Cyprus parliament decides on bailout

Cyprus’s parliament decides on Tuesday whether to back a bailout imposed by its EU partners, with approval likely from a thin majority against mounting calls for the island to exit the euro.

Lawmakers were due to meet in an extraordinary session at 4 pm (1300 GMT) to ratify the terms of the aid, which is conditional on Cyprus winding down its second-largest bank and slapping heavy losses on uninsured depositors in another.

Also read: Gold sale not a priority: Cyprus finance minister

No single party has a majority in the 56-member parliament, and the government is counting on support from members of its three party centre-right coalition which have 29 seats in total.

“The situation is extremely difficult,” said Finance Minister Harris Georgiades. Without a bailout, Cyprus would face “incomparably tougher difficulties” and a fiscal “nightmare”, he told lawmakers on Monday.

Communist AKEL, in government until it lost presidential elections in February, said it planned to vote against. It has 19 seats in parliament. The socialist Edek party, with 5 seats, said it would also reject the bill.

Attempts to agree on a bailout triggered financial chaos on the island last month, when parliament rejected an initial plan to force both insured and uninsured depositors – those holding less than 100,000 euros in savings – to pay a levy to fund the recapitalisation of two banks heavily exposed to debt-crippled Greece.

It was followed by a two-week shutdown of banks. The fallback option was to wind down one of the banks, Laiki, and impose losses of up to 60 percent in uninsured deposits in a second, Bank of Cyprus.

AKEL, which had made the initial application for financial aid in June 2012, said onerous terms offered by Cyprus’s EU partners were compelling enough for the island to seek alternative sources of funding.

“Cyprus’s only option is a solution outside the loan agreement and the Memorandum of Understanding. Seeking such a solution is possibly tantamount to a decision to exit the euro,” it said in a statement.

Finance Bill to be tabled on Tuesday with 12 amendments

After a logjam of five days, Parliament will finally be functioning tomorrow as the Finance Bill 2013 is likely to be tabled tomorrow with close to 12 amendments, reports CNBC-TV18’s Aakansha Sethi.

Bhartiya Janata Party, which has been demanding prime minister’s and law minister’s resignation over the coal block allocation today said that they will allow the Finance Bill 2013-14 to be passed in the Lok Sabha on Tuesday, as they did not want a ‘constitutional crisis’ to arise.

Parliamentary affairs minister Kamal Nath today told reporters that all finance-related business of the session will be taken up in the Lok Sabha tomorrow.

However there would be close to 12 amendments in the Finance Bill, sources said. Some of these will include giveaways to sectors which have demanded for certain changes and these are likely to total up to about Rs 2000 crore.

Also read: Better for BJP if it lets govt pass difficult bills: Gupta

Fore foreign investors, tax residency certificate (TRC) will be enough to prove residency in a particular jurisdiction in which a double taxation avoidance (DTA) benefit is being invoked. This is something that the Finance Minister has clarified after the Budget and the language maybe tweaked to bring into effect this change.

Meanwhile senior BJP leader Yashwant Sinha today wrote to P Chidambaram demanding certain amendments to the Finance Bill. Sinha has sought the amendment to ensure that farmers whose land was being attached for non-payment of wealth tax were provided some relief.

The finance minister is however unlikely to make any speech tomorrow as BJP continues to oppose government on other issues. When the Budget was announced the Finance Minister had said that he would use the opportunity when the Finance Bill was being passed to make some more announcements, but that is unlikely now.

Dutch party on streets as royals prepare for handover

Willem-Alexander will become the first King of the Netherlands in more than 120 years when Queen Beatrix passes the crown to her eldest son on Tuesday morning.

“He’s ready, in every way,” Queen Beatrix said of her 46-year-old son, a water management specialist who is expected to bring a less formal touch to the monarchy, as she bid farewell to the nation in a subdued televised address on Monday night.

April 30, or Queen’s day, is always a day for partying in the Netherlands, although many Dutch took Monday off work and started celebrating in earnest from Monday evening with street bands and music.

But this year the city of Amsterdam is putting on a special show to celebrate the investiture of Willem-Alexander and the abdication of Beatrix, 75, who wants to retire after 33 years in the job.

The royals are broadly popular, with 78 percent of Dutch in favour of the monarchy up from 74 percent a year ago, according to an Ipsos poll.

