities through fibre lines and also complete voice over internet protocol (VoIP) services network by 2015 and quickly adopt 3G networks to provide telecommunication linkages to the entire country. — UNI
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New Delhi, May 24 The two companies have successfully concluded a strategic partnership initiative for the NDTV Networks business, NDTV said. NBCU has the option in two years to increase stake, at the then fair market value, in the holding company of Networks Plc to 50 per cent with NDTV group holding an equal 50 per cent stake. NBC Universal is one of the world's leading media and entertainment companies involved in the development, production and marketing of entertainment, news, and information. — PTI
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‘Airport development fee’ uncalled for
by K.R. Wadhwaney An unavoidable hike in fuel prices and meaningless fee for airport modernisation will turn much-hyped aviation ‘boom’ into ‘bane’ very soon as flying scenario is both complex and murky. While rise in fuel prices from time to time may be beyond the control of the government, it is downright unreasonable and uncalled for to allow rich private developers to charge Rs 1,000 on an international flying and Rs 300-500 on domestic sectors from October. An ‘airport development fee (ADF)’ is an ‘after-thought’ and a naked ploy of the private outfits like GMR’s Delhi International Airport Limited (DIAL) to make easy money at the cost of innocent and ignorant passengers. The proposal or idea of this kind of levy from passengers should have been mooted and announced at the time of bidding and acquiring contracts instead of subtly doing now when the projects are nearing completion at Delhi and Mumbai. For gullible passengers, it is a matter of ‘like it or lump it’. The developers of the new airports at Hyderabad and Bangalore have already started levying the fee of Rs 1,000 from passengers. The passengers for domestic sectors will shell out fee when Bangalore starts operations early next month. Who is the gainer from these kinds of levies? It is not government nor country. It is the gain of the private operators, who will become wealthier. How long will this ADF stay? The ‘fare structure’ formula — combination of basic fare and taxes — is very vex. The ‘basic’ fare may be small; but taxes are hefty. The majority of taxes go to the coffers of private agencies, while government is no more than a mute observer in the name of ‘aviation boom’. Actually, taxes payable by passengers are not independently spelt out. The ticket says: basic fare and taxes. There are several taxes from airline to airline and destination to destination. The ‘fare’ scenario is very murky. The civil aviation ministry in particular and directorate-general of civil aviation in general should study the "games" airlines and travel agents are playing. The flying, particularly on international sectors, has become exceedingly costly because there is an enormous rise in visa fees. One European country, for example, charges fee of Rs 17,000 from each tourist. It retains the right to grant tourist visa from one year to 10 years. In majority of cases, it grants visa for five years. Even the embassies have gone ‘commercial’. Why should fee be same for one year's visa and for 10-year visa? These are business gimmicks. The temporary structure near Haj terminal, according to DIAL officials, will be ready by November 2008.
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Foreign income of RNOR not taxable in India
by A.N. Shanbhag Q: After residing for 40 years in the U.K. I have returned to India. Now I am Resident but Not Ordinary Resident. (RNOR). I retired in the UK in 1990 and was getting my UK pension in UK from the pension service part of the department of work and pensions. Now that I have returned to India permanently, I have transferred the U.K. pension to State Bank of India. My account in this bank gets credited every month. I want to know whether this pension that is essentially my foreign income exempt from income tax as I am RNOR. If yes, then under which section? Please guide me — K. Sharma A: The forex income of an RNOR is not taxed in India unless it is directly received in India. RNOR is a special status that returning NRIs can get provided they satisfy certain conditions. The receipt of income refers to the first occasion when the recipient gets the money under his control. Once an amount is received as income, any remittance or transmission of the amount to another place does not result in receipt at the other place. For instance, an assessee after receiving an income outside India cannot be said to have received the same again when he brings or remits the same to India. The position will remain the same if income is received outside India by an agent of the assessee who later on remits the same to India. Income after the first receipt merely moves as a Remittance of money. The same income cannot be received by the same person twice, once outside India and once within India. — Keshav Mills Ltd. v CIT (1953) 23ITR230(SC). You will do well by receiving the pension in your bank in UK and then arrange for its remittance to India. In that case, the pension will not be taxable in India. Return on investment Q: I regularly invest in mutual funds. However, I find that when I calculate my return on investment (ROI), it is sometimes lower and sometimes higher than what is given in the media (Economic Times, Business Standard etc.) Could it because my way of evaluating the return is based on my cost price rather than the face value? The face value is irrelevant to me since my cost would be what I have paid for the units and this is the figure on which I require to find out my return. Please clarify. — Nimesh A: You are correct in observing that for any investor the face value of the units is irrelevant and it is his or her individual cost which will have to be considered for calculation of the return. The ROI figures are based on the value (NAV) of the units. Therefore, if there is a ROI figure since inception, the same would be the IRR from the face value to the current value. Three year figures would calculate IRR from the NAV existing 3 years back till the NAV to date. So to answer your question, face value (which is the then NAV) only comes in the picture only once when since inception returns are calculated. Else it is year on year. As far as your calculations are concerned, the same would be different since your purchase date and the cost incurred would not be the same as the one considered by the media. Dividend distribution tax Q: 1) In the case of a liquid fund, what is the current rate of dividend distribution tax? My CA told me that it is higher than that applicable to other debt based schemes. 2)Would the tax be different in case I invest in MIP of any mutual fund and opt for regular monthly dividends. — Manoj A: Your CA is correct. The distribution tax in the case of liquid funds is higher at 25% as compared to other debt based funds. Other debt based funds such as income funds or MIP have a lower distribution tax of 12.5%. Nowadays, mutual funds have introduced liquid plus funds that are for all practical purposes like liquid funds, however, the distribution tax rate on these funds is the lower rate of 12.5%. You may choose to invest in liquid plus funds instead of MIPs as MIPs have an element of equity component that increases their risk. Tax on PF withdrawal Q: I have quite a large accumulated balance in my provident fund. I understand that I can avail it on my retirement. However, if I want to withdraw from the fund and use the money for my personal purposes, is there any tax incidence? — Shrikant Joshi A: The withdrawal from accumulated balance due and becoming payable to an employee participating in a recognised provident fund will not be taxable only in the following situations:
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If he has rendered continuous service with his employer for a period of 5 years or more. If accumulated balance includes any amount transferred from his individual account in any other recognised provident fund(s) maintained by his former employer(s), then, in computing the period of 5 years, the period(s) for which the employee rendered continuous service to his former employer(s) is also to be included. l
If the employee is not able to fulfill the conditions of such continuous service due to his service having been terminated by reason of his ill-health or by reason of the contraction or discontinuance of the employer’s business or due to some other reason beyond the control of the employee. l
If, on the occasion of his retirement, the employee obtains employment with any other employer, to the extent the accumulated balance due and becoming payable to him is transferred to his individual account in any recognised provident fund maintained by such other employer. The authors may be contacted at wonderlandconsultants@yahoo.com |
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