When  under the leadership of  Arun Sarin ,Vodafone bought Hutchison Whampoa’s Indian telecom operations for $10.7 billion  it was seen as a major triumph.India was supposed to be the most exciting telecom market and no price too high.However the potential Jewel in Vodafone to a Money Sucking Morass making it write down $3.3 billion of its purchase price.India’s market is unique because of the following reasons.

  1. Second Largest Potential Market in the World
  2. Cheapest Rentals in the World
  3. HyperCompetitiveness with 12-13 players compared to 3-4 in most other markets
  4. One of the highest population teledensities making spectrum a scarce resource
  5. Very Low ARPU’s due to low per capita income
  6. Fastest Growing Market in terms of subscribers added per month

The severe competition in the Indian market makes surviving and making profits a tough task for almost all the companies except for a few.The 3G auction concluded today is turning around to be a “Winner’s Curse” for the winning companies .The huge capital outflow has led to a massive underperformance of the telecom sector leading some stocks to go below their all time lows.

India’s Telecom Operators Fork out Huge Sums to Gain Spectrum – Yahoo

India’s leading telecom operator Bharti Airtel, which won 13 circles in the auction of airwaves for third generation (3G) telephony, said it could not achieve pan-India target as auction format and spectrum shortage drove prices beyond reasonable levels.’We would like to point out that the auction format and severe spectrum shortage along with ensuing policy uncertainty, drove the prices beyond reasonable levels. As a result, we could not achieve our objective of pan-India 3G footprint in this round,’ Bharti said in a statement.Bharti, which won 13 of 22 circles, will have to pay Rs.12,295.46 crore ($2.73 billion) to the government.

The 3G auction, that concluded Wednesday, fetched Rs.67,718.95 crore ($15 billion) for the Indian government.Nine companies — Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications — took part in the online auction that started April 9.Among them, Etisalat and Videocon could not win a single circle.

Vodafone’s India ‘Fiasco’ Forces Colao to Seek Further Cuts – Reuters

For Vodafone Group Plc Chief Executive Officer Vittorio Colao, India is failing to become the emerging-market powerhouse the company had hoped for.When the world’s biggest mobile-phone operator agreed to buy a 67 percent stake in Hutchison Essar Ltd. for $10.7 billion in 2007, it predicted “major contributions.” Instead, Vodafone yesterday booked a $3.3 billion charge for the unit, citing “intense price competition.”

Vodafone’s difficulties in India, like those of Norway’s Telenor ASA, show the pitfalls of expanding in emerging markets as European phone companies counter slower growth at home. Vodafone’s outlook for India soured a year after its entry, when six new national licences were awarded. Price competition has pushed call rates to among the cheapest in the world. India’s seven largest operators face rates of less than 1 cent a minute.New operators “triggered very strong price declines,” Colao told reporters yesterday. “We are recognizing the pricing environment is different from what we had put in the acquisition business case.”

India suffers from high population density making mobile spectrum a scarce and valuable resource for the 12-13 telecom companies operating in India.Even Vodafone which is the 2nd largest telecom operator  in the world has not been immune from these brutal auctions .The prices  have been bid so high as to make even the government worried whether some companies might not just forfeit the earnest money without paying the full value of the bids. In its recent report it has taken a hit to its results with a huge impairment charge of $3.3 billion on this account.India has proved to be an irresistible market for telecom companies around the world with 500 million people still without a phone.Considering that most people in the world already have a connection outside of India and Africa,it makes sense for saturated telcos to target these two places. But it has been hard going in India because of severe competition,price wars and now high spectrum costs.

Vodafone meets forecasts but takes hit on India – Mint

Vodafone Group Plc, the world’s second largest mobile operator by revenue, posted full-year earnings in line with forecasts on Tuesday and raised its dividend policy despite taking a hit on its key Indian business.The UK-based group, which has 341 million subscribers including its share of those from affiliates, said it would take an impairment charge of £2.3 billion ($3.3 billion) on its fast-growing Indian unit after facing new licence costs.Higher spectrum costs in India and a fierce price war in the market had weighed on Vodafone ahead of the results, but its financial performance for the year was either in line or slightly ahead of forecasts.

Most analysts had expected all-India spectrum to cost between $1.3 billion to $2 billion.The third generation, or 3G, spectrum would allow firms to offer high-speed Internet and other premium services in the highly competitive market, which would prove highly attractive to major operators.But on top of the auction, the Indian telecom regulator has called for mobile operators to pay a one-time fee for the 2G radio spectrum with high bandwidth which they won several years ago, a move that has drawn fierce criticism from all involved.The combination could put pressure on Vodafone’s cash generation and raises the stakes for operators who will still have to spend billions more on equipment to build 3G networks in a market where call rates are among the cheapest in the world.