But they have been stripped of their political influence, and no longer appoint the mediator who conducts exploratory talks when forming government coalitions.

Amsterdam is already awash with orange, the royal colour. Houses are covered in bunting and flags, shop windows are stuffed with orange cakes, sweets, clothes and flowers and many partygoers are decked out in the royal colours.

Nearly a million people are expected to join the street party with dancing to bands and DJs, helping create a carnival atmosphere. As always, there will be people on the pavements at dawn setting up traditional makeshift bric-a-brac stalls.


Britain’s Prince Charles and Japan’s Crown Princess Masako, who is making her first foreign trip since falling ill a decade ago, will be among 2,000 visitors at the official ceremony.

“There will be tears on Tuesday,” said Dutch Prime Minister Mark Rutte, paying tribute to “this formidable lady who has ruled this country for over 30 years”.

On Tuesday morning at 10:00 a.m. (0800 GMT) Beatrix will sign her abdication, whereupon Willem-Alexander immediately becomes king and his wife Maxima, a popular former investment banker from Argentina, becomes queen.

All three will appear on the palace balcony to wave and address the crowds in Dam Square.

They will then head from the palace to the 600-year-old Nieuwe Kerk, or New Church, next door where the king will swear an oath to uphold the Dutch constitution before lawmakers.

The Dutch monarch is never crowned, since, in the absence of a state church, there is no cleric available to carry out the coronation. But there is a crown, which will sit on a table next to him throughout the ceremony, along with other regalia that constitute the crown jewels.

Willem-Alexander will wear a royal mantle that has been used for investitures since 1815, although it has been repaired and altered at least twice over the past century, for the investitures of his mother and grandmother.

The celebration will continue through the evening with a water pageant along the Ij, Amsterdam’s historic waterfront.

Unilever offers Rs 600/shr for 22.5% in Hindustan Unilever

Unilever Plc, the parent of Hindustan Unilever Tuesday said it would make an open offer for an additional 22.52 percent stake in the company at Rs 600 per share. The Anglo-Dutch consumer goods giant will pay USD 5.4 billion to raise its stake in the Indian unit.

The offer price represents a premium of 20.5 percent to Monday’s closing price of Rs 497.

Unilever already holds 52.48 percent stake in the company, and if the offer succeeds, its stake in the company will increase to 75 percent.

Market experts expect the HUL stock to climb to Rs 550 near term. The acceptance ratio in the offer will be 47.30 percent, which means that if a HUL shareholder tenders 100 shares in the open offer, 47 of them will be accepted.

HUL’s fourth quarter numbers announced Monday were better than analyst estimates, driven by an improvement in volume sales. The market is viewing Unilever’s offer as a vote of confidence in the long term prospects of HUL, and a bullish outlook on the FMCG sector.

50bps cut doubtful in May, CPI inflation too high: JPMorgan

Fall in gold and crude prices may have addressed the current account deficit (CAD) issue to some extent, but given the fact that CPI inflation is still above Reserve Bank of India’s (RBI) comfort zone, a 50 bps rate cut on May 3 is unlikely, feels Sajjid Chinoy, Asia Economics, JPMorgan.

“CPI inflation is still running at 10 percent and there are no signs that it will moderate dramatically over the course of the year. CAD has also to do with whole bunch of policy issues coal, iron ore, fertilizers which are not going away in a hurry, the central bank will be suitably cautious,” he said in an interview to CNBC-TV18.

He expects the central bank to ease by 25 bps in May and by another 25 bps in June or July.

Despite a 50 bps cut in this year the market has not seen significant transmission of rates. So, the market should not focus on number of rate cuts, but on how much of those cuts can be translated into market rates,” he added.

Also Read: RBI likely to go for a 0.50% rate cut by mid-2013: Goldman

Below is the verbatim transcript of Sajjid Chinoy’s interview on CNBC-TV18

Q: The market has priced in a 25 bps cut from the RBI next week, but do you believe there is case for a 50 bps cut?

A: It is going to be hard given that the RBI has already cut 50 bps. The markets are getting excited because crude prices are much lower, commodities are much lower. That would give us relief not just on inflation, but also on the current account deficit (CAD) which the RBI has cited as a key concern. There are a couple of issues here, one is that the CPI inflation is still running at 10 percent. There are no signs that it will moderate dramatically over the course of the year.

