Malaysian tycoon's $7 billion wipeout turns his India dream into nightmare

Bloomberg
March 2, 2018

New Delhi, Mar 2: It was supposed to be the crowning achievement of Malaysian tycoon T Ananda Krishnan's five-decade career.

But his $7 billion bet on mobile carrier Aircel Ltd may instead go down as one of the biggest-ever flops by a foreign investor in India, a stark reminder that doing business in the world's fastest-growing major economy is often a lot tougher than it looks.

Krishnan's holding company stands to lose all the money it poured into Aircel over the past 12 years, people with knowledge of the matter said, after the carrier filed to start bankruptcy proceedings this week. Buffeted by intense competition and regulatory uncertainty, Aircel is the latest in a long list of casualties in an Indian telecom market that only a few years ago was luring foreign entrants in droves.

While international companies have fared much better in India's buoyant consumer products and financial services industries, the turmoil in telecom is unlikely to help Prime Minister Narendra Modi's campaign to lure more foreign capital. In January, his government eased restrictions on foreign direct investment in several sectors, including single brand retail, real estate brokerages and power exchanges.

"India has always been a difficult market, even as it offers the prospects of great demographics and a billion-plus population," Sampath Reddy, chief investment officer at Pune-based Bajaj Allianz Life Insurance Co, said by phone. "The Aircel episode definitely has lessons in the offing for anyone who starts a business in the country."

Krishnan, 79, spent about $800 million to purchase Aircel in 2006, when less than 10 percent of India's 1.1 billion people owned a mobile phone and the scope for growth looked nearly limitless.

By that time, the Harvard Business School graduate had already established himself as one of Malaysia's most powerful billionaires, with controlling stakes in the country's biggest mobile-phone and pay-television operators and close ties to former Prime Minister Mahathir Mohamad.

India Allure

Faced with lackluster growth at home, Krishnan saw India's booming market as key to his empire's future. And he was willing to invest big to make Aircel a success.

Over the years, Maxis Communications Bhd, the holding company in which Krishnan owns a 45 percent stake, made about $3.4 billion of shareholder advances to Aircel, one of the people with knowledge of the matter said. Maxis Communications also bought $1.2 billion of common stock and subscribed to $1.6 billion of redeemable preference shares, the person said.

While he had deep pockets, Krishnan failed to anticipate how cutthroat India's telecom market would become. With nearly a dozen players jockeying for market share, call rates in the country plunged to some of the lowest levels worldwide. Competition has only intensified since 2016, when Reliance Jio Infocomm Ltd., owned by India's richest man, stormed into the market and offered free calls.

Aircel made a last-ditch effort to gain scale by attempting a merger with Reliance Communications Ltd. A setback came in January 2017, when India's highest court barred Aircel from selling or leasing its airwaves amid a broader graft lawsuit. The deal eventually collapsed in October last year.

The company summed up its dire situation in a Twitter post on Wednesday announcing the bankruptcy filing, saying Aircel had been "facing troubled times in a highly financially stressed industry, owing to intense competition following the disruptive entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses."

A representative for Maxis Communications declined to comment.

After Aircel, Krishnan is likely to spend more time focusing on his other businesses, which include Malaysian carrier Maxis Bhd. and pay-TV operator Astro Malaysia Holdings Bhd., the person with knowledge of the matter said. Both companies are still profitable, though their stock prices have dropped by an average 10 percent over the past year, versus a 9.6 percent gain in Malaysia’s benchmark equity index, according to data compiled by Bloomberg.

That doesn’t mean Krishnan is giving up on India entirely. He still controls a stake in South Asia FM Ltd., a radio broadcaster, and TV service provider Sun Direct. The businesses are performing well, and Krishnan currently has no plans to sell, the person said.

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News Network
January 8,2020

Howrah, Jan 8: Following the 'Bharat Bandh' called by trade unions, protesters blocked railway tracks in Howrah and Kanchrapara in North 24 Parganas on Wednesday.

They raised anti-government slogans and criticised the Center for its policies. They were holding placards, posters and banners against the government.

Commuters faced difficulties as bus services were also affected. CPI (M) protesters also stopped the operation of state transport buses. In Odisha, the public agitation started around 6 am at Talcher, Bhubaneswar, Brahmapur, Bhadrak and Kendujhargarh.

Due to the protests, the following trains are detained enroute at different stations --Bhadrak-Brahmapur passenger at Bhadrak, Kendujhargarh-Bhubaneswar passenger at Kendujhargarh, Bhubaneswar-Balangir InterCity at Bhubaneswar, Howrah-Yesvantpur Express at Brahmapur, Ichhapur-Cuttack MEMU at

Brahmapur and Puri-Rourkela passenger at Bhubaneswar.

The ten central trade unions including Centre of Indian Trade Unions (CITU), Indian National Trade Union Congress (INTUC), among others have given the call for strike with a 12-point charter of demand. Trade union Bharatiya Mazdoor Sangh (BMS) is not taking part in the strike.

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News Network
May 15,2020

May 15: Global tensions simmered over the race for a coronavirus vaccine Thursday, as the United States and China traded jabs, and France slammed pharmaceuticals giant Sanofi for suggesting the US would get any eventual vaccine first.

Scientists are working at breakneck speed to develop a vaccine for COVID-19, the disease caused by the virus, which has killed more than 300,000 people worldwide and pummelled economies.

