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Uninor Q4-2011 Concall Live: Writes Down NOK 4.1 Bn; Tentative 2012 Outlook

Following Telenor’s declaration of financial results, and more pertinently, after India’s Supreme Court cancelled 22 of its licenses as a part of the cancellation of 122 telecom licenses issued by the UPA government, CEO & President Jon Fredrik Baksaas will face some tricky questions on its earnings call. We’re reporting live the India specific details from the concall, so keep checking this page for more. We’ve submitted the following questions to Telenor:

– What kind of a base price for 2G spectrum in India would you be comfortable with? What price would be a dealbreaker for you?
– How many data subscribers do you have and how much is data and VAS as a percentage of mobile revenues for Uninor?

The concall:

1:54 PM: Before the Supreme Court verdict, we would have shown this panel with pride:

The operation, as it moves forward with a low cost focus, and being competitive on a basic services basis.

It is an extremely unfortunate fact that the Supreme Court came out with their ruling. If we take the marketshare of Uninor in the geography, we have a marketshare of 5.5%, and this is according to the TRAI statistics. If we concentrate on the Telenor way of accounting, we have reached 23.1 million customers. We are adding customers at a high rate, in parallel seing competitors being very aggressive, on seeing uninor going down.

It was unexpected that all licenses were cancelled for that specific date, and we will do what we can to protect what has been done and is under development. We will also look at court initiatives. At the same time, we have to evaluate all options, when we are thinking of our options in India. Priority for 2012 is that we have to clarify platform for investments in India.

2:11 PM: Writes down NOK 4.1 Bn in Uninor.

2:16: Making an outlook for India is not so easy, since the license is cancelled. The outlook for India, still:

We have to spend the next few weeks, to see how things can be resolved in India, so we have to take this outlook with great caution.

2:22PM: We hope that the government of India will be swift in its clarification, but things take time. We have started a dialog, and others will do that as well. We have to get ourselves through that period.

2:26 PM: 4 licenses were issues on the basis of the same priciples of the same licenses, and telenor is the one that has gone deepest among the new licensees on 2G. Two principles in 2G allocation and 3G auction colliding. It’s peculiar that they’re only looking at licenses issued in 2008, and not the ones before.

The likely outcome? If they still want to maintain a broader package of competition, then it has to be offered only to the greenfield players like Uninor. If they offer it to the whole of the market, then it will go all players including incumbents. The best case is that the licenses are returned and you pay to get them back. On the opposite scale, the maximised auction with incumbents which will rule out the incumbents.

We have had a meeting with the regulator and the ministers, and there is a timeline that TRAI asks for as input for this process, within 15th of February.

2:29 PM: “In response to MediaNama’s question on base price of spectrum”:  If we roll forward from where we are, it would be okay. An auction based on the whole of the market, then new comers will not be able to follow.

2:30 PM: We have never seen any ruling in which a court moves against a process in which a government has issued licenses. We have coperated with Indian authorities with every examination on the license process before we came with, and got an FIPB approval to extend our ownership to 67%. This is done on proper terms and conditions set forward by Indian authorities.

2:40 PM: Whether the court ruling will result into investigations on the previous license processes in the same decade remains to be seen. It’s strange if it will apply only to the 2008 license processes. Secondly, if the auction principle is utilized, and the whole package is addressed to the whole of the market, then incumbents will be in a better position to get spectrum, and that will lead to an increase in pricing. The legal options, based on international conventions and treaties will be seen. We will be asking for a review of the Supreme Court of its own ruling, for which there is an option.

2:46 PM: The company will have a flexible approach in deciding if it wants to bid for select circles or nationwide but priority would be given to existing circles.

2:48 PM: On negative press making an impact on subscriber addition, the company says that the first priority was to protect its investment.


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