iWorld
IAMAI demands imposing revenue sharing mechanisms between internet companies and TSPs smack of rent-seeking
Mumbai: The Internet and Mobile Association of India (IAMAI) has in its counter comments submitted to the Telecom Regulatory Authority of India (TRAI) on the consultation paper “Regulatory Mechanism for Over-The-Top (OTT) Communication Services, and Selective Banning of OTT Services” said that demands for imposing revenue sharing mechanisms between internet companies and telecom service providers (TSPs) smack of rent-seeking.
IAMAI also flagged demands made by the Cellular Operators Association of India (COAI) and the Indian Council for Research on International Economic Relations (ICRIER). The COAI has called for regulatory intervention to ensure “largest traffic originators” pay a ‘fair share charge’ to telecom companies to account for capital investments made by the latter to “accommodate surging data traffic”. Similarly, ICRIER has called for the imposition of a ‘Broadband Infrastructure Levy’ to be applied at 3% of India operations of “significant” OTT service providers based on “specialized contracts” between service providers and network operators.
According to IAMAI members, by requiring “largest” OTT service providers to pay TSPs for data used by consumers, TSPs would effectively be charging twice for the same service – as they already charge consumers for data. In any case, “surging data traffic” is merely data consumed by consumers that they have already purchased from telecom companies. Therefore, the “strain” on infrastructure of TSPs occurs when they sell data to consumers beyond their infrastructural capacity – a fact that has been conveniently ignored.
Opposing demands to bring OTT service providers under regulations typically reserved for telecom companies, IAMAI highlighted that such demands fail to recognise that telecom service providers are subject to a special regulatory and licensing regime by virtue of the control that they exercise over valuable national resources such as spectrum. Therefore, the introduction of a telecom regulatory regime for OTT service providers would be an act of over-regulation.
Over-the-top service providers have provided high quality content for little-to-no cost to users. This in turn has spurred the rapid growth of data consumption and economic activity in India. Mandating revenue-sharing mechanisms between OTTs and TSPs would effectively reverse this phenomenon by disincentivising growth for OTT based businesses, for whom a volume-based revenue sharing mechanism would be a glass ceiling for continuing growth and may prove to be an entry barrier for startups.
iWorld
Bill Ackman’s Pershing Square makes $64 billion bid to acquire Universal Music Group
Ackman pitches NYSE relisting plan as UMG board weighs unsolicited offer
The hedge fund has proposed a business combination that values UMG at €30.40 per share, representing a hefty 78 per cent premium to its current trading price. The offer includes €9.4 billion in cash alongside stock in a newly formed entity, with shareholders set to receive €5.05 per share in cash and 0.77 shares in the new company for each UMG share they hold.
Under the proposal, UMG would merge with Pershing Square SPARC Holdings Ltd and re-emerge as a Nevada-based entity listed on the New York Stock Exchange. The move is designed to boost investor visibility and potentially secure inclusion in major indices such as the S&P 500.
Pershing Square Capital Management ceo Bill Ackman argued that while UMG’s operational performance remains strong, its market valuation has lagged due to external factors. “UMG’s stock price has languished due to a combination of issues that are unrelated to the performance of its music business,” Ackman said, pointing to concerns ranging from shareholder overhang to delayed US listing plans.
Ackman also flagged what he sees as untapped potential in UMG’s balance sheet and a lack of clear capital allocation strategy. He added that the market has not fully recognised the value of UMG’s €2.7 billion stake in Spotify, alongside gaps in investor communication.
The proposed transaction would also result in the cancellation of around 17 per cent of UMG’s outstanding shares, while maintaining its investment-grade balance sheet. Pershing Square has said it will fully backstop the equity financing, with debt commitments secured at signing. The deal is targeted for completion by the end of the year.
UMG, however, has struck a measured tone. The company confirmed that its board has received the non-binding proposal and will review it with advisers. It reiterated confidence in its current strategy and leadership under Lucian Grainge, signalling no immediate shift in stance.
The proposal comes at a time when global music companies are navigating evolving investor expectations, streaming economics and capital allocation pressures. For Pershing Square, the bet is clear: sharpen the financial story, relist in the US, and let the music play louder in the markets.
Whether UMG’s board is ready to change the tune remains to be seen, but the spotlight on its valuation just got a lot brighter.
