Telenor commits to Indian operations

15 November 2010 |


Norway-based global carrier Telenor has reaffirmed its commitment to the Indian telecoms market, countering speculation that it was planning an exit.

 
Sigve Brekke, executive vice president,
Telenor Group


The company launched operations in India under the Uninor brand in December 2009, after taking a controlling stake in local mobile operator company Unitech Wireless.

The venture has reportedly made heavy losses despite successfully growing subscriber numbers, and some Telenor investors have openly questioned the rationale of continuing to compete in such a tough market.

Sigve Brekke, Telenor Group executive vice president and head of Asian operations, used the company’s Capital Markets Day to reassure analysts and investors that its Indian strategy is on track.

“We are an experienced regional operator with a long-term commitment to the Asian region,” he said, and claimed the company is managing to “keep the momentum” from the Uninor’s initial launch in December last year.

To help control Uninor’s costs, Brekke said the company would be looking at potential 30% opex and capex savings from sharing infrastructure with other mobile operators: “We’re exploring several initiatives, including tower sharing, active infrastructure sharing and IT outsourcing,” he explained.

“Telenor’s guidance remains unchanged, projecting EBITDA will break even three years after launch,” commented Roz Roseboro, principal analyst at consulting firm Analysys Mason. “We believe that India offers tremendous opportunities for telecoms operators, but that conditions will remain challenging in the near term.”

She said that with a population of 1.2 billion and mobile services penetration of approximately 57%, India remains one of the most attractive regions in the world for potential telecoms revenue growth: “But with 14 mobile operators in the country and most mobile zones, or circles, having 10 to 12 operators the mobile market is hypercompetitive. India now has the lowest pricing in the world. This is certainly welcomed by end users, but for operators, this is clearly not sustainable. We expect that in the next one to two years, the Indian mobile industry will enter into a consolidation phase, facilitated by positive government M&A policies.”

Roseboro said she expects that government limits on the market share an operator can have in a given sector of the market will be relaxed, as well as the limits on the amount of spectrum an operator can control: “These factors must be addressed in order for consolidation to occur,” she said. “We expect only six or seven operators will remain in the market in three years’ time.”