From the US to Europe to Asia, national and local governments are easing lockdown orders to get people back to work -- while fretting over a possible second wave of infections.

Increased freedom of movement means an increased risk of contracting the virus, and so national labs and private firms are labouring to find the right formula for a vaccine.

The European Union's medicines agency offered some hope when it said one could be ready in a year, based on data from clinical trials already underway.

But Marco Cavaleri, the EMA's head of vaccines strategy, acknowledged that timeline was a "best-case scenario," and cautioned that "there may be delays."

The race for a vaccine has exposed a raw nerve in relations between the United States and China, where the virus was first detected late last year in the central city of Wuhan.

Two US agencies warned Wednesday that Chinese hackers were trying to steal COVID-19 vaccine research -- a claim Beijing rejected as "smearing" its reputation.

US President Donald Trump, who has ratcheted up the rhetoric against China, said he doesn't even want to engage with Chinese leader Xi Jinping -- potentially imperilling a trade deal between the world's top two economies.

"I'm very disappointed in China. I will tell you that right now," he said in an interview with Fox Business.

"There are many things we could do. We could do things. We could cut off the whole relationship."

On Capitol Hill, an ousted US health official told Congress that the Trump government had no strategy in place to find and distribute a vaccine to millions of Americans, warning of the "darkest winter" ahead.

"We don't have a single point of leadership right now for this response, and we don't have a master plan," said Rick Bright, who was removed last month as head of the US agency charged with developing a coronavirus vaccine.

The United States has registered nearly 86,000 deaths linked to COVID-19 -- the highest toll of any nation.

World leaders were among 140 signatories to a letter published Thursday saying any vaccine should not be patented and that the science should be shared among nations.

"Governments and international partners must unite around a global guarantee which ensures that, when a safe and effective vaccine is developed, it is produced rapidly at scale and made available for all people, in all countries, free of charge," it said.

But a row erupted in France after drugmaker Sanofi said it would reserve first shipments of any vaccine it discovered to the United States.

The comments prompted a swift rebuke from the French government -- President Emmanuel Macron's office said any vaccine should be treated as "a global public good, which is not submitted to market forces."

Sanofi chief executive Paul Hudson said the US had a risk-sharing model that allowed for manufacturing to start before a vaccine had been finally approved -- while Europe did not.

"The US government has the right to the largest pre-order because it's invested in taking the risk," Hudson told Bloomberg News.

Macron's top officials are scheduled to meet with Sanofi executives about the issue next week.

The search for a vaccine became even more urgent after the World Health Organization said the disease may never go away and the world would have to learn to live with it for good.

"This virus may become just another endemic virus in our communities and this virus may never go away," said Michael Ryan, the UN body's emergencies director.

The prospect of the disease lingering leaves governments facing a delicate balancing act between suppressing the pathogen and getting their economies up and running.

In the US, more grim economic data emerged Thursday, with nearly three million more Americans applying for unemployment benefits.

That takes the overall total to 36.5 million -- more than 10 percent of the US population.

Further signs of the damage to businesses emerged when Lloyd's of London forecast the pandemic will cost the global insurance industry about $203 billion.

European markets closed down, but Wall Street rallied despite the new jobless claims. In a sign of progress, the New York Stock Exchange trading floor was due to reopen on May 26.

The reopening of economies continued in earnest across Europe, where the EU has set out proposals for a phased restart of travel and the eventual lifting of border controls.

"Maybe it's a mistake, but we have no choice. Without tourists, we won't get by!" Enrico Facchetti, a 61-year-old former goldsmith, said of Venice's reopening.

Japan -- the world's third largest economy -- lifted a state of emergency across most of the country except for Tokyo and Osaka.

And Canadian Prime Minister Justin Trudeau said national parks would partially reopen on June 1.

But in Latin America, the virus continued to surge, with a 60 percent leap in cases in the Chilean capital of Santiago.

Authorities said 2,000 new graves were being dug at the main cemetery.

South Sudan reported its first COVID-19 death on Thursday.

And in Bangladesh, the first case was confirmed in the teeming Rohingya refugee camps in Bangladesh, which are home to nearly one million people.

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News Network
June 9,2020

Jun 9: The World Health Organization says it still believes the spread of the coronavirus from people without symptoms is “rare,” despite warnings from numerous experts worldwide that such transmission is more frequent and likely explains why the pandemic has been so hard to contain.

Maria Van Kerkhove, WHO''s technical lead on COVID-19 said at a press briefing on Monday that many countries are reporting cases of spread from people who are asymptomatic, or those with no clinical symptoms.

But when questioned in more detail about these cases, Van Kerkhove said many of them turn out to have mild disease, or unusual symptoms.

Although health officials in countries including Britain, the U.S. and elsewhere have warned that COVID-19 is spreading from people without symptoms, WHO has maintained that this type of spread is not a driver of the pandemic and is probably accounts for about 6 per cent of spread, at most.

Numerous studies have suggested that the virus is spreading from people without symptoms, but many of those are either anecdotal reports or based on modeling.

Van Kerkhove said that based on data from countries, when people with no symptoms of COVID-19 are tracked over a long period to see if they spread the disease, there are very few cases of spread.

“We are constantly looking at this data and we''re trying to get more information from countries to truly answer this question,” she said. “It still appears to be rare that asymptomatic individuals actually transmit onward.”

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