Secondly, despite the moderation in commodities, half the widening of our CAD over the last two years has got nothing to do with commodity prices or weak exports but to do with a whole bunch of policy issues coal, iron ore, fertilizers which are not going away in a hurry. Given that and its experience from last year, the central bank will be suitably cautious, 25 bps in May and perhaps another 25 bps in June or July, because the April inflation print will be even lower.

Q: Is that a change from your previous expectations, because the takeaway from the last policy meet was that perhaps the RBI was not going to move too ferociously through the course of this year on rate cuts? Do you expect them to move in a more easy fashion now even if they do 25 bps over the next meet?

A: We have added 50 bps over the last six weeks or so. It comes down to how global commodity prices have moved. The fact that you have seen 12 percent correction in the Indian oil basket, 15 percent correction in gold prices will provide relief to inflation, current account as well as oil subsidies on the deficit. However, even if you get these rate cuts, will there be transmission? We have not seen a significant transmission of the rate cuts from last year, so what the market should focus on is not how many policy cuts we get, but how much of that is translated into market rates.

Q: The recent moves in commodity prices have made people look at India in a slightly more optimistic light over the last fortnight. The key question now is whether we can rediscover growth and it is not just a deficit issue that gets addressed, what are your thoughts on that?

A: There are two very distinct issues to which people are confusing. There is the issue of macro stability and the issue of growth. On the macro stability issue, there is some relief compared to last six months. Fiscal consolidation is on course. Lower inflation, perhaps a slightly lower CAD because of falling commodity prices, ratings downgrade is warded off for now, but the growth issue is a completely different kettle of fish.

According to Prime Minister’s Economic Advisory Council (PMEAC) report, unless you get significant traction on projects on the ground over the next year there is no reason to believe that we are going to have any major acceleration in growth. The fisc is on a consolidating path which in the short run is going to be contractionary for activity. Global growth is wobbly, so do not expect too much on the export front. Without that the only trigger will be corporate investment and unless there is more swift policy action on the project front, it is hard to see where people are talking about 6-6.5 percent growth as a given.

Q: The RBI’s prime focus has been inflation so far. This tempering of inflation is more about demand destruction rather than supply enhancement. Do you expect this tempering of inflation to last? Is it looking like a long-term feature?

A: There are two elements to it. The PMEAC report made that distinction. Food inflation is going to remain stubbornly high, because there are structural issues which have not been affected by recent actions by the RBI and that is going to keep CPI inflation high. The tempering of core inflation is because of demand destruction.

If you now forecast a pick up in growth over the next three to four quarters, what will matter crucially is whether that pick up comes from consumption or investment. If it comes from investment then RBI will be much more sanguine that enough capacities have been created and the core inflation can remain contained. But if you do not see a pick up in investment but an acceleration in consumption in a pre-election year, there is nothing to suggest that core inflation will not rise again. The RBI is worried that you have had the demand destruction, now will you get the supply response.

Private banks, auto look strong, says Vineet Bhatnagar

Private sector banks and auto will continue to look strong at least as we move into the first few trading sessions of May, says Vineet Bhatnagar, PhilipCapital.

Bhatnagar told CNBC-TV18, “I think the entire shift in the sentiment was the confluence of a few things that happened almost at the same time. The way crude reacted and gold fell through and of course both of them have bounced back since then. Also the news about the inflation numbers that came about all of it meant that equities in general were looking supportive across the region and perhaps even globally. Also locally the macro positions started looking better on account of less than worse situation as far as the current account deficit (CAD) is concerned and also because of a possible rate cut by the RBI on May 03.”

He further added, “So what it actually meant when people had to take positions on the long side was it that interest rate sensitive sectors were the immediate favourites and that was visible clearly in the financials and also in autos. Private banks were the favourites and similarly in autos also we saw that there was a support that was building up. Therefore we think that these two sectors will continue to look strong at least as we move into the first few trading sessions of May.”

Market won’t run up on lower commodity prices: Nomura

The recent correction in commodity prices is a big relief for the Indian economy and has eased some pressure on macro concerns like current account deficit and soaring inflation, but fall in commodity price alone is not a solution to India’s growth woes , which are structural in nature, believes Prabhat Awasthi, head of equity research & MD, India – Nomura Financial Advisory & Sec.

