Despite its massive marketing frenzy while launching Uninor in India in the December quarter, its owner, the Norwegian telecom operator Telenor, has reported a sharp and un-anticipated drop in capital expenditure. Capex fell to NOK 1.196 billion compared to the previous quarter’s NOK 2.076 billion. In the June quarter, Telenor had invested NOK 424 million in India. Some of the costs related to the next launch phase have slid into 2010, the company states. Uninor had 1.21 million connections by December 31, 2009.

Details: Release | Report | Telenor Q4 Presentation | Financials

Fiscal 2009 Versus 2010

Telenor considers the development of Uninor among its top priorities for the year.  For the year 2009, Uninor has registered lower EBITDA losses than estimated at NOK 906 million (the company had earlier estimated EBITDA losses of NOK 1.5 billion). Capital expenditure of NOK 3.6 billion is according to expectations of it being in the range of NOK 3.5-4.5 billion.

In 2010, Telenor expects EBITDA losses to be higher at NOK 4.5-5 billion and capital expenditure in Uninor to reduce to NOK 2.5-3.5 billion. Its net debt in Uninor was at NOK 888 million in the December quarter. Uninor aims at achieving EBITDA break-even within 3 years and Operating Cash Flow break-even within 5 years of launch of operations and a market share of 8% by 2018.

Key Corporate Developments During The Quarter

Uninor launched operations in Andra Pradesh, Karnataka, Kerala, Tamil Nadu, Bihar, Uttar Pradesh East and Uttar Pradesh West. On 22 December 2009 Uninor additionally launched in the state of Orissa.

By the end of December, 1 million subscriptions were activated.

Its tariff plans “Callmore” and “Talklonger” target mid to high end users.

Uninor entered into agreements with Indus Towers and Reliance Infratel as second and third tower suppliers. Uninor had installed 13,300 towers by the end of 2009.

In November, Uninor announced it had cut down its accumulated capex for the first 5 years by around Rs. 30-35 billion after receiving better terms from equipment vendors.

In November, Bangladeshi telco Grameenphone went public on the Dhaka and Chittagong stock exchanges. Telenor’s stake in Grameenphone is at 55.8%.

Final Tranch Into Uninor Complete

Telenor has completed the fourth tranch of investments into Uninor, with the green signal from the Foreign Investment Promotion Board. The FIPB had apparently put forth certain conditions before approving the investment.

On January 7, 2010, Telenor paid the third tranche of capital contribution in
Uninor, taking the shareholding to 60.11%. The fourth tranch consisted of Rs. 20.22 billion in new equity shares and has effectively upped Telenor’s stake to 67.25% in Uninor, as per plans laid last year. This is the final investment into Uninor; a total of Rs. 61.356 billion has been invested in the company.

“Telenor Group’s investments into Uninor, as agreed between the shareholders, are now complete. As earlier, Uninor will utilize this investment as working capital to strengthen its operations in the eight circles launched last year and launch operations in new circles in 2010,” said Stein-Erik Vellan, Managing Director, Uninor.

Time Line

July 31, 2008 – Unitech announced there were two global candidates for a partnership and that it would roll out in early 2009.

September 10, 2008 – Telenor was close to picking up 26 percent in Unitech Wireless for $500 million.

September 18, 2009 – Telecom Italia denied media reports of its interest in Unitech Wireless.

October 29, 2008 – Telenor announced the acquisition of 60 percent stake in Unitech Wireless for $1.07 billion. (Also read Live: Telenor-Unitech Not Keen on 3G Services In India)

January 28, 2009 – Telenor cancelled plans of a share issue to fund its purchase of 60% stake in Unitech Wireless, following resistance from investors and instead took a three year loan worth 8 billion Norwegian Kroner ($1.19 billion) to acquire the stake for $1.07 billion.

February 16, 2009: Unitech Wireless announced it would launch mobile services in Q3.

March 18, 2009: It cut the value of the acquisition of controlling stake in Unitech Wireless by 11%. Announced plans to invest Rs 61.2 billion for a stake of 67.25%.

March 20, 2009 – Telenor bought 33.5% stake in Unitech Wireless for NOK 1.7 billion.

October 19, 2009 – Telenor owned 49 percent in Unitech Wireless.

Related

Live: Uninor Launches In 7 Circles; Price War @Rs. 0.29

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

Updated: Telenor Allowed To Acquire 74% In Uninor; Conditions?