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Uninor Breaks Even In Five Of Its Six Telecom Circles

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Telecom operator Uninor has announced that it has achieved EBITDA (earnings before interest, tax, depreciation and amortization) break even in two new circles – Uttar Pradesh (West) and Bihar.

With this, Uninor has now broken even in five of the six operational circles, and seems to be on track with its plans to break even in all six operational circles by the end of 2013. Uninor had broke even first in Uttar Pradesh (East) in November 2012, followed by Gujarat in January 2013 and Andhra Pradesh in July 2013.

The only circle where Uninor is yet to break even is Maharashtra (which includes Goa), where the company apparently faced negative development in terms of revenue in the previous quarter, due to the closure of the neighboring Mumbai circle in February 2013.

Interestingly, Uninor CEO Yogesh Malik also points out that Uninor has lower average revenue per user (ARPU) and higher energy costs in these circles, while other circles like Gujarat and Andhra Pradesh have higher ARPU and lower energy costs. He claimed that Uninor currently has more than 2,890 sites in UP (West) and 2,442 sites in Bihar while the company has a retail footprint of 56,285 points of sale in UP (West) and 50,000 points of sale in Bihar, as indicated by a Business Standard report.

Going forward, the company plans to expand its network and retail presence with specific focus on the rural regions.

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Telenor’s Roller Coaster 2012 and 2013

Norway’s Telenor which currently operates in India as Uninor, seems to be slowly recovering after a roller coaster year or two in terms of licenses and its Indian operations:

– It lost all its licenses due to the landmark Supreme Court judgment in February 2012, which led to the cancellation of 122 2G licenses controversially allocated under Telecom Minister A. Raja’s regime in September 2008.

– Faced a bitter battle with the previous Indian partner Unitech which finally exited from the venture in October 2012 (A Telenor vs Unitech timeline here)

Tied up with Lakshdeep Investments & Finance to create a new joint venture Telewings Communications in November 2012. Telenor maintained operational control of the entity and was expected to own 74% of the joint venture, following all requisite government approvals. It had also mentioned that all assets of Unitech Wireless (Uninor) will be transferred to Telewings following necessary approvals, for seamless continuity of operations. In July 2013, Telenor however noted that Indian government has still not provided the necessary approvals to carry out the business transfer from Uninor to Telewings.

Secured 24 blocks of spectrum in 6 circles for a total of Rs 4,018.28 crore in the November 2G spectrum auction.  This was the highest price per MHz a telco had paid in the auctions.

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Closed down operations in seven of thirteen operational telecom circles in 2012 and in Q1 2013. This includes the sudden shutdown of the Mumbai circle, following a Supreme Court order which had directed all unsuccessful bidders in the November auctions to close down services immediately.

Received Foreign Investment Promotion Board (FIPB)’s approval to increase its stake to 74% from the existing 49% in its Indian joint venture Telewings. The company had received an approval to invest up to Rs 1,000 crore in the joint venture. Interestingly, the Indian government had also recently approved 100% Foreign Direct Investment (FDI) in telecom, although there are currently no indications on whether Telenor has any plans to buy out its Indian partner in the future.

Also readUninor Q2 2013 ARPU At Rs 97; NOK 107M Loss

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