Telenor threatens to exit from India

Posting a huge operating loss of 3,100 million Norwegian Krone (around Rs 2,530 crore) for its Indian telecom business, Telenor on Wednesday hinted at exiting India if it fails to procure spectrum at reasonable rates.

At the same time, the Indian arm of Telenor looks to expand 4G footprint and said that it would offer the lowest tariff for these services as part of its affordable pricing strategy.

While announcing financial results in Norway, Telenor global CEO Sigve Brekke said, “Long term presence in India is dependent on our ability to secure additional spectrum. We are not able to compete with current spectrum portfolio we have in growing data market.”

Mr Brekke said that company is looking at solution to procure spectrum and “a price that we can justify”.

“We are looking at upcoming auctions and also looking at potential trading options... We need to be pragmatic to consider other alternatives to find value focused solutions. We are looking at all sustainable business model options,” he said.

Telenor India offers GSM-based services in six out of 22 circles in the country. Trai has recommended Rs 11,485 crore base price for auction of spectrum in 700 Mhz band, the highest ever for any radiowave.

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

The operating loss of Telenor India has widened to NOK 3100 million in the fourth quarter of fiscal 2016 compared to NOK 159 million in the same quarter a year ago.

The revenue during the quarter under review, however, rose by about 11 per cent to NOK 1306 million compared to NOK 1171 million a year ago. “Operating profit was negatively impacted by NOK 2.9 billion in impairment and write-down,” Telenor said.

The company’s average revenue per user in local currency fell by eight per cent to Rs 90. The decline was primarily driven by lower voice consumption.

The company, which launched its pilot 4G service here, said that it will offer lowest tariff in high-speed mobile segment in line with its brand positioning of ‘sabse sasta’ (most affordable).

“Telenor India is a mass market operator. We are committed to providing most affordable services. We will continue to maintain our sabse sasta position. That’s why it is important for us to venture into narrow-band LTE (4G),” Telenor India CEO Sharad Mehrotra said.

Telenor already offers narrow-band 4G service in Varanasi where the company, Mr Mehrotra said, is offering an average download speed of 2 megabit per second.

The company is offering 1GB of 4G data for Rs 149 and 2GB for Rs 249, about half the price of others. But the catch is telenor competitors pro-mise full-fledged 4G service, with a higher speed.

Mehrotra saw competition with existing players on the cost front and entry of Reliance Jio as major challenges.

“When we entered India, we started as the 12th or 13th operator in the country. Today, we are number four in terms of customer and revenue market share in six circles where we operate. This talks about acceptability of Telenor in India,” he said.