ARAb StAtES diSMAyEd At WESt'S cOMPlAcENcy - Kuwait Times

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SATURDAY, MAY 4, 2013 Qatar extends buying spree to India with $1.3bn Bharti deal Deal pushes India ahead of China NEW DELHI/DUBAI: Gulf state Qatar has bought a 5 percent stake in Indian telecoms firm Bharti Airtel Ltd for $1.26 billion, the firm said yesterday, extending an overseas buying spree from mainly developed countries to Asia’s third-largest economy. The deal is being channelled through Qatar Foundation Endowment and a source close to QFE said it would be an active investor in Bharti Airtel, securing a board seat at the world’s fourthbiggest mobile phone company by customers. “QFE is in for the long-term,” the source said, speaking on condition of anonymity. The purchase by QFE - an investment vehicle of the Qatar Foundation controlled by Sheikha Mozah, the second wife of the country’s Amir - pushes India ahead of China to top Asia’s inbound league table for mergers and acquisitions this year. According to Thomson Reuters data, India’s inbound M&A now totals $9.83 billion so far this year, compared with China’s $7.7 billion and Australia’s $6.9 billion. Qatar’s first major investment in a listed Indian company provides Bharti Airtel with much-needed capital that strengthens its balance sheet and future growth. LONDON: China, Russia and Kazakhstan are among the few trade allies still providing a lifeline to Iran’s vital steel and iron ore sector after most Western suppliers and buyers have cut ties due to growing sanctions pressure. While industry data shows steel imports have more than halved in the last year, Tehran has kept an inflow from some partners and slightly boosted domestic production of the material, used in construction and vehicle production but also potentially for nuclear use and munitions. Iran has also doubled exports of the steelmaking raw ingredient iron ore, worth about $3 billion a year at current prices. The country does not have enough capacity to use much more of its ore to produce steel, but exporting it provides much-needed income now its oil revenues are down by about 50 percent due to sanctions over its disputed nuclear programme. “This only allows Iran to ease the pain or offset some of the effects of what is happening because of sanctions. It does not enable them to overcome the sanctions,” said Scott Lucas, founder of the EA WorldView news site. “The Iranians are having to go to a shrinking number of customers to try and look for this increase in exports like iron ore to compensate for sharp drops in its main product, which is oil,” said Lucas, whose site provides analysis on Iran. While EU and US bans on specific ferrous products have pushed most Western players away, fearing repercussions on their international trade, Chinese interest in Iranian iron ore has increased, and China has increased steel supplies to Iran. Top steel producer China is now buying about 2 million tonnes of Iranian iron ore a month, double the amount it was buying in early 2012, data from consultancy the International Steel Statistics Bureau shows. “The growth in exports is absolutely true ... (The business) is growing from an infant to a small child,” said a spokesman for the Iran Iron Ore association. It is not yet a “key form of income at Bharti’s profit has fallen for three years in a row, hit by fierce competition in its main Indian market. Controlled by billionaire Sunil Mittal and also nearly a third owned by Southeast Asia’s top phone carrier SingTel , Bharti had $11.7 billion of net debt, or about 2.5 times its operating profit, as of end-March. It operates in 20 Asian and African countries and has about 260 million mobile phone customers. The investment by QFE, a recently-established arm of the Qatar Foundation, is in line with the gas rich state’s strategy of picking minority stakes in large global companies such as Royal Dutch Shell, Tiffany & Co and Siemens. Those deals were made through Qatar Holding, the investment arm of the state sovereign wealth fund, which has emerged as one of the world’s most prolific investors with stakes in companies such as London miner Glencore Xstrata and Swiss banking giant Credit Suisse. Bankers close to the sovereign fund say it has an appetite for $30-$40 billion in global investments annually. Separately, the nonprofit Qatar Foundation has a main mandate of developing the state’s human capital and a knowledge-based economy, although it still owns commerciallooking investments such as telecoms firm Vodafone Qatar. Deal dynamics As part of the deal Bharti will issue 199.9 million new shares at 340 rupees each, a 7.3 percent premium to the stock’s Thursday closing price, the company said yesterday. The telco’s shares closed 0.3 percent higher on Mumbai’s National Stock Exchange, having risen as much as 4.7 percent in early trade. The stock has fallen 4 percent in the last three months. The deal “should help ease the debt burden and improve investor confidence”, said Karan Mittal, a telecommunications analyst at ICICI Direct in Mumbai. Bharti, which recently raised $1.5 billion in overseas bonds, has an option to sell shares its majority-owned telecoms infrastructure unit Bharti Infratel. Bharti Airtel did not sell any shares when this unit went public last December. It is also looking to sell up to a quarter of its satellite television