”The consumption cycle is still very slow. It has slowed down progressively because of the fact that the past measures of reducing the deficit has led to a burden on consumers. CAD is improving also because of growth coming off. So there is interest rate story compared to growth story. That’s why the upside will not be runaway market,” he said in an interview to CNBC-TV18.

He expects earnings growth to remain muted for atleast a year. “I don’t see earnings picking up before 18 months. Earnings growth from cyclicals may also remain weak, but defensives may continue to contribute to growth,” he added.

On sectors, the broking firm remains underweight on metals. It has changed its outlook on cement space to positive.

Below is the edited transcript of his interview to CNBC-TV18.

Q: Is the recent improvement in macro due to commodity prices good is enough to re-rate the market or do you think the growth issues remain unaddressed and they will limit upsides?

A: Both these statements are true to some extent. Obviously, there is a big stress. If the commodity prices remain at the current level then it’s a big relief from Indian perspective because India is right now facing one of the biggest issues of current account deficit (CAD).

Commodity prices feed into current account, feed into interest rates because of inflation, they feed into government fiscal deficit because of the subsidy debt which government provides. Many issues are sorted out if commodity prices stay down.

Commodity prices moving down automatically do not relieve the growth stresses in the economy which are more structural in nature because of the fact that the investment cycle is not only held hostage by interest rates but by policy.

Currently, there is no clear announcements from companies which suggest that investment cycle is starting to look up. So, on that side, we will continue to exert the pressure on the growth down. The consumption cycle has slowed down progressively because past measures of reducing the deficit has led to a burden on consumers.

So growth engine doesn’t seem to be firing. We are seeing improvement in current account deficit because growth is coming off. So we have an interest rate story compared to growth story. So, the upside will not be runaway market. But commodities have relieved a lot of stress.

Q: You interestingly pointed out that growth is causing some relief to CAD. In that context, how much more protracted do you think the growth resumption will be for the equity market itself? How many more quarters of very poor earnings growth performance you think?

A: Basically, earnings growth is dependent on the performance of GDP because earnings growth

Earnings growth basically depends on how GDP growth does because earnings growth has very strong linkage to how much output we are producing and the pricing part of companies therefore. I think there is at least one year before we see any recovery. Elections is another problem that we are about to face next year as it might slow down policy as far as investment cycle is concerned.

Q: How do you think the global growth will look like over the next three-four quarters, we keep analysing the local situation and globally the other market has been very strong. Is there a possibility that global growth will disappoints over the next two-three quarters which might have ramifications for global equities generally including our market?

A: Data points out that Chinese growth have disappointed. So they are three separate parts of the world. The data from the US is very good except last few data points.

The European growth is muddling and the same is expected to continue even though it seems to have stabalised. The Chinese data from where the commodity prices are driven has been much worse than expected. For example, the PMI data which recently came out was worse than expected. If everything is put together then it looks like that while US might be doing well, it really doesn’t have that much of bearing on commodity prices.

If China doesn’t do well then China is trying to upgrade and turn the quality of growth into less driven by investments amount and more by consumption plus at this point of time they are also on austerity drive. The essential point from India’s perspective is that if US does well then I think it is generally a positive as long as commodity prices don’t go up which extremely depends on Chinese growth.

But overall, I think growth is too not accelerating. Secondly, all the monetary accommodation could come off and that may not be as great from India. So, from Indian perspective, right now the situation is probably the best.

Q: Would you expect to see an even narrow earnings performance. Some of these companies with global exposure whether it is IT or a few auto or metal companies have done better than the domestic companies because of this global linkage. Do you foresee that over the next few quarters, earnings performance will get even narrower along with poor in quality?

A: The expectation from consensus is around 14-15 percent and that is a usual trend when you start the year. We were at 18 percent when we started last year, we have delivered 5 percent. I think the same 15 percent will probably support, some of that might fade. So, it might not go to four percent but might be 8-10 percent because the growth is very slow. The growth is holding up due to defensive in exports like pharmaceutical and IT and defensive domestics like FMCG and banks. Banks earnings growth is a very large constituent of overall earnings.

Autos and industrials have shown very disappointing earnings. There might be some slowdown even on the consumption side but recovery on the industrial side looks unlikely. Defensives will continue to post decent growth.

We are getting into elections. For last six months, the government has withdrawn a lot of stimulus and lot of expenditure and that might start coming back post the passage of financial bill.

