The benchmark stock indices have The head of telecom giant Airtel has opined on the headwinds facing the sector.Join us as we follow the top business news through the day.11:30 AMExxon removed from the Dow
Exxon, the longest-serving member of the Dow, was removed from the index after seeing its value plunge by more than half in the past six years, from more than $450 billion as recently 2014 to about $180 billion today. https://t.co/DuAhC5FvNg— Lisa Abramowicz (@lisaabramowicz1) August 25, 2020
11:00 AMSunil Mittal hints at mobile services rate hikeIs the era of cheap telephone services about to end?PTI reports: “Bharti Airtel founder and Chairman Sunil Bharti Mittal on Monday hinted at an increase in mobile services rates while stating that the average revenue per user is expected to cross Rs 200 in the next six months.He said 16 GB data consumption a month for Rs 160 is a tragedy.“You either consume 1.6 GB of capacity per month either at this price point or you may prepare to pay a lot more. We are not wanting USD 50-60 like the US or Europe but certainly USD 2 for 16 GB a month is not sustainable,” Mittal said at an event.He said that ARPU of Rs 300 is required to make industry sustainable with lower end still paying Rs 100 a month.“But if your consumption is largely around watching TV, movies, entertainment and depriving other vital special services on to the networks, then you need to pay for that,” Mittal said.He was speaking at the launch event of book ‘Some Sizes Fit All’ written by his colleague at Bharti Enterprises, Akhil Gupta.Airtel reported an increase in average revenue per user at Rs 157 in the first quarter ended June 30, 2020. The rise in ARPU comes following an increase in tariff by Bharti Airtel in December 2019.Mittal said that while telecom operators have served the nation during the difficult times, the industry needs to invest in 5G, more optical fibres, submarine cables etc.“Businesses which are not telecom, also need to adopt digital stories around them. You should see solid ARPUs building up in the next 5-6 for industry to be sustainable. We are down to 2-3 players now. India is a very price conscious market. In six month time we should be crossing the mark of Rs 200 for sure and Rs 250 would be ideal,” Mittal said.Telecom operator Bharti Airtel has reported widening of losses to Rs 15,933 crore for June quarter — its fifth straight quarter of decline — as the telco made additional provision for statutory dues.The company had been struggling to make margins due to tariff war triggered by Reliance Jio in 2016 and the Supreme Court order in favour of the government on statutory dues added to its woes.”10:40 AM 10:20 AMSoaring price, higher LTV pose asset quality risks to gold loan cos: ReportA report flags possible risks in the gold loan market.PTI reports: “Surging gold prices and the RBI’s decision to allow banks to lend more against the yellow metal pose risks to gold loan focused non-banking lenders, warns a report.Gold prices have rallied more than 35 per cent since April, which has helped support higher loan growth by some gold loan companies.Though this will bolster their interest income, it also raises potential risks associated with a fall in gold prices, ratings agency Fitch said in its report.Growth in gold-backed lending may outperform other parts of the financial sector in the near-term due to the higher prices, it said.While Manappuram Finance and IIFL Finance saw loan growth of 4-5 per cent between March and June, the largest player Muthoot Finance saw a 1 per cent decline in gold loans as it played more cautious during the lockdown months. As against this, banks saw a 1 per cent contraction in lending.“Higher gold price increases asset quality and collateral risks that gold lenders will face if price falls,” the report said, adding gold prices can fall if the global economic growth outlook improves.“A lower gold price may trigger intentional defaults by some borrowers, particularly if outstanding loan amounts start to exceed the market value of collateral pledged, as they did during periods of significant decline in 2012 and 2013,” it said.The RBI’s move to retain the loan-to-value (LTV) cap for gold loan companies at 75 per cent provides a buffer against these risks. Some lenders have reduced internal LTV caps below the regulatory ceiling to better manage collateral risks. As a result the average LTVs are in the 55-65 range, it said.However, the RBI raised the LTV to 90 per cent for gold loans by banks until next March.If banks opt to exploit this higher LTV rate, they could pose a competitive threat to gold loan companies and may pressure smaller entities to lend at higher LTVs, increasing risks associated with their new lending, the report said.”10:00 AM Reuters reports: “9:30 AM‘WhatsApp leads Zoom among video-calling apps’The most preferred video calling apps in India continue to be WhatsApp and Zoom with user shares of 35% and 27%, respectively, while Jio has 4%, as per a study by LocalCircles.Among the top video-calling apps being used in the country, there is no Indian app. The popular group video-calling apps used in India include Zoom, WhatsApp, Microsoft Teams, Google Meet and Skype.While some 11% used Microsoft Teams, 5% said Skype, 13% used Google Meet/Hangout and 5% used other group video calling appsMore than 35,000 people across 247 districts participated in a survey conducted by LocalCircles.