services arm, sources told Reuters in March. Goldman Sachs advised Qatar Foundation Endowment on the Bharti deal. — Reuters Trade allies throw lifeline to Iran’s vital steel sector this point”, he said, adding that cash was the primary payment choice. Market participants, however, say much of the trade now involves barter and funds deposited in bank accounts in China, South Korea and other countries that can be exchanged for goods. Tehran’s ambitious plans Tehran has ambitious plans to expand domestic steel output and hopes it can in the short term become self-sufficient. “Iran is in a position to produce more steel domestically; they have the technology, energy, iron ore to do that,” said Edwin Basson, director general of industry body WorldSteel. Nevertheless, industry experts say it will take the country many years to become independent from foreign producers, especially for semi-finished products such as billet. “We have enough factories, and they can make anything they want, but the raw product is often coming from abroad,” an Iranian property developer said by phone. While some of the finished products he needs such as steel beams come directly from China and Russia, others are manufactured by Iranian companies from billets coming from abroad, he said. Iran still has to contend with the dragnet of sanctions, which is cutting supplies of steel. New US regulations coming into effect on July 1 are set to tighten metals trade with Iran. Government sources in South Korea said steel exports to Iran had decreased a lot and would face tougher sanctions. “Those who continue to do business with Iran will face fewer competitors for Iranian business and will demand a risk premium on exports to Iran and a risk discount on imports from Iran. The net impact will be a continued drain on Iran’s foreign currency reserves,” said Mark Dubowitz, who has advised President Barack Obama’s administration and US lawmakers on sanctions. — Reuters business MICHIGAN: In this photo, Ford’s Flat Rock Assembly Plant employees cheer as the millionth Ford Mustang is driven off the assembly line in Flat Rock, Mich. — AP Boeing to build longest-range passenger jet PARIS/DUBAI: Boeing has shown airlines a blueprint for the world’s longest-range passenger jet, adding spice to a longawaited revamp of its 777 wide-body jet, people familiar with the matter said. Boeing launched a race against Airbus for sales of the newest long-haul jets by announcing it had begun selling an upgraded aircraft family code-named 777X. First seen in the 1990s, the 777 cornered the market for large twin-engine aircraft able to fly routes previously only possible with four engines, earning it the nickname “mini-jumbo.” Analysts say the 777 is Boeing’s most profitable plane, thanks largely to the 777-300ER, a 365-seat version that began operations in 2004. Most of the industry’s attention is now focused on a future 400-seat version known as the 777- 9X, which is Boeing Co’s response to a growing challenge from the largest version of Europe’s newest aircraft, the Airbus A350-1000. But talks between Boeing and potential buyers have also generated interest in a 777-8X that would be a successor to the 777-200LR, the industry’s current distance champion, with a range of more than 9,300 nautical miles (17,200 km), people briefed on the talks said. The 777-8X, boasting a range of 9,500 nautical miles (17,600 km), would be designed for some of the world’s longest trips such as from the Middle East to South America. “They are offering an ultra-long range aircraft in the 777-8X,” said an industry source briefed on the plans. “It’ll be the longest range aircraft in the business.” Boeing declined to comment on specifics, but spokeswoman Karen Crabtree said the company is working with customers to fine tune the details. Experts say ultra-long range planes deliver mixed benefits to airlines and so far the market for them remains a niche, overshadowed by the juggernauts designed for trunk routes. That is because when modern aircraft fly the longest 15-hour flights, the first few hours are spent mostly burning the fuel needed to carry even more fuel for the rest of the flight. These aircraft “carry more fuel to carry more fuel,” said consultant Richard Aboulafia of Virginia-based Teal Group. “They need a very big wing with lots of (fuel storage) capacity, which means lots of structure and weight.” Fuel is not the only source of extra weight. The long journey times also mean loading extra meals and a reserve crew, so that the fuel burned per hour - a measure of efficiency - can end up greater than if the plane simply stopped en route. Airlines must balance this against any extra revenue they can charge for a direct flight and the ability to eliminate the fuel wasted in climbing and descending twice, as well as en-route landing fees and other costs linked to a stopover. —Reuters
