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Long term operations in India subjected to spectrum auction: Telenor Group CEO

cmn_Telenor office

The Telenor Group posted an operating loss of 3,100 million Norwegian Krone (NOK), approximately Rs 2,530 crore for its Indian operations during its first quarter results, and hinted on suspending operations in India if the upcoming spectrum auctions turns out to be costlier.

According to a PTI report, Telenor global CEO Sigve Brekke said that the company’s long terms presence in India is subjected to its ability to secure additional spectrum (from upcoming auctions). He also added that Telenor is not able to compete with current spectrum portfolio it holds in India.

Brekke further said that the company is looking at ‘potential trading options’ in order to maintain a sustainable business model. However, he said that the company is looking to acquire new spectrum at “a price that we can justify”.

“We are in India to make money, if we don’t see return then we need to look at other alternatives,” Telenor CFO Morten Karlsen Sorby added.

MediaNama has written to Telenor regarding its stance on TRAI’s costly reserve prices, and the government’s move to offer liberalized spectrum, and whether it would look to collaborate with other telcos in spectrum sharing/trading, or roaming deals. We will update the story once we get a reply.

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Alternate payment structure for telcos: This month, TRAI recommended an alternate payment structure for telcos to ease debt. For the upcoming auctions, telcos could first pay 10% of the bid amount; the balance 90% could be paid over 18 years with 18 equal annual installments, along with interest. The telecom regulator has upheld the it’s pricing of Rs 11,845 crore for a single unit of the 700MHz band

Financials

Telenor India posted a total India revenue of NOK 1.520 billion for Q1 2016, a 9% increase from NOK 1.383 billion in the same quarter last year. On a sequential (QoQ) basis, revenues were marginally up by 5% from NOK 1.436 billion in last quarter.

However, the operating loss of Telenor India widened to NOK 3100 million in this quarter, from NOK 159 million in the same quarter a year ago. The company’s Average Revenue Per User in fell by 8% to Rs 90. The decline was primarily due to lower voice consumption, according to Telenor.

4G service roll out

In this month, Telenor confirmed to MediaNama that it is looking to launch 4G services across six circles it operates in. It has already rolled out a pilot 4G service in Varanasi and based on the outcome, it plans to extend 4G in 6-8 cities across six circles in the next few months.

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Telenor provides mobile services in UP (West), UP (East), Bihar, Andhra Pradesh, Maharashtra and Gujarat circles. The company has a permit to operate in Assam but is yet to start its services there.

During the January-March quarter, Telenor claims to have added 1.5 million subscriptions in India with a total connection base of 44 million across its 6 telecom circles in the quarter ended March. Last quarter, it had 42.6 million subscribers across its 6 circles.

The company is currently offering 1GB of 4G data for Rs 149 and 2GB for Rs 249, about half the price of others. However it could face competition from other 4G providers like Vodafone, Airtel, and from Reliance Jio, once it rolls out commercial operations.

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