wordpress blog stats
Connect with us

Hi, what are you looking for?

Live: Telenor-Unitech Not Keen on 3G Services In India

Unitech Wireless, TelenorWe were on the Telenor India investment call which took place in Norway, and were updating this post on the fly. Telenor today announced the acquisition of 60 percent stake in Unitech Wireless for $1.07 Billion. According to Telenor, Unitech Wireless has an enterprise value of $1.1 Billion. From the conference call:

The Deal
— $250 million of primary equity upon closing
-– Remaining $820 million in three additional tranches by end of September 2009

Fundraising
— The deal will be financed by additional fund-raising, by a rights issue
— Tower Sharing will reduce capex by 50-75 percent. When it comes to operational cost, it adds a fairly marginal increase in OPEX.
— Will be a $2 billion CAPEX in India for the first three years, so the fundraising will not cover the negative cashflow from India in the beginning of the project.
— The Government of Norway is a majority shareholder in Telenor, and the approval for fundraising has to go through the Parliament of Norway, which will take 2-3 months.
Open to selling existing assets to raise funds for India

No to 3G, To Begin With
— Telenor is concentrating on 2G business model, in the 900 MHz band. “3G is not a part of our common sense. We are reluctant to throwing ourselves into the 3G auction, as it stands today.” Significant negative cashflows in the first year.
3G as a differentiator: the customer segments and the market segments in India will probably be not as inclined to 3G as a differentiated offering. If we see how it’s evolved in Europe, it’s taken quite some time for it to evolve. It was used more as a capacity enhancer.
— 3G auction process will have a circle approach, not a national approach, so operators will be selective with their approach to 3G.

Spectrum
— Unitech Wireless currently has spectrum for 13 circles, and expects spectrum for the remaining 9 circles within the next 12 months

Targets for India, not including 3G:
— EBITDA breakeven in approx three years from launch
— 30% EBITDA Margin
— 20% Operating Cashflow Margin
— More than 8 percent marketshare in India in the long term, but not giving an opinion on how the market is going to evolve.

Control
Telenor gets management control from day 1: will occupy 4 of 7 board seats. Telenor will nominate Managing Director, CFO and CMO, and the overall management will be appointed by Managing Director, in consultation with the board.

Partner Conflicts
(with reference to Videocon-Nahata conflict over Datacom) When you embark on a partnership, like with Unitech, challenges is not the highest element to discuss. There is paperwork around conflict resolutions with Unitech. We have used our extensive experience in partnerships, and have necessary devolution mechanisms, have a firm majority on the board

Brand: The brand of wireless services that Unitech intends to launch by mid 2009, has not been decided yet.

Is there an opportunity in India with 7-10 operators?
The presence of existing players is very differentiated from circle to circle. The impact of more players will vary from circle to circle. We’re looking to differentiate our offering.

Tower Sharing
— Access to 30,000 – 50,000 existing sites through tower sharing agreements
— Towers used by us doesn’t necessarily give quality. We do see that traffic volumes are being hampered in certain areas because of multiple areas. This will be compensated by an increase in frequency eventually, like in Dhaka. We have not said we’ll not deploy our own towers, but we will have access to existing towers which will take down the capex levels significantly, and speed up roll-out.

You May Also Like

News

Mobile number porting requests increased by 28.7% to 7.53 million requests in July 2020, compared to 5.85 million porting requests reported in June 2020....

News

While Reliance Jio added 2.5 million active connections in July, Vi, formerly Vodafone Idea (down 3.8 million) and Airtel (down 0.45 million) saw declines....

News

After Reliance Jio’s controversial “testing” phase signed up millions of subscribers to the telco, the Department of Telecommunications, somewhat belatedly, prohibited telcos from running...

News

Telecom infrastructure company Bharti Infratel has decided to proceed with its imminent, but long delayed, merger with Indus Towers, the company said in a...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to Daily Newsletter

    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