Uninor will continue focusing on providing 2G data services rather than looking at more advanced data services like 3G & 4G services in the country under the prevailing spectrum situation, Telenor CEO Jon Frederik Baksaas disclosed during the company’s earnings conference call for the quarter ended September 30, 2014.
This was in response to an analyst question on whether Uninor would require additional CapEx to deploy more advanced data services since it has witnessed significant growth in data usage in the country.
Uninor had mentioned that 18% of its connections are active Internet connections for Q3 2014, while Telenor had earlier reported a 42% increase in its Internet revenues for the six months ended June 30, 2014.
Baksaas said they are currently investing only on growing the footprint of its existing network with existing technologies and they don’t expect new investments at existing spectrum with the existing edge services. That being said, he noted that “in the upcoming auction next year, TRAI is now coming up with new suggestions and proposals also to include new spectrum amounts and we clearly will start where it will come.”
Note that Uninor focuses only on providing basic services in voice, SMS and basic Internet in the country and offer aggressive plans in these services. In November last year, Baksaas had mentioned that the 3G handset ecosystem in India is still not at the level where the market could suffice on 3G service and at this stage, 2G service is more than sufficient in the country.
However, it’s worth noting that telcos like Airtel, Vodafone and Idea Cellular have started witnessing significant 3G adoption in the country. Last month, Reliance Communications also reported that its 3G connection base had surpassed 2G mobile Internet connection base during the quarter.
Data customers growing significantly in Asia
Telenor CFO Richard Olav Aa however mentioned that they are currently in the beginning of the S Curve of picking up data customers in Asia, with only 29% of Telenor customers having access to Internet.
Aa attributed this growth to the significant drop in device prices, stating that consumers can now buy “a very good smartphone below $50 in Asia”. The emergence of new Internet services and availability of spectrum have also contributed to this growth.
“It would not be prudent of us not to catch up on that opportunity that we now see particularly in Asia. Having said that, that does not mean that we will go and do an investment next year.”
Other notes from Telenor’s earnings conference call:
– Uninor witnessed 39% organic revenue growth and added 1.8 million new connections during the quarter. In six operational circles, Uninor has 10.5% subscription market share and a 6.2% revenue market share.
– Telenor operating expenditure (OpEx) is increasing to NOK 146 million, mainly due to the telco’s site redeployment program in India. During the quarter, Telenor had deployed 3,100 new sites as part of its network coverage expansion initiative that was started in Q1 2014.
As of now, the telco has deployed around 4,400 sites of the planned 5,000 sites. It claims this has increased its population coverage from existing 42% to around 50%. Olav Aa notes that these sites come with with their own rent costs and energy costs “before we can fill them up with revenues.”.
Listen – Telenor Q3 2014 conference call