SATURDAY, MAY 4, 2013 business Turks see red over airline lipstick ban Turkish consortium wins tender for third Istanbul airport BRUSSELS: EU commissioner Economic and Monetary Affairs Olli Rehn gives a press conference on the spring European Economic Forecast yesterday. — AP France to get more time to cut deficit BRUSSELS: France will get two more years to meet its budget deficit target because of the country’s poor economic outlook within a recession-hit euro zone, the European Commission said yesterday. Presenting economic forecasts for the next two years, Olli Rehn, the European monetary affairs ommissioner, also confirmed earlier statements that Spain would get the same leeway. Others, including the Netherlands, Slovenia and non euro-zone Poland, are likely to get a year more to get their budget gaps below the 3 percent of gross domestic product European Union ceiling. The formal decision will be announced on May 29, when the Commission will make macroeconomic recommendations. “France badly needs to unlock its growth potential and create jobs,” he said as he announced that Spain, Italy and the Netherlands as well as France - four of the euro zone’s five largest economies - would remain in recession this year. The granting of more time is a victory for French President Francois Hollande, who won elections promising a focus on growth and less on austerity but has little to show for his economic policies after a year in office. The extra time also underlines a shift of focus in the 17 countries that share the euro from sharp fiscal consolidation in the first years of the sovereign debt crisis to economic growth, as earlier radical deficit cuts and European Central Bank action restored some market trust in euro zone finances. EU finance ministers had given France until this year to bring down its budget shortfall below 3 percent of GDP and set the deadline for Spain for 2014. But while France expects its economy to expand by 0.1 percent this year, the European Commission forecast a 0.1 percent contraction. “The recovery is now expected to be delayed... The French growth forecast is in our view overly optimistic,” Rehn told a news conference. France repeated yesterday it would bring the deficit below 3 percent in 2014, only one year later than the original deadline, but a finance ministry official said the Germany’s cautious approval The euro-zone as a whole will shrink more than expected this year and budget deficits in most countries will therefore decline more slowly, Rehn said, as the bloc struggles in its second year of contraction and its second recession since 2009. Of the large countries only Germany, the largest euro zone economy, will manage to eke out 0.4 percent growth, even if less than the earlier expected 0.5 percent. It sees budget austerity as necessary to bring down bloated public accounts after a decade of credit-fuelled spending across much of Europe, even if many economists say such austerity has deepened the euro zone’s recession. Chancellor Angela Merkel’s spokesman Steffen Seibert gave only cautious approval to the Commission’s planned extensions, saying each country must be “checked on an individual basis”. The Commission now believes that the euro zone economy will shrink 0.4 percent this year and grow 1.2 percent next year, against projections from last February of a 0.3 percent recession and 1.4 percent growth respectively. This is roughly in line with forecasts from the European Central Bank. “We must do whatever it takes to overcome the unemployment crisis in Europe. Fiscal consolidation is continuing, but its pace is slowing down,” Rehn said, referring to the record 19 million people out of work in the euro zone in March. — Reuters ISTANBUL: Turkey’s national airline has barred female flight attendants from wearing red lipstick and nail polish, striking a nerve among secular Turks worried the country is becoming more Islamic. Turkish Airlines, Europe’s fourth-biggest carrier, said the ban was aimed at keeping crews “artless and well-groomed with makeup in pastel tones”, as a natural look improved communication with passengers. “As a consequence of our current cabin uniforms not including red, dark pink, et cetera, the use of lipstick and nail polish in these colours by our cabin crew impairs visual integrity,” the statement said. Turkish Airlines declined a request for further comment. The guideline follows other restrictions on employees’ appearance and on serving alcohol. Critics say they reflect the influence of the government’s conservative religious values at the fast-growing state-run airline, one of Turkey’s most recognised brands. “This new guideline is totally down to Turkish Airlines management’s desire to shape the company to fit its own political and ideological stance,” <strong>At</strong>ilay Aycin, president of the airline’s Hava-Is labour union, told Reuters. “No one can deny that Turkey has become a more conservative, religious country.” Turkey is 99 percent Muslim but the NATO state and European Union candidate has a secular constitution. Prime Minister Tayyip Erdogan’s ruling AK Party, which traces its roots to a banned Islamic party, has relaxed the state’s control over the expression of religion, such as oncestrict limits imposed on wearing the Islamic-style headscarf. Such restrictions were aimed at reining in Islamism and improving women’s rights, but effectively prevented many devout women from studying at university or taking government jobs. Turkish Airlines scrapped its own ban on the headscarf more than a year ago, and covered women now work at check-in counters and at other positions in the company, Aycin said. Other Turkish carriers also have guidelines on the appearance of cabin personnel. MUMBAI: India’s central bank cut its main interest rate by 25 basis points yesterday in the third such move this year, but said there was “little space” for further