Telenor expects that Unitech Wireless, the Indian telecom license holder which it is acquiring 60% stake in, will launch mobile services in Q3. While the details of the rollout have not been disclosed, the company has said that the launch plan will be based on the attractiveness of the market; they still intend to reach 60% population coverage within 1 year of launch. The cost break-up:
Telenor is still expected to close the Unitech investment in Q1 of 2009, for which they will get management control of Unitech Wireless, appoint 4 of its 7 board of directors, and reserve the right to appoint its Managing Director. The company plans to roll out a a pan-India retail network of 1 million outlets, including branded retail shops. However, Telenors plans do hang in the balance – they are dependent on an approval from India’s Foreign Investment Promotion Board (FIPB). Investment plans:
As we’ve mentioned before, Unitech Wireless has received spectrum for 21 of 22 circles – Delhi’s taking a little longer than the others, it appears. They expect EBITDA break even in approximately 3 years from launch, Operational cash flow break even approximately 5 years from launch, and have a long term ambition of 30% EBITDA margin and 20% operating cashflow margin.
Telenor is cutting costs primarily by outsourcing its IT and more importantly, reducing cap-ex expenditure by around 75% by inking tower sharing agreements. So far, the company has tied up with Tata Teleservices’ tower company Wireless-TT Info Service Ltd and Quippo Telecom. The tower sharing agreement covers around 40,000 sites, which will cover 55-60% of the population by mid 2010.