Daily Watch

Lehman Brothers back on track

2012-07-21T17:29:00.000+05:30

Lehman Brothers, which was the fourth largest bank in US, before it's collapse in 2008, is now back on it;s track to recover from bankruptcy. It has paid almost $22.5 billion of it's debts till now, which is 53% more than it expected.

Currently, it has $21 billion of cash in hand and is planning to repay around $53 billion in next 6 years.Besides cash, the 162 year old bank also has $7.7 billion of real estate assets which it tends to liquidate, $6.3 billion of private equity investments and $1.4 billion worth of stake in formula one .

2G Spectrum pricing basis

2012-07-21T13:31:00.000+05:30

The 2G spectrum reauction scheduled in the near future has already started impacting telcos and government is still in a fix to decide on the reserve price for the same.The government had priced the spectrum at around 18000 crores per 5 Mhz. initially, but now , due to the telcos explaining their financial crisis and inability to maintain their projected revenues , the EGoM has finalised the reserve price to be somewhere around 14000-1600 crores.This was done as the companies had said that according to their analysis, they will have to increase the tariff rate by 90-95 paise per minute to meet their projected revenue targets.

Prior to that , TRAI chairman ,Mr. Rahul khullar, had said that the companies have already raised around 200,000 crores as debts for 3G auction in 2010 through external borrowings, and now, will not be able to raise even 20-30,000 crores for 2G auction . He had replied , when TRAI's analysis was questioned by the telcos, which said that the companies can meet their revenue targets with the existing reserve price by a mere increase of 5 paise per minute in their tariff rates.He also said that the real problem is not tariif, but it is the high debt-equity ratio which the companies were carrying currently .

the Telcos failed in market forecasting and now, are asking the government to lower the reserve price. Had the government not lowered the base prices, the burden of losses would have come on the common man, who ends up suffering for what the companies had done.

The million dollar question now is, after raising funsd for 2G auction , if the 3G technological faults are overcome, and demand for 3G increases , with a shift of customer base from 2G to 3G, what will the telecom sector do?
They have already suffered a big loss and experienced it in 3G , where they borrowed a lot, and overestimated the demand. The future is still unpredictable, what happened in 3G case, can happen again in 2G, and if it happens again, Indian telecom sector will be in deep economic crisis.

Getting Started

2012-07-21T12:43:00.002+05:30

The blog "Daily Watch" is aimed at discussing the current business affairs which affect the Indian economy or the other economies at the global level as a whole.
It supports a healthy discussion on various important issues which can play an important role in the reshaping or restructuring of the economic scenario .

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Let's started becoming aware of the corporate world so that we can get a better insight of what is happening in this world.