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Uninor Q2 2012: ARPU at Rs 97; Revenues at NOK 1034 Million

Due to an uncertain regulatory environment, Uninor has re-allocated its resources to the nine most profitable circles including Mumbai, Maharashtra & Goa, UP East, UP West, Bihar and Jharkhand,  Kolkata, West Bengal, Andhra Pradesh and Gujarat to reduce the cost for the operations and the risk of its India investment.

Telenor has reported a Profit after tax of NOK 2.06 billion (Rs 18.95 billion) for the quarter ending June 30, 2012, down from NOK 4.49 billion (Rs 41.31 billion) profit in the same quarter last year. The total revenue stood at NOK 25.36 billion (Rs 233.32 billion), up from NOK 24.36 billion (Rs 224.12 billion) in the same quarter last year.

With a net subscriber growth of 2 million during the quarter ended 31st March 2012, the operator has 33.7 million subscribers in the Indian market. Uninor holds UAS licence to offer mobile services in the 22 telecom circles in India. It had rolled out in 21 circles and was commercially present in 13 circles until today’s announcement, following which it is scaling down its operations in four circles including Tamil Nadu, Kerala, Karnataka and Orissa. The company is also targeting a self-financing operation by end of 2013.

Uninor reported revenues of NOK 1034 million (Rs 9.51 billion) for the quarter ended June 30, 2012, an 8% QoQ increase in local currency and 66% YoY increase in local currency. The company said that the growth was due to increased subscription base. It registered an EBITDA loss of NOK 625 million (Rs 5.75 billion), slightly higher than the previous quarter loss of NOK 622 million (Rs 5.72 billion) and significantly lower than NOK 965 million (Rs 8.88 billion) in the same quarter last year. The company said that EBITDA was affected negatively by NOK 104 million as the capital expenditure was recognised as operating expenditure, in accordance with IFRS due to the high uncertainty regarding the re-auctioning of licences post the Supreme Court decision in February 2012 to cancel the licences awarded in 2008. The operating loss stood at NOK 619 million (Rs 5.69 billion).

ARPU: Uninor has added 2.2 million subscriptions during the quarter, compared to 3.2 million in the last quarter and its total subscriber base is at 33.7 million. The company’s ARPU was Rs 97 (11 NOK) for the quarter, same as the previous quarter.

Borrowings & Case By Unitech

As of 30 June 2012, Uninor had NOK 9.6 billion (Rs 88.32 billion) in current interest-bearing borrowings, all with financial guarantees from Telenor. In addition, new guarantees of NOK 0.8 billion (Rs 7.36 billion) was given after the balance sheet date. This is an increase of NOK 2.2 billion since 31 December 2011.

As of 30 June 2012, Uninor had NOK 1.1 billion (Rs 10.1 billion) in bank guarantees from the State Bank of India with counter guarantee from Telenor ASA. 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.

Telenor filed notice of arbitration to Singapore International Arbitration Centre (SIAC) on 2 May 2012 to invoke arbitration, but since SIAC has denied an expedited procedure, Telenor has instead filed a writ petition with the Delhi High Court on the same matter. The next hearing is scheduled for 5 September 2012. The corresponding petition filed by Unitech has however not been referred to arbitration. This petition is currently adjourned and next hearing before the CLB is scheduled for 24 July 2012.

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