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Uninor Q1-12: ARPU At Rs 100; Revenues At NOK 1009M

Uninor has said that the recent recommendation from the TRAI on spectrum auction, following the Supreme Court’s ruling to revoke all licences issued in 2008, has severe negative impact on both the telecom industry in India and Uninor, and that it would be impossible for Telenor to participate in the fresh auctions, if the recommendations were approved. The company did not include Uninor in its financial guidance for 2012 for the Group.

Based on the high uncertainty of the terms and conditions for the re-allocation of licences, Telenor has recognised an impairment loss of NOK 3.9 billion in the first quarter of 2012. Telenor had recognised an impairment loss of NOK 4.1 billion in the last quarter, following the Court verdict. The company has urged the Indian government to clarify a sound framework for the industry.

With a net subscriber growth of 3.2 million during the quarter ended 31st March 2012, the operator has 31.5 million subscribers in the Indian market. Uninor holds UAS licence to offer mobile services in the 22 telecom circles in India. It has rolled out in 21 circles and is commercially present in 13 circles.

Uninor reported revenues of NOK 1009 million for the quarter ended March 31st 2012, a QoQ increase of 8% in local currency.Compared to the first quarter of 2011, revenues increased by 102%.

The company’s revenue in the same quarter last year stood at NOK 548 million. It registered an EBITDA loss of NOK 622 million, lower than previous quarter, due to a positive effect from reversal of accruals related to energy costs and tower rentals. According to the company EBITDA also improved due to increase in subscriber base. Its operating loss was at NOK 4684 million.

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From first quarter 2012, Uninor has changed the method for booking activation revenues which has negative effect on revenues and ARPU, but no effect on EBITDA, according to the company.

Uninor had begun offering services in December 2009. Telenor owns 67.25% in Uninor, while the Unitech Group owns 32.75%. It’s accumulated operating cash flow loss is Rs 108 billion since entry.

ARPU & CAPEX

Uninor has added 3.2 million subscriptions, compared to 4.1 million in the last quarter and its total subscriber base is at 31.5 million. The company’s ARPU was Rs 100.1 (11 NOK) for the quarter, a minor decline compared to the last quarter.

The Capital expenditure was NOK 142 million.Investments were primarily related to radio access network and core to cater for increase in subscription base.

Sites

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The number of sites was reduced by 109 in the quarter due to relocation and implementation of cluster strategy. The number of sites at the end of the quarter was 27,863.

Borrowings & Case By Unitech

As of 7 May 2012, Uninor had NOK 9.2 billion in current interest-bearing borrowings, all with financial guarantees from Telenor. This is an increase of NOK 1.1 billion since 31 December 2011. As of 31 March 2012, the guarantees amounted to NOK 8.8 billion. Uninor’s loan agreements contain typical bank loan provisions including material adverse effect clauses, according to the company.

As a further consequence of the judgment passed by the Supreme Court of India on 2 February 2012, where Uninor’s licences were quashed, Uninor’s board of directors decided on 21 February 2012 to carry out a business transfer of the Uninor business at fair market value to a newly incorporated Indian legal entity. Unitech has challenged Uninor’s business transfer decision, and both Telenor Asia and Unitech have by separate petitions, brought the matter before the Company Law Board (CLB). CLB passed an order on 12 April 2012 disposing of the Telenor petition and, referring the parties to arbitration in accordance with the Arbitration Rules of the Singapore International Arbitration Centre.

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