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Telenor Investors Get Cold Feet Over India Telecom Investment, But It Plans To Stay

Just days after a report suggesting that some of India’s new telecom operators (were granted spectrum in 2008) had approached the countrys telecom ministry for an exit route, comes a Bloomberg report with analysts urging Telenor to quit India, just a few weeks shy of its Analysts Day on September 21st. This is reminiscent of calls for Nokia CEO Olli-Pekka Kallasvuo to resign just before Nokia’s Q2 earnings, a story which was, again reported by Bloomberg, rounding up the Red Queens. Telenor has subsequently denied having any such plans, to the Economic Times.

The New Telco: Gross Revenue & Subscribers

The table below has information for the April-June 2010 quarter for revenues, and the company’s subscriber base at the end of June 2010, as reported to India’s telecom regulator TRAI.

Even though Unitech Wireless, the company which Telenor paid Rs. 6135.6 crore to acquire 67.25% in, hasn’t made a significant dent in the market yet with just 6.023 million connections at the end of June 2010, it certainly is the best off in comparison with its peers. MTS is apparently doing better in terms of revenues, no doubt supported by revenues from its EVDO Data Card business (it has CDMA spectrum), but on the whole, both in terms of revenues and subscriber base, none of the new telcos have amounted to much.

Since receiving licenses in 2008, these five new telco’s have accounted for only 2.33% of India’s total connection base of around 617 million. For the April-June 2010 quarter, they accounted only for 0.65% of Gross Revenue MarketShare.

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Uninor reported gross revenues of Rs. 64.07 crore for the quarter, and a connection base of 6,023,655. As we’d reported earlier, the company is targeting 8% marketshare by 2018, and EBITDA break-even in 3 years, and operating cashflow break-even in 5 years. It is clearly taking a long term view of this investment and the Indian market, and reining in investor expectations. At the same time, it does appear as if the market cannot sustain 14 telecom operators, and some might quit, and in that scenario, the opportunity for those who remain, improves. Uninor appears to be ready to take that gamble.

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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