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Telenor Expects Unitech Wireless FY09 EBITDA Loss Of NOK 1.5B, CapEx 3.5-4.5B

(by Diwaskar Chettri & Nikhil Pahwa)

Norwegian telecom operator Telenor expects services in India to contribute marginally to group revenues before the turn of the (calendar) year, since the company plans to roll out services under the Uninor brand name only by the end of the fourth quarter. For the year, Unitech Wireless / Uninor is expected to incur an EBITDA loss of around NOK 1.5 billion, and capital expenditure in the range of NOK 3.5-4.5 billion.

Speaking on the companys Q3 earnings conference call, execs declined to comment on specific launch plans, only stating that they’ll start “with a number of circles, and there will be a second wave next year.” Last quarter, Telenor had announced plans to launch in 5 circles in Q4. As we had reported earlier this year, Telenor does not intend to participate in Indias 3G auctions.

On 19th October 2009, India’s Cabinet Committee on Economic Affairs approved the recommendation by FIPB for Telenor to obtain a shareholding of 67.25% in Unitech Wireless. However, this was subject to certain conditions, which weren’t mentioned in the release, and according to Telenor, the final documentation is yet to be presented to Unitech Wireless.

On The Price War: Spectrum Will Win

Uninor will launch services in the midst of a massive price war in the Indian telecom arena, with most telcos having cut prices or modified pricing terms to attract customers. Chief Executive Jon Fredrik Baksaas said that “the price mechanism over time will probably will look differently from this as spectrum becomes scarce…the overall market growth will eventually be distributed among those with the network capacity available. In that sense we need to find a balancing point with the prices in the Indian market going forward. As for the initial offer, price will always be price as a part of how to make yourself visible in such a competitive market environment.”

During the quarter

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— Telenor & Unitech Wireless announced the brand name Uninor for their services in India.

— On October 19th 2009, India’s Cabinet Committee on Economic Affiars approved Telenors increase in stake in Unitech Wireless to 67.25%; the approval allows the company to increase stake to 74%.

— Questions were believed to have been raised about the approval given to Telenor, as a part of a CBI raid on India’s Department of Telecom.

— Telenor secured a Rs. 50 billion bridge funding facility from the State Bank of India.

— Unitech Wireless entered into a number of contracts during the quarter, including a tower sharing with Indus and GSM contracts with Nokia Siemens Networks and ZTE.

— Pan-Indian national roaming agreement was signed with Idea.

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Q2-09 Call: Unitech Wireless Plans 5 Circle Launch In Q4; Competition, Timing, Free Minutes
CBI Raids DoT: Corruption Cases Lodged Against DoT Officials, Companies
Updated: Telenor Allowed To Acquire 74% In Uninor; Conditions?
Unitech Wireless Rebrands As Uninor; Operational Hubs, Challenges

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