reductions to help the slowing economy. After meeting in the financial capital Mumbai, the Reserve Bank of India (RBI) said that the benchmark repo rate, at which it lends to commercial banks, would fall to 7.25 percent, as expected by most economists. After the decision, India’s Finance Minister P. Chidambaram, said that there was “scope for more rate cuts, if inflation came down further”. India’s headline inflation eased to a three-year-low of 5.96 percent in March, but the consumer price index is at 10.39 percent, led mainly by high food prices. Explaining the rate cut, the RBI governor Duvvuri Subbarao said that “growth had decelerated continuously,” forecasting expansion of 5.7 percent in the new fiscal year-far below the government’s estimate of 6.0-6.5 percent. But Subbarao warned that there were “significant risks” to inflation in the near-term and said that “monetary policy cannot afford to lower its guard against the possibility of a resurgence of inflation pressures”. The governor also struck a cautious tone about future rate cuts, saying: “Overall, the balance of risks stemming from our assessment of the growth-inflation dynamics yields little space for further monetary easing.” The RBI’s decision to cut rates had been forecast by economists and business leaders, who have been calling for lower borrowing costs to help the economy, which grew at an estimated 5.0 percent in the full year to March. Indian shares fell as much as 0.91 percent to 19,555.05, reacting to the news that further rate cuts were unlikely in coming months, but recovered marginally to 19,613.10 points, down 0.62 percent. The cash reserve ratio-the percentage of deposits banks must keep with the central bank-was kept unchanged. The RBI’s decision to cut rates had been forecast by economists and business leaders, who have been calling for lower borrowing costs to help the economy, which grew at an estimated 5.0 percent in the full year to March. But they are unsure when the next rate cut could come. Goldman Sachs chief India economist Tushar Poddar expects the RBI to proceed slowly with future rate cuts. “The forward guidance suggests to us that the RBI is unlikely to cut again in its next policy meeting (of June 17),” he said. But Nomura economist Sonal Varma said that: “Given the recent fall in commodity prices, upside risks to inflation are likely to remain contained... creating more space for future rate cuts,” in a note to clients. Industry body Associated Chambers of Commerce and Industry of India (Assocham) criticised the RBI for being “over-cautious” on potential risks to India’s economy. “While there is a lot the government should do to improve governance, the RBI should not wash its hands off at the cost of economic growth, which is a must for fulfilling aspirations of the people,” Assocham president Rajkumar Dhoot said. The RBI yesterday reiterated that the government should take measures to encourage investment, as policy action was not enough to stimulate the economy. Subbarao said the biggest risk to India’s economy came from the current account deficit, which widened to a record 6.7 percent of GDP in the December quarter. The government, led by Prime Minister Hidden agenda? The flag carrier caused a stir earlier this year when newspapers published mockups of a new Ottoman-style uniform for stewardesses with ankle-length dresses, a proposal the airline’s management appears to have since abandoned. That was followed by a ban on alcohol on planes flying to most domestic destinations and some Islamic countries. “They are objecting to the lipstick and nail polish that we have been using for years,” said Asli Gokmen, 30, a flight attendant who lost her job with more than 300 others last year during a union protest and is petitioning for her position back. No current employees were available for comment. Turks worried the government is undermining the country’s secular order see a hidden agenda. On Twitter, women posted pictures after applying red lipstick. One wrote: “Why not just ban stewardesses altogether so we can all breathe a sigh of relief?” Some male Twitter users were indignant over the insinuation that red lipstick would induce a sexual frenzy. Turkish Airlines passenger Ahmet Yerli, 33, said he did not think the new guideline was a sign of creeping Islamisation but that the ban was still “absurd.” “I’ve never heard of a plane crashing because of a women’s lipstick,” he said before his flight. In another development, a consortium of Turkish construction firms won a tender yesterday to build and operate a planned third airport in Istanbul which Turkey says could eventually be the world’s largest, bidding 22 billion euros ($29 billion) for the project. —Agencies India’s central bank cuts rate Manmohan Singh, has been battered by a spate of corruption scandals and is keen to revive economic growth before facing voters in general elections due in 2014. The World Bank on Tuesday lowered its forecast for growth to 6.1 percent for the new fiscal year which started in April, from the 7.0 percent projected six months ago. The RBI slashed rates by 25 basis points at its previous two meetings in March and January. Rates had previously been on hold for nine months. — AFP MUMBAI: An Indian security guard stands at the gate of the Reserve Bank of India (RBI) yesterday. —AP
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