"We are 100% steady. Everything’s fine. But democracy can be sloppy sometimes." — General Mark A. Milley, US chairman of the Joint Chiefs of Staff, speaking to China’s General Li Zuocheng on Jan 8, two days after then President Donald Trump’s supporters stormed the Capitol to try to stop the certification of his election loss.
India’s relief for telco industry a ‘game changer’: Singtel’s Lang
India’s relief package for its heavily-bruised mobile industry is “truly a game changer” that will give telco operators including Singapore Telecommunications’ (Singtel) associate Bharti Airtel breathing space to run a sustainable business.
"The industry has been buffeted by everything you can think of,” says Singtel’s CFO Arthur Lang, referring to the whole litany of woes over the past decade ranging from unfavourable regulations to hyper competitive dynamics and most recently, the Covid-19 pandemic.
“This is really a breath of fresh air and shows the forward-looking vision of the government. They see rapid digitalisation that’s happening and with one fell swoop, they are able to give the industry wings to take off,” says Lang in an interview with The Edge Singapore.
On Sept 15, the Indian government announced a four-year moratorium on airwaves payments due. The operators have the right to use the airwaves for 30 years instead of 20 years now. The usage charge for airwaves acquired via future auctions will be waived and different operators can share the airwaves freely. The measures also include a four-year deferral in payments of adjusted gross revenue due.
Singtel holds a stake of around 32% in Bharti Airtel and the bleeding at this entity has weighed down on Singtel’s own bottom line over the past few years, triggering other woes such as a negative watch over Singtel’s own credit rating.
Lang estimates that with the new measures, Bharti Airtel can free up some US$1.8 billion ($2.4 billion) in free cash flow per year over the coming four years — a substantial proportion to its existing Ebitda of around US$5 billion. “The money can be used to fund 5G, broadband rollout, or even pay dividends,” he says.
While the exact impact on Singtel is difficult to ascertain, Lang believes that with this latest news coming out of India, Bharti will at the very least help ensure a more sustainable dividend payout to Singtel.
The way Lang sees it, India was partly inspired by the massive inflow of capital into China’s tech industry. The recent curbs on the massive market leaders notwithstanding, the benefits of a more digitalised economy — underpinned by more advanced mobile and broadband communications infrastructure — is clear for all to see.
Bharti Airtel used to be a significant contributor to Singtel’s earnings. That changed when Jio, a new operator backed by Reliance, kicked off a brutal price war, forcing incumbents Airtel and Vodafone Idea to cut rates and defend market share. The price war ended in late 2019 and for the quarter ended March 2020, Bharti Airtel was able to lift its revenue by 16% over the preceding quarter largely thanks to higher tariffs.
Nevertheless, Jio’s strategy to grab market share worked. As of June this year, its revenue market share was 43.4%. Bharti Airtel, which used to be the market leader, now holds 34.5% and Vodafone Idea 22.1%.
However, the adjusted gross revenue the telcos are to pay the government is still in effect, despite the moratorium. From a total of US$6.5 billion, Bharti Airtel has paid around US$2.5 billion so far. It is not turning into a cash-generating machine overnight.
In fact, it is calling shareholders for more support. On Aug 30, Bharti Airtel announced plans for another rights issue to raise US$2.9 billion.
In March 2019, it had raised US$3.5 billion from an earlier round of rights issue. Singtel did not take up its full share. GIC was roped in and its contribution of US$700 million was more than the US$525 million Singtel stumped up then.
However, Lang describes this latest cash call as an “offensive” move so Bharti can invest to capture new growth and not one of “survival” as in the 2019 cash call.
In 2019, the rights were priced at just INR220, and Bharti’s debt to Ebitda was over five times. The latest round of rights is priced at INR535 and the corresponding gearing ratio is down to around 3.5 times.