So there could be some added momentum in terms of government spending which might flow through into stocks and sectors like cement along with some rural consumption plays, etc. There might be some recovery due to government expenditure coming back on line in next six months, otherwise I don’t think there will be a massive recovery across sectors.

Q: What is your advice to your clients on IT because it did very well in the first quarter of the year and then post earnings, they have all started coming off significantly, not just Infosys and Wipro which disappointed but even TCS has underperformed. What’s your advice to them for the rest of the year?

A: Earnings have been a big disappointment. In the companies which have performed, there has been no massive upgrade or anything positive from the deals flow perspective. It is important recognise that a part of that is probably priced in. In the beginning of the year we had an overweight position on the IT sector. Event after the fall, the sector was outperforming but a lot of out performance has been given away. From valuation prospective, excluding TCS, the sector is trading at a discount to the market. Even if TCS is included, the valuation premium which is at 20-25 percent at the peak this year has fallen to about six percent.

There has been a huge amount of correction and lot of bad news is priced in. We are still advising investors to keep the faith and have an overweight on the sector primarily because if there is any recovery globally then there will be some flow through into Indian IT which will ultimately flow into in numbers. Valuations are building in fairly dismal performance going forward.

Q: How would changes in the commodity cycle would impact some of our listed metal players? What would you do with Tata Steel for instance?

A: Overall, we have been underweight on metals for a while now and we continued with that. Obviously, lowering commodity prices will impact earnings negatively. The thing essentially now with metals, the key call would be whether we have seen the bottom of the commodity cycle or not.

To some extent, one could argue that the non-ferrous metals for example have fallen to a level where it will be very hard to make money or lot of capacity globally. Therefore, at some point in time we expect some bounce back. But the process of correction can be elongated depending on the news flow especially from China.

If China slows down, then demand side is unlikely to recover. So at this point in time we are continuing with underweight outlook and we will continue to evaluate that sector because stock prices are cheaper. There might be some merit at a point in time looking at the valuations to look back at the sector. But I do not expect rosy news going forward so we continue with the underweight call.

Zynga shares dip on loss forecast; asks for turnaround time

Zynga Inc’s management on Wednesday pleaded for more time for its turnaround effort after the online game maker forecast a steeper-than-expected loss for the current quarter, sending its shares lower.

Also Read: Apple’s cash plan takes heat off Cook, buys him time

The embattled publisher behind games such as “FarmVille” and “Words With Friends” reported a surprise profit for its latest quarter through steep cost-cutting, but Chief Executive Mark Pincus said Zynga’s business, although stabilized, may not pick up until the latter half of the year.

The company also reported a 13 percent slide in monthly figures for the number of people playing its games.

“We know that 2013 is a year of transition,” Pincus told analysts on a conference call. “We continue to expect non-linear, uneven results.”

On an adjusted basis, Zynga reported earnings of 1 cent per share, beating analyst expectations of a loss of 4 cents per share. But the company also projected a second-quarter loss between 3 and 5 cents per share, exceeding the 1 cent per share loss analysts had expected.

The results and Zynga’s forecast sent its shares 9 percent lower to USD 3.05 in extended trading.

Over the past 12 months, Zynga’s shares have shed two-thirds of their value while investors have watched the company struggle to keep hold of gamers who once flocked to its games on Facebook Inc’s website.

“While we recognize the decline in the user base on a macro level, we have the pipeline coming down,” Barry Cottle, the company’s chief revenue officer, said in an interview. “That’s going to happen over a period of time, not something that happens in a quarter.”

The company aims to build up its business with gamers on smartphones as it loses users on PCs, but doubts remain over whether this can sustain its revenues and profits.

In recent months, Zynga and Facebook have revised their business partnership, as the game company sought to establish a more independent network even at the risk of getting less visitor traffic from the social media giant.

Over the past year, Zynga’s monthly players have fallen to 253 million from 292 million, while its number of monthly paying users shrank to 2.5 million from 3.5 million, the company said.

“The stock is down because of the guidance,” said Sterne Agee analyst Arvind Bhatia.

But in the long term, he added: “We continue to think that any hope for real growth for this nebulous company really depends on what it can do in real-money gaming.”


In past quarters, Zynga has promised investors that it could tap into a potentially lucrative new revenue stream by launching real-money casino games around the world. The effort kicked off in the last quarter in Britain, where such games are highly regulated.

