Era of 5G 🗼
Insurance IPO, IT humming, and bottled water slump.
Hi 👋, Tanvi here.
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Stock market summary:
US - S&P 500 up 0.84%
India - Sensex up 1.08%
Prepping for the 5G era 🗼
RIL’s Jio is asking the Department of Telecommunications for 5G spectrum allocation to conduct field trials of the company’s 5G network in select metro cities. The carrier has asked for 800Mhz of mm Wave spectrum along with 100Mhz of mid band 3.5Ghz spectrum.
The request comes after RIL announced at its AGM that it has created a complete 5G solution using 100% homegrown technologies. If the trials successfully go through, Jio could end up competing with Samsung, Nokia, Ericson, ZTE, Huawei and other global vendors that sell telecom equipment globally, marking a consequential “Make in India” win.
Key regions globally including the US, UK, Japan, South Korea etc have already rolled out 5G services but India has delayed its 5G auctions until 2021, primarily because high pricing turned telcos away.
Bottomline: a debt-free RIL will be much more aggressive in its pursuit of 5G - a tech that offers 10 times better speeds and low latency for India’s data hungry consumer base. If their tests go well, Airtel and others could be further in trouble. Read more.
IT showing signs of bloom 🖥️
A week ago Vanguard had hired Infosys in an unprecedented deal lasting over 5 years to streamline its reporting, accounting and other functions by shifting processes to the cloud in the 401k contribution management business. Reportedly, the deal is worth $1.5 Billion and will make it the biggest deal that Infosys has ever signed.
Also, INFY believes the deal could expand to 10 years with the value of the contact rising to over $2 Billion. Such large volume deals are rare for Indian IT companies and possibly signals a new era where technology and digital transformation investments take priority over all other spending.
INFY won this deal in a hot contest with Wipro in the last lap, adding to the $1.7 Billion of fresh business it added in the April-June quarter.
Why does it matter: INFY is a major employer in India and the IT services companies showing signs of strong rebound from the pandemic reads very well for India’s economic prospects and improving employment outlook. Read more.
Policybazaar gearing for an IPO 😎
India’s prominent online insurance marketplace Policybazaar is reportedly planning an IPO for as early as 2021. The softbank backed company will be seeking $3.5 Billion valuation in the raise and looking to raise about $500 Million.
If successful, this would be one of the biggest IPOs coming out of India’s digital boom. Management intends to list in Mumbai and possibly consider a dual listing as well if rules are favorable. Softbank, Tiger Global, Tencent etc. are looking at a big payout.
In India’s fragmented insurance market that is mostly controlled by banks and other brick-and-mortar franchises, PolicyBazaar’s digital approach was truly revolutionary. By taking out a lot of friction and adding transparency, the company successfully simplified the lives of millions of millennials over a decade. The payout now will be sweet.
Closing thoughts: India’s insurance market is expected to grow 14-15% in 2020 touching over $280 Billion in revenues. Market penetration is at barely 4%. The runway is very long so expect the IPO to be a hit. Also, the exit will pave the way for other late stage companies to follow suit, marking a pivotal point for India’s startup ecosystem. Read more.
Arab world’s first mars mission 🚀
The UAE added a feather to its cap after it successfully launched its first interplanetary mission, as the country’s Mars-bound “Hope Probe” took off successfully from a launch site in Japan.
The probe is expected to enter the Red Planet’s orbit in February 2021 and so far ground communications indicate smooth functioning of the gizmo. In addition to providing a complete picture of the Martian atmosphere, the probe will supply data to study Mars’ lower layers and the loss of hydrogen and oxygen gases into space. The mission is expected to last about a year.
The project is one of three ongoing efforts aimed at Mars this year, along with Tianwen-1, from China, and Mars 2020, from the United States - all taking advantage of a period when Earth and Mars are closer together, about 57 Million kilometre away, reducing the journey times. Read more.
The bottled water business is crushed 📉
India’s bottled water industry growth has come to a grinding halt as the pandemic and prolonged lockdowns keep offices, hotels, and other travel locations closed.
Industry execs claim that sales volume is down by as much as 70% on an year on year basis - an unprecedented decline. Low margin industries with a thick network of suppliers, vendors, distributors, all sharing the pie are often not built to survive such shocks.
Bisleri CEO claims office attendance at corporate clients has tanked to an average of 10-20% and that the odds of that going up considerably in the near future are slim. For Bisleri, the corporate segment has also reduced to barely 10% of their overall business. Closed restaurants, sparse traffic on highways, no celebratory functions - all avenues of demand have vanished overnight.
Bottomline: While the Bisleris and Cokes of the world will survive, small businesses are the ones that will suffer the most. Government bailouts or cheap availability of capital is the only ray of hope. Read more.
Tweet of the day -
What else are we snackin’ 🍿
📱 AIIMS adopts telelearning for medicos- facilitating a video consultation program for doctors treating Covid-19 patients in different parts of India, AIIMS will allow knowledge sharing and discussions to reduce mortality from COVID-19 by learning from shared experience and strengthening best practices among hospitals.
☕ CCD faces a brunt of lockdowns - the coffee chain has closed 280 outlets in the first quarter of the current fiscal year, citing profitability issues and high costs in the current environment.
💉 GSK buys into biotech CureVac - investing $163 Million to buy a 10% stake in Germany's CureVac, GSK hopes to kickstart a collaboration to develop up to five mRNA-based vaccines using existing CureVac tech to develop a COVID-19 vaccine.
Hope you took a thing or two away from today’s edition. 😀
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