Norwegian telecoms incumbent Telenor has announced an ambitious target of being the second- or third-biggest player in regions of India home to about half its population.
It also says it will maintain its peak funding target of INR155 billion ($2.85 billion), aims to break even by the end of 2013 and is targeting an equity return of more than 25% on new money invested in India.
The company previously operated under the Uninor brand in a joint venture with Indian real-estate business Unitech (Gurgaon, India), but had its spectrum revoked by Indian authorities in February – along with several other operators – after the Supreme Court found evidence of corruption during the licensing process in 2008.
“The decision by India’s Supreme Court in February to revoke all our licenses took the entire industry by surprise and we were faced with an intense period of uncertainty for the next 10 months,’’ said Jon Fredrik Baksaas, the chief executive and president of Telenor (Fornebu, Norway).
India’s government recently auctioned the airwaves it had seized, however, and Telenor won licenses allowing it to continue operations in six of the country’s most populous ‘circles’, or regions.
After announcing that Lakshdeep Investments & Finance (Mumbai, India) would replace Unitech as its new Indian partner, it spent INR40.2 billion on 5MHz of paired spectrum in each of Uttar Pradesh East, Uttar Pradesh West, Andhra Pradesh, Gujarat and Maharashtra.
Telenor failed to renew licenses in the important markets of Mumbai, Kolkata and West Bengal, but quitting operations in those areas may help it stick to its funding limit.
The operator is confident of growing market share because its “cost per minute in India is already below incumbents’”, but it has only just broken even in Uttar Pradesh East three years after launching services.
Telenor reckons it will break even in Gujarat and Maharashtra in early 2013, with the remaining circles becoming profitable later in the year.
Analysts think Telenor’s funding targets look realistic, but seem disappointed the operator has made no mention of 3G.
Due to fierce price competition, many of India’s operators survive on razor-thin margins and its biggest service providers have reported dwindling profits for several quarters.
“We are ready to move forward in India,” said Sigve Brekke, the managing director of Telenor’s Indian operations. “We will continue to position our brand as the best price on local voice, to drive subscriber growth and increase customer loyalty in India as part of our continuous efforts of cost efficiency.”