Te­lenor