For now, Lang cannot commit if Singtel will take up its full share of the rights. However, as part of the “promoter group”, which includes its partner, tycoon Sunil Mittal, it will give its full support. Singtel shares closed on Sept 16 at $2.41, up 3 cents.— The Edge Singapore
Job vacancies rose to record high of 92,100 in June: MOM
Amid easing unemployment and growth in resident employment, the labour market registered a recovery in the 1H2021.
The number of seasonally-adjusted job vacancies rose to an all-time high of 92,100 in June, according to the labour market report for the 2Q2021 released by the Ministry of Manpower (MOM) on Sept 15.
Resident unemployment rates continued to decline, but remain elevated compared to pre-Covid-19 levels.
As the number of unemployed persons also declined, the ratio of job vacancies to unemployed persons improved to above one for the first time since March 2019.
In June, there were 163 job openings for every 100 unemployed persons.
However, the improving labour market has been uneven across sectors. For instance, domestically-oriented as well as tourism- and aviation-related sectors continued to be impacted by Covid-19.
Meanwhile, growth sectors such as financial and insurance services, professional services as well as information and communications saw sustained demand for manpower.
In the 1H2021, resident employment increased to 28,500, while non-resident employment declined by 32,600 amid ongoing border restrictions. The figure excludes migrant domestic workers (MDWs).
As a result, overall employment, excluding MDWs fell during the six-month period.
Resident employment increased across several sectors led by the information and communications and health and social services sectors. Figures for resident employment registered a decline in sectors adversely affected by the Phase Two (Heightened Alert) restrictions in 2Q2021. These sectors include food and beverage services and retail trade.
On the other hand, non-resident employment declined across all sectors and pass types. Work permit and other passes declined by 12,600, while EPs and S Pass holders fell 10,100 and 9,800 respectively due to the tightened travel restrictions.
On a seasonally adjusted basis, unemployment rates continued its downtrend in June, standing at an overall 2.7%. Residents’ unemployment rates during the period stood at 3.5% while citizen’s unemployment rates stood at 3.7%.
The resident and citizen unemployment rates saw lower revisions from the preliminary estimate of 3.7% and 3.8% reported in the labour market advanced report in 2Q2021.
1H2021 saw a total of 4,620 retrenchments, or 2.3 retrenchments among every 1,000 employees. According to the ministry, the figures were “comparable” to the half-yearly levels seen in 2018 and 2019. On a q-o-q basis, the number of retrenchments rose slightly to 2,340 in 2Q2021 from 2,270 in 1Q2021.
In its outlook statement, MOM says the labour market recovery is expected to be uneven across sectors amid the ongoing uncertainty in the economy. — Felicia Tan
Ray Dalio says ‘cash is trash’ and makes the case for crypto
Ray Dalio warned that investors shouldn’t become too reliant on cash and that while he owns some Bitcoin there’s a danger that governments could destroy the crypto market.
First, know cash is trash, so don’t keep it in cash,” Dalio, the founder of US$150 billion ($201.3 billion) Bridgewater Associates, told CNBC Wednesday, Sept 15.
Dalio, 72, who has a US$15.6 billion fortune, according to the Bloomberg Billionaires Index, said he has some money invested in Bitcoin, but it is a small percentage of his investment in gold, which in turn is a small percentage of his other assets.
The hedge fund billionaire said that governments do not want cryptocurrency to succeed but that does not mean investors should not diversify.
Bitcoin, the largest digital currency, has jumped more than 60% this year but has come under increased scrutiny from regulators concerned about how retail investors are engaged with cryptocurrencies.
“At the end of the day if it’s really successful, they’ll kill it,” Dalio said. “But that doesn’t mean it doesn’t have a place.”
Later in the day at the SALT hedge fund conference in New York, Dalio cast doubt on the prediction earlier this week by Ark Investment Management’s Cathie Wood that Bitcoin will increase 10-fold in five years, saying that “doesn’t make sense to me”.
Bridgewater’s Pure Alpha II hedge fund has gained 1.4% this year through August. The firm manages US$105 billion in hedge fund assets — Bloomberg
Photo: Bloomberg
