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Norwegian telco’s CEO hints at Indian exit if his company cannot secure more frequencies; Telenor writes down value of Indian unit in Q1.
Telenor this week lent credence to reports that it is considering pulling out of the Indian mobile market when CEO Sigve Brekke made it clear that his company needs to secure more spectrum to remain competitive and is considering its options for the future should it fail to do so.
"The long-term presence in India is dependent on our ability to secure additional spectrum," Brekke said, speaking on the Norwegian incumbent’s first quarter results call.
As it stands, Telenor is unable to compete in the growing mobile data market, he explained.
"We need to find a solution and pay a price we can justify," Brekke said. "That’s why we are looking at the upcoming auction, that’s why we are looking at potential spectrum-trading opportunities," he said, although he declined to provide any further information on what a justifiable price might be.
"We need to be pragmatic, to consider other alternatives," if the acquisition of more spectrum turns out to be impossible, he said.
India is planning a multi-band spectrum auction this summer, although details are yet to be fully finalised.
Spectrum-trading in the country is now an option and a couple of early deals have been announced although they have yet to be officially approved: Bharti Airtel recently agreed to acquire 1800-MHz spectrum from Videocon in six circles, and 2.3-GHz frequencies from Aircel in eight.
The country is also witnessing the beginnings of consolidation: Reliance Communications is currently holding exclusive talks with Aircel with a view to brokering a deal, for example.
"Reflecting on the consequences of this [spectrum-trading and consolidation] we have found it prudent to make [an] impairment," Telenor’s acting CFO Morten Karlsen Sorby said.
Telenor adjusted down the valuation of its Indian business by 2.9 billion kroner (€314 million) in Q1, driving it to an operating loss of NOK3.1 billion in India.
Revenues at Telenor India grew by 7%, in local currency terms, to NOK1.52 billion, but ARPU fell by 8% and customer additions were slower than in the year-ago quarter at 1.52 million, leaving the firm with a 44.15 million-strong base across its six operating circles at the end of March.
In terms of revenue share, Telenor has "a clear number four position," in those circles, Brekke said.
However, "we are in India to make money. We are in India to have a return," he said. If Telenor cannot boost its spectrum position, via auction or trading deals, "then we need to look at other alternatives," he said.