But executives on Wednesday stayed largely mum about the progress of its real-money inroads in other markets, saying that it could be at least months before Zynga could begin any meaningful operations in the United States, where real-money gambling is illegal in many states.

“We can’t tell you when the regulatory environment will let us test that audience,” Pincus said.

Other analysts said it was unrealistic to consider the talk about real-money gaming as anything but a long-shot for the coming years.

“They’re kind of in dream mode here as they go through the process of trying to materialize the business,” said Mike Hickey, an analyst at National Alliance Capital Markets.

“They started with partnering in the UK market, which is probably at least a year from ever being material.”

Zynga executives blamed their eroding user base on gamers abandoning computers for mobile devices, but pledged to recapture the market once it releases its slate of mobile games due out later this year.

In the meantime, the company will continue to rely on its brand-name franchises, such as its aging but still-robust “FarmVille” series, to generate sales from both mobile and desktop users.

Executives argued that Zynga, which has been the most popular game publisher for Apple Inc’s iPhone, would be better placed than rivals with its independent gaming network to generate game downloads.

“Discoverability becomes such an important factor in how apps are found,” Cottle said. “If you look at challenges in mobile, it gives us a distribution advantage in the marketplace.”

Still, it was unclear if the company would be able to wring as much revenue from mobile users as it had from desktop gamers, analysts said.

“The majority of their games are lower-monetizing experiences on mobile platforms,” Hickey said. “Certainly they’ve attracted a large audience but it’s hard to get much money from that audience.”

The company now derives 22 percent of its revenue from its mobile platform, compared with 12 percent a year ago, but that share remains modest compared with similarly sized technology companies such as Twitter Inc, which gets more than half of its revenue from mobile users.

On Wednesday, Zynga reported revenue of USD 263.6 million, down 18 percent from the year-ago quarter.

For the full year, the company projected that it could be narrowly profitable.

“If we launch the right games and get the right sort of engagement, there’s an opportunity that revenues will go up as well,” Chief Financial Officer Mark Vranesh said. “2013 is going to be bumpy. It’s going to be hard to predict.”

Verizon eyes roughly $100bn bid for Verizon Wireless stake

Verizon Communications Inc has hired advisers to prepare a possible USD 100 billion cash and stock bid to take full control of Verizon Wireless from joint venture partner Vodafone Group Plc, two people familiar with the matter said on Wednesday.

Verizon, which already owns 55 percent of Verizon Wireless, has not put a proposal forward to Vodafone yet but it has hired both banking and legal advisers for a possible bid, the sources said.

Also read: In Myanmar, cheap SIM card draw may herald telecoms revolt

Verizon hopes to start discussions with Vodafone soon for a friendly deal but is prepared to take a bid public if the British company does not engage in talks, one of the sources added.

There are no guarantees that Vodafone will be interested in a deal or that any bid will materialize, the sources said.

Over the past decade, Verizon has made little secret of its wish to buy out its British partner from the joint venture, which is the No 1 US wireless carrier. The sources said that Verizon now is ready to push aggressively for a deal.

Verizon, benefiting from record low interest rates as well as its own strong stock price, is confident that the company can raise about USD 50 billion of bank financing, the sources said. It plans to pay for the rest of the deal with its own shares, they added. The sources asked not to be named because the discussions are confidential.

Verizon’s board is expected to discuss details of a potential Verizon Wireless buyout next week at a regularly scheduled meeting being held ahead of the company’s annual shareholder meeting, one of the sources said.

Verizon spokesman Bob Varettoni declined to comment, but pointed to the US telephone company’s statement earlier this month, in which it said it would be a willing buyer of Vodafone’s share of their Verizon Wireless venture.

Analysts have said a sale of Verizon Wireless would enable Vodafone to return cash to shareholders, purchase fixed-line assets in Europe or potentially make the company an attractive takeover target for other telecom giants such as AT&T Inc .

Taking full ownership would give Verizon, which is reliant on the Verizon Wireless operations for growth, a lot more flexibility with the cash generated from the wireless business.

Verizon came close to doing a deal in 2004, when Vodafone tried to buy AT&T Wireless but lost the auction to Cingular. That deal would have allowed Vodafone to bring its brand across the Atlantic and would have required it to sell its 45 percent stake in Verizon Wireless.

