It's Elon Musk And Sunil Mittal vs Ambani, In A 3-Way Corporate Battle

• <00:46> It's Elon Musk & Sunil Mittal vs Ambani, In a 3-Way Corporate Battle 
• <10:27> An India Logistics Story: How Ice Cream travels from Pune to All Over The Country with Sunil Nair
• <13:44> The Only Thing Byju Can Teach Is How Not To Run A Company
• <16:03> The Rains Are Delayed: Don't Panic Yet But There Is Some Impact with Madan Sabnavis

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TRANSCRIPT

NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.

Good morning and it's Friday, the 23rd of June and I'm Govindraj Ethiraj coming to you from Mumbai, India's financial capital.

Our top reports of the day

- It's Elon Musk & Sunil Mittal Vs Ambani, In a 3-Way Corporate Battle
- An India Logistics Story: How IceCream travels from Pune to All Over The Country
- The Only Thing Byju Can Teach Is How Not To Run A Company
- The Rains Are Delayed: Don't Panic Yet But There Is Some Impact.

Elon Musk & Sunil Mittal Vs Ambani Battle

Elon Musk who we spoke of in the context of cars and batteries just yesterday is back, on The Core Report, I mean this morning as well.

Reuters is reporting that he is eager to bring his Starlink satellite broadband to India but he faces strong resistance from Mukesh Ambani who runs telecom giant Jio.

Following a meeting with Prime Minister Narendra Modi in the U.S. on Tuesday, Musk reportedly said he was keen to launch Starlink in India which "can be incredibly helpful" in remote villages that have no internet or lack high-speed services.

Of course, Reliance and Airtel, among others also want to be equally, if not more helpful in entering this segment.

Anyway, the point of conflict is apparently this:

Starlink is apparently lobbying the Indian government to not auction the spectrum but just assign licences in line with a global trend, saying it is a natural resource that should be shared by companies.

An auction may impose geographical restrictions that will raise costs, it said in company letters made public by the Indian government this month.

Reliance disagrees and has called for an auction in a public submission to the government, saying foreign satellite service providers could offer voice and data services and compete with traditional telecom players, so there must be an auction to achieve a level playing field.

Reuters further quoted sources as saying that Reliance will continue nudging the Indian government to auction satellite spectrum, and not agree to the demands of foreign companies.

Reliance Jio got its satellite broadband license or nod in September last year, a few months after OneWeb did. OneWeb is 30% owned by Bharti Airtel, along with the UK Government, among other investors. Sunil Mittal is the chairman of this company.

Incidentally, Starlink has just launched in the Philippines for a monthly fee of approximately $50 a month and a $526 installation charge. Speeds range from 50 Mbps to 200 Mbps here. This is like a base charge, the price starts moving up as you bring in the ability to move to a different location or be mobile - like on a car or boat.
From what I could understand, the rates here are competitive if not better than broadband services offered by local telecom operators.

But the ostensible pitch is similar to what we heard Musk say, targeting parts of the country where internet access is low. This makes some sense in the Philippines which is pretty dispersed including over 7,000 islands.

This is not the case in India.

Before we move further, let me play you what Mukesh Ambani said in his address to shareholders at the annual general meeting in August 2022, almost a year ago now.

So you get a sense of what has already been laid on the ground which will drive what is on ground as well as over ground or wireless

Now, let's see what he has promised he would roll out this year... notably 5G.

This is a shareholder's meeting and hence you could possibly discount a little here and there but from all accounts Jio seems to be on track.

At this point Reliance says Jio True 5G is available in most key Indian cities but promises to reach town, every taluka and every tehsil of India by December 2023 or in six month's time. Or broadly what was promised in August 2022.

So while Reliance is promising all of this, Airtel is not far behind. Last October 2022, Airtel founder Sunil Mittal announced that Airtel 5G services were available in eight cities, that they would be available in most major cities by around now and the entire country by March 2024.

Airtel's OneWeb was hoping to launch in India in July, or next month. OneWeb now says it has 618 blow-earth orbit (LEO) satellites, which completes its constellation and positions it to start global satellite broadband coverage.

Sunil Mittal though said the same thing as Musk, which is that spectrum for satellite communications should not be auctioned but allotted administratively, as is the global norm.

So it's Reliance versus Airtel, not for the first time of course, and Elon Musk.

While the projections for satellite broadband seem quite rosy, consulting firm EY has estimated that it could grow to $4.7 billion by 2025 and that nearly 75% of rural India does not have access to broadband as many locations are still without cellular or fibre connectivity, it is not clear to me that Reliance's and Airtel's own 5G push will not fill most of the gaps.