India’s Telecom Market is a unique market in a lot of ways.The differences are

  1. Second Largest Potential Market in the World
  2. Cheapest Rentals in the World
  3. HyperCompetitiveness with 12-13 players compared to 3-4 in most other markets
  4. One of the highest population teledensities making spectrum a scarce resource
  5. Very Low ARPU’s due to low per capita income
  6. Fastest Growing Market in terms of subscribers added per month

The severe competition in the Indian market makes surviving and making profits a tough task for almost all the companies except for a few.Bharti due to its first mover advantage is India’s largest telecom company with a relatively better balance sheet than other companies.The other big players are state owned BSNL,Vodafone,Reliance,Idea and Tata-DoCoMo. There are also a number of smaller regional players and national wannabees.With even 2G spectrum scarce , voice quality is poor and leads to frequent dropped calls.Before the 3G spectrum auction was started , a cutthroat price war was unleashed by new entrants like DoCoMo,MTS and Aircel.This led to a sharp fall in revenues and margins for all companies leading to severe underperformance of the telecom sector compared to the broader stock market.

The 3G auction has become a bigger problem for the companies as buying spectrum becomes imperative for the larger companies to defend their market positions.This had led to a price bidding war resulting in auction prices which are far ahead of the government’s and analyst expectations.This will also severely impact the balance sheet which is already heavily leveraged  by the sharp capex expansion in the previous years.The large outgo of cash for the spectrum promises to be a “Winner’s Curse” for some of the companies with heavy debt on their balance sheet.

India 3G Sale ‘Out of Hand’ as Bids Top $12.5 Billion – Bloomberg

Vodafone Group Plc and Bharti Airtel Ltd. are among eleven companies that will pay more than $12.5 billion for high-speed mobile data licenses in India, fueling concern they won’t recoup their investments.

The auction for 93 licenses to bring data at third- generation speeds to India’s 586 million mobile-phone users may end as early as this week, according to analysts including Rohit Chordia. Based on prices at the close of today’s bidding, a company winning a license in each of 22 telecommunications zones would pay 140 billion rupees ($3.1 billion) for permission to operate a nationwide network, said Satyendra Prakash, spokesman for India’s department of telecommunications.

Internet usage may not be enough to offset the cost of the licenses for providers including Bharti and Japan’s NTT DoCoMo Inc. in a market where monthly phone bills are about $5 per user, or about the same as a basic New York City MetroCard. Revenues have declined as price competition has pushed call rates to lower than a penny a minute, while Bharti said this month only 5 percent of Indian subscribers currently use smartphones.

“It seems to me that these guys are overpaying, that it’s getting out of hand,” said Saeed Baradar, an analyst at Societe General SA in London. “In India, with the rural population so significant, with voice being such an important part of revenue, well, at $2.8-$3.0 billion, you’re really starting to stretch yourself.”

Bids by Internet

Bidding started April 9 in an anonymous, Internet-based auction two years after the government first announced plans to sell the airwaves. The auctions will end when each of the local telecommunications zones have the same number of bidders as available licenses.

India’s government could trim half a percentage point from a deficit estimated at 6.8 percent of gross domestic product for the last fiscal year based on a projection of 350 billion rupees in auction proceeds, Nomura Holdings Inc. estimated in February. Since then, Minister for Information Technology and Telecommunications Andimuthu Raja had predicted the auction could reach 500 billion rupees. Bids exceeded that upper estimate May 7.

Bharti, Vodafone’s India unit, Aircel Ltd., controlled by Malaysia’s Maxis Communications Bhd., Idea Cellular Ltd., DoCoMo’s Indian partner Tata Teleservices Ltd., and a Reliance Communications Ltd. subsidiary put up 5 billion rupee deposits each on March 19, indicating an interest in all 22 zones.

Shares Decline

Shares of Bharti, India’s largest phone company by subscribers, fell 3.3 percent to 284.7 rupees at close of trading in Mumbai today. They’ve lost 9 percent since the auction began in April, while Reliance Communications has lost 16 percent, and Idea 12 percent. That compares with a 3.3 percent decline for the benchmark Sensex index in the same period.

A battery that has lithium as its anode is known as a lithium battery. A lithium battery consists of anode, cathode, separator, electrolyte and current collectors. When the battery is charging, the positive electrode gives up some of its lithium ions which pass through the electrolyte to the negative electrode. The battery captures this energy and stores it. The movement of the lithium ions creates free electrons and a charge that flows to the device being powered.

Read about the Advantages And Disadvantages of Lithium Batteries

Lithium batteries are gaining popularity on rising demand for electric vehicles and also in energy storage. Other applications include telecom, energy storage, government projects, and toys. Eminent consumers of lithium are Tesla, Panasonic, Samsung, and LG. In fact, Tesla signed a long-term contract with a large lithium producer, Ganfeng. Indian players like Reliance, Mahindra, Ola, Adani, Suzuki, Mahindra, JSW, Hero are planning to set up giga-size battery factories in India. According to Reuters, lithium demand touched about 320,000 tonnes last year and is expected to reach 1 million by 2025 and 3 million by 2030. It is also estimated that about 80% of world lithium will be used by the electric vehicle industry and the balance 20% by electronics, energy storage, and other gadgets by 2030.

