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Telenor Recruiting For India Launch, Expecting NOK 2-2.5B EBITDA Loss

Jon Fredrik Baksaas

Telenor President & CEO Jon Fredrik Baksaas

Growth in all of Telenors Asian operations slowed down in Q1 2009, compared to Q1 2008. “A key operational priority in 2009 is the start of our Indian operations.  We clearly acknowledge that we have many challenges ahead of us. However, we are on track and are confident”, said Telenor President & CEO Jon Fredrik Baksaas, speaking at an investor conference.

Telenor acquired a 33.5% ownership stake in Unitech Wireless on March 20, 2009, through a capital injection of NOK 1.7 billion, and is scheduled to increase its stake to 67.5% during the year with an additional NOK 6.4 billion, which will result in a total shareholding of 67.25%. This, however, depends on approval from India’s Foreign Investment Promotion Board.

Telenor expects that the investment in India will contribute with marginal increase in organic revenues, an EBITDA loss in the range of NOK 2–2.5 billion and capex in the range of NOK 5.5–6.5 billion for 2009.

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Baksaas said that the recruitment of personnel is ongoing, as is hiring of vendors and suppliers. “Our plan is to launch services in a limited number of circles in the second half of this year. We’re taking the circle by circle approach for launch, ” he added.

Differentiation of Services?

Responding to MediaNama‘s question about how the new telco will differentiate its services in a low ARPU market, Baksaas sidestepped the question – If we go deep into the competence of Telenor, the answer is in how we are behaving in similar markets. Saturation? Well, what kind of an addressable market do we have in India? It is my firm belief that there’s no reason why India should not be on par with neighboring countries. Penetration will probably double from beginning of this year towards the end of 2012, and from that perspective, Telenor will participate in building marketshare. Question is, what kind of economic development will we see India have in the coming years? The economic development will impact the ARPU levels to be expected. India and other economies are seeing significant growth. In India we don’t see a setback of the financial crisis. In fact, customer uptake has increased.”

Cutback on rollout if India doesn’t go according to plan?

“Of course if there are events this market that drastically tilt the balance or shows the bottom, we will reconsider. But we are not at that point in time now, and that is a question for the future. If significant elements around that project kills or shifts, that has us reconsider priorities, we will do that. ”

Asian Operations

A growing share of Telenor’s revenues and profits is derived from operations outside Norway. In its other Asian markets – Bangladesh, Pakistan, Thailand and Malaysia, APRU declined (slide) or was flat. Minutes of Usage were also flat or lower than the previous quarter (slide). “However” said Baksaas, “we signs of stabilizing trends in usage and revenues.” Subscriber base grew in Bangladesh (slide), and reduced subsidies allowed Grameen Phone to report an EBITDA margin of 59%. In Thailand (slide), weak sentiment continues. Q1 is normally the strongest quarter in Thailand, and usage and revenues were in line with Q408, Baksaas added, saying that “In spite of challenges in Pakistan (slide), we’ve managed to maintain margins from Q408.” In Malaysia (slide)


— Telecom Round Up: Telenor-Unitech Funds, SEBI DoCoMo-TTML, Swan Rollout
— Telenor To Get 67.25% In Unitech Wireless; Deal Value Down By 11%
— Unitech Wireless To Launch Mobile Services In Q3; Targets
— Live: Telenor-Unitech Not Keen on 3G Services In India

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