Apr

24

TRAI to Telcos: Get Written Consent from Users on VAS

Filed Under India Business, Indian Government, Mobile Telecom, Regulations | Leave a Comment

To prevent accidental activation of value added services (VAS) like call ring back tone and hallo tunes, Telecom regulator TRAI has directed the operators to seek explicit consent from users who have subscribed such services in writing.

TRAI thinks there could be chances of accidental activation of VAS through Out-Bound- Dialer (OBD)-call method, as children at home, can unintentionally pressed a particular key.

Also a customer, without listening to the announcements fully or without understand the offer may press a particular key unintentionally, thereby activating the chargeable service.

Now, operators will have to convey to the customer in writing or through SMS or FAX or e-mail, all the details of the offer of a value added service.  [source: Asian Cerc]

Most Indian Mobile Service providers are banking on VAS for future revenue growth in next 5 years. The above move will introduce extra work for the Indian Telecom value added services (VAS), but it may not be a hurdle that can pull down the margin from VAS, since SMS has also been called as an acceptable way to get User consent, which is similar to how its being done in Europe and other places.

Jan

7

Satyam reveals Fraud after Fiasco

Filed Under IT BPO KPO Services, India Business, Indian Companies, Indian Government, Indian Stock Market | 4 Comments

Today is a bad day for investors of the Indian capital markets.

Till now the belief was that Satyam’s Board did a fiasco (which is paradonable if the intent was genuine) by doing things without the right process.

But today, Satyam’s chairman has revealed fraud in financial statements over the last few years, which results in over Rs5000 cr of non-existing assests. Now its a crime, not a mistake.

Read this fax letter from: Satyam_Computer_Services_Ltd_070109.pdf

Exactly a week back, we had written of two basic issues in the Satyam fiasco. Lessons From Satyam Investor Issues

The second point was this:
2. The effectiveness of Satyam’s corporate governance

What has come out very clearly from today’s news is that corporate governance was really bad at Satyam — and this is was top 5 Indian IT services companies — so you can well imagine what kind of controls may or maynot be there in smaller companies.

So this is going to put all IT companies under a very tight spot — with unplanned extra expenses in all kinds of auditing reviews.  Everyone has to learn from Infosys - the leading IT services stock — about how to be fully tranparent with investors. SEBI should use Infosys reporting as a guideline.

Investors are likely to now reduce the P/E valuaiton for mid-cap and small-cap companies, because this corporate governance risk just can’t be calculated for smaller companies when a large company like Satyam can do it wrong, despite an army of auditors and market analysts.

Every investor needs to reassess his portfolio companies and check if the parts are adding to the total.  This weak global economy will expose more such examples where things were hidden under rosy valuations and positive market conditions.

Following were the comments of Narayana Murthy (NRN) of Infosys about an hour back:

I am shocked and painfully dismayed at what has happened at an important software company in India. It is a total failure of governance. I only hope that relevant authorities get to the bottom of this and take appropriate action.

It is important to remember that one Satyam does not make the entire Indian software industry. I believe it is an isolated case. I want foreign investors to realise that there are many honest managements and good companies in this country. While what has happened at Satyam is totally regrettable, I believe that it does not represent India. It just represents one individual and one company.

In the short term, investors will start looking deeper into all companies they want to invest in, and rightly so. Once they realise that things are not all that bad and that most companies are decent and managements honest, they will regain their faith.

This too will pass. Investors will consider this as an extreme case. Right now, all of us must conduct ourselves in the most legal and ethical manner. It is a good warning signal for all managements.

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