Remember, Jio is saying every tehsil in the country. Most telecom companies playing the satellite game seem to be looking at clusters of houses or villages to serve. A market which is technically there and will remain but it is unclear how big, at what price and how profitable, given how the rest of the telecom sector is fighting for air.

The high yield markets for broadband are clearly the bigger cities which are already penetrated quite strongly.
Whether on space or ground, this is another battle that promises to be interesting and one Elon Musk may not receive the same welcome he gets when he talks cars or batteries.

And In The United States, More Deals Around PM Modi's visit.

GE Aerospace said yesterday it has inked a much awaited pact with Hindustan Aeronautics Limited (HAL) to jointly produce fighter jet engines for Indian Air Force's Light Combat Aircraft (LCA)-Mk-II -- Tejas.

The announcement came during Prime Minister Narendra Modi's first state visit to the US at the invitation of President Joe Biden.

"The agreement includes the potential joint production of GE Aerospace's F414 engines in India, and GE Aerospace continues to work with the US government to receive the necessary export authorisation for this," the US firm said in a statement.

GE's F414 military aircraft engine powers fighters like the Boeing Super Hornet and Saab Gripen. The pact to build them in India for the LCA Tejas Mk2 marks a key milestone in India-US ties, and the final burial of the 'technology denial regime', the Indian Express said, adding only a handful of countries - such as the US, Russia, the UK, and France - have mastered the technology and metallurgy needed to manufacture an engine that can power combat aircraft.

How Is Icecream transported?

Transporting anything in India used to be a nightmare. A unified Goods & Service Tax came along and that changed a lot of things, particularly for the logistics sector. Add roads that are constantly getting better and you can start making ice-cream as Baskin Robbins does in one location in the country and then distribute it all over, thanks to new-age cold chain logistics.

I always remember in my interviews at Hindustan Unilever, cold chain infrastructure or the lack of it, was considered a big negative in the growth of the food processing industry, including the effective storage of fruits and vegetables.

Not all the problems have been resolved but an efficient cold chain transport system is definitely freeing up some of the cogs in the wheel as I found out in my conversation with Sunil Nair, CEO of Snowman Logistics, India's one of India's leading cold chain warehousing and transport companies.

Here he speaks on Baskin Robbins.

Byju's, Learning From The Teacher

Edtech company's biggest lessons appear not to be to the students who buy its course material, but rather on how not to run a company, at least from a corporate governance point of view.

In the latest development, its statutory auditors Deloitte Haskins & Sells have reportedly resigned due to the delay in the company's filing of financial results.

Business Standard is reporting that in a letter to the board members of Think & Learn Private Limited, the parent company of Byju's, Deloitte said: "The financial statements of the Company for the year March 31, 2022, are long delayed… we have not received any communications on the resolution of the audit report modifications in the respect of the year ended March 31, 2022, the status of the audit readiness of the financial statements and the underlying books and records for the year ended March 31, 2022, and we have not been able to commence the audit as on date."

Meanwhile, The Economic Times reported quoting sources that three of Byju's directors had resigned, including investors representing Peak XV Partners, formerly Sequoia Capital, Prosus and Chan Zuckerberg.

The company has however denied these resignations publicly.

Maybe the directors have quit like proverbial, well, independent directors deserting a sinking ship or maybe not.

After all, the thing that investors do in situations like this - if they can- is to bring about some change in management -or take control.

Be that as it may, elsewhere Byjus is battling lenders and essentially saying it can't pay up. And more people have been laid off.

The destruction of capital is mind-boggling, at $6 billion, a good part of it is unlikely to be recovered as things stand today unless some major changes are effected because if nothing else, the management seems to have lost the confidence of one and all.

The distortion caused in the jobs market is much worse by hiring and then firing. Byju's is of course not the first. One just hopes it is amongst the last at least for the sake of thousands still holding on to jobs in firms where the business case for their very existence is questionable.

The Rains Are Delayed

Before I go, the monsoons are delayed as you must be reading all over. The delay is in itself not troublesome except that the anticipation of what the delay can do is already causing some stress. And causing some prices to go up.

Delays have happened before but the combination of potential delays and El Nino is something that is making everyone, including those in the stock markets a little jittery.

There are several data points floating around but I decided not to get into them because the synthesis of the data is important as sometimes data without context, for example, the number of districts without rain, can scare you.

I reached out to Madan Sabnavis, Chief Economist at Bank of Baroda to do a status check as we go into the weekend on where we stand right now and what we should and should not worry about.

That's it for me for today, do look out for our Saturday edition of Connect The Dots which will feature an extended interview with special guests from logistics.

Our first will be my interview with Snowman Logistics CEO Sunil Nair, an excerpt of which was featured in today's podcast.