Lithium battery technology has been witnessing significant cost reductions in the last few years. The average price of Lithium Battery in India for DC (Direct Current) Solution is Rs. 25 per watt-hour and for (AC- Alternating Current) Energy Storage Application is Rs. 30 per watt-hour including all costs.  At homes, our appliances work on AC. The product range of lithium batteries starts from 75 Watt hour to 5,000 Watt hour (5kWh) for DC to DC solution and power backup solution.

Prior to lithium batteries, lead-acid, nickel-based, and flow batteries were being popularly used. However, advantages like high energy density, lightweight, fast charging, portability, long life, safety, low maintenance, long life, etc. have led to lithium batteries becoming popular for application in  EVs and energy storage. It is a no-brainer that demand for lithium is going to increase in the next decade as countries are pushing the adoption of EVs as well as aiming at achieving an uninterrupted power supply in energy storage applications. Australia, Chile, China, and Argentina are the top four countries with high lithium production.

India has seen a sharp increase in renewable energy capacity with more than USD 70 billion being invested over the last seven years in this sector. However, in order to meet the country’s climate change commitment which is 40% of the overall power capacity to come from RE or 450 GW of power, another USD 500 billion will be required. This will mean investments in the generation sector such as solar plants and wind farms and the transmission and distribution sector, which would take RE from the generation to its actual consumption.

stock-footage-solar-panels-and-wind-turbines

There are already major funds active in the sector with India allowing 100% foreign direct investment in the renewable energy sector. The concerned ministries such as MNRE and MOP as well as “Invest India” are actively promoting funding in this sector with a renewable energy investment board also having been set up. Public companies such as NTPC are planning massively aggressive targets in renewable energy with other PSUs such as IOC, GAIL, ONGC, etc also increasing their allocation to RE as well as alternative fuels. Private companies and conglomerates already have a major presence in the green energy sector. Reliance Industries the biggest private player (non-IT) which is the country’s largest oil refiner as well as having a strong presence in telecom and retailing has also planned to invest more than USD 10 billion in green technologies. It plans to aggressively scale up manufacturing such as solar panels, hydrogen, fuel cells, and storage. This would help develop a complete supply chain in the green energy sector as India is still majorly dependent on imports of capital equipment. The other conglomerates like Tata, Adani, JSW, etc. also have got major capacities and investments planned in this sector.

The government is also supporting this sector by facilitating investments by setting up giant solar and wind parks which allow the investors to get readymade land and transmission which are considered as major hurdles towards investing and building up capacities in the wind and solar energy. The production-led incentive scheme has allocated nearly USD 3.5 billion as incentives to set up solar manufacturing and advanced battery factories in the country. There are also regulations such as compulsorily buying of green hydrogen by fertilizers and refining industries which should also give a leg up to the RE industries.

After disrupting the telecom industry with Jio, Mukesh Ambani is now all set to shake the solar industry in India with plans to set up an Rs.75,000 crore solar plant over the next three years. This will pose intense competition for the existing business tycoons namely the Adnais and the Tatas already existing in this plane.

Mukesh Ambani is known for his innovative business plans for the betterment of the masses. His Reliance mobile phones resulted in almost every Indian having a handset and the Jio telecom network rapidly displaced the likes of Airtel and other prominent operators in almost every Wi-fi-ed household. If he succeeds in doing a Jio in the clean energy field, it could change the entire energy landscape in India and will compel complacent competitors to pull up their socks. On the other hand, Gautam Adani has vowed to become the world’s largest renewable energy producer by 2030. Adani Solar has 3.5 GW of annual solar PV production capacity while Adani Green Energy has an impressive project portfolio of 25 GW.

solar panels india

Mukesh Ambani announced to diversify into solar power generation and manufacturing, hydrogen production, e-fuels, and energy storage under its newly formed “New Energy and New Materials” division.  It will also set up a platform for clean energy project financing for investment in this space. This will involve an investment of Rs 75,000 crore over the next three years. The plant will be based in Jamnagar, Gujarat, and is expected to producing solar power of 100 GW in the next decade.

Ambani’s green energy investment will also go a long way in supporting PM Modis’ energy target of 450 GW by 2030. Given Ambani’s business acumen, deep pockets, influential business relationships, and manufacturing expertise, this investment could be a welcome sign to lift up solar manufacturing in India and to enable the country to establish a decent spot in terms of clean energy manufacturing on the world map. It has been five years since Jio disrupted the telecom space in India, could Ambani’s investment in the clean energy sector also disrupt the green energy industry in India? Well, only time will tell. For now, it is time to closely watch these two players shape up the Indian clean energy industry, over the next few years.