Any deal now, if it were to happen, would come at a time when the telecommunications industry has seen a fresh round of consolidation attempts. MetroPCS Communications Inc shareholders voted on Wednesday to approve a merger with No.4 US wireless service provider T-Mobile USA, a unit of Deutsche Telekom AG .

The merger came after Deutsche Telekom’s 2011 effort to sell T-Mobile to AT&T for USD 39 billion got blocked by US antitrust regulators. Verizon would be unlikely to face any similar obstacles in a Verizon Wireless buyout.

Meanwhile, Dish Network Corp , the No 2 US satellite TV provider, last week offered to buy wireless service provider Sprint Nextel Corp for USD 25.5 billion in cash and stock, challenging a proposed deal between Sprint and Japan’s SoftBank Corp.


One of the main sticking points to a deal so far has been the perception that Vodafone could incur a tax bill of around USD 20 billion if it sells its holding, meaning Verizon would have to pay a high price to make it worthwhile for the British company.

But the sources said any deal would be structured in such a way that the eventual tax bill would likely be USD 5 billion or less. Verizon Chief Financial Officer Fran Shammo said last week that he was extremely confident it could purchase the Vodafone stake without any major tax implications. He did not elaborate on how this would work.

Verizon’s shares have risen about 20 percent so far this year as its wireless business has been easily outperforming its smaller colleagues in terms of profitability and customer growth, and amid rising hopes that it will purchase the rest of Verizon Wireless. Investors say the conditions for a deal have improved because of Verizon’s strong results, its share price gains, and low interest rates.

Any deal that includes such a large stock component may, though, mean dilution for Verizon Communications shareholders.

So far this year, Vodafone’s shares have risen about 23 percent after lagging in the final few months of 2012. The recent gains have been attributed by analysts to hopes that it will sell the stake to Verizon.

India to become third largest market in 3 years: LG

Korean consumer durables major LG expects the Indian market to become its third largest in the world within next three years with an estimated revenue of over Rs 25,000 crore. The company’s wholly-owned subsidiary LG Electronics India had clocked a turnover of Rs 16,000 crore in 2012 and the country is currently its fifth biggest market globally.

“I want to be an optimist on turnaround of the Indian economy. Our company’s rise is also dependant on the overall economic sentiment here. Still, I believe that India will go up to the top three markets for LG in the next three years,” LG Electronics India managing director Soon Kwon said.

With a sales revenue of Rs 16,000 crore, the Indian operations is at present contributing about 6 percent of the global turnover, he added. When asked how much revenue LG Electronics India expects in the next three years, Kwon said: “It has to be at least Rs 25,000 crore for it to be in the top three markets.”

Without sharing any specific number, he said India’s contribution to global revenue will also will increase “much more from 6 percent in the next three years”.

Currently, the US is the largest market for LG globally, followed by its home market South Korea, Brazil and Russia. Talking about exports, Kwon said,

“We are at present exporting to over 70 countries around the globe and it is around 10 percent of our total sales. Exports is growing and we do not want to lose any business opportunity.”

Speaking after unveiling the LG Tech Show-2013, he said the company is expecting its total revenue to grow by 20 percent in 2013, riding mainly on robust performance by its home appliances division.

In order to boost its sales in future, the company is looking to increase the portfolio of goods produced locally at its two Indian plants at Greater Noida in Uttar Pradesh and Ranjangaon in Maharashtra. “Currently 90 percent of our products are manufactured in India, while the rest comes from different plants located outside. We have plans to increase the localisation in coming months,” Kwon said.

The company is currently importing products like front loading washing machines and large frost free refrigerators. “During the second half of this year, we will start assembly of the front loading washing machines,” he said.

Kwon said LG will take a decision by the second half of the year on discontinuation of manufacturing of CRT ( cathode ray tube) television sets.
LG Electronics India today launched a new range of flat panel TVs It also showcased a new TV, which is claimed to be the world’s slimmest one, and a pocket photo printer at the Tech Show.

The company, which has around 4,000 people on its rolls, is spending Rs 700 crore this year on marketing and promotional activities. It will be 15 per cent higher than what it spent during 2012.

Earlier January, Kwon had said the company will put in around Rs 1,500 crore in 2013 on engineering, R&D, developing new products, refreshing equipments, advertising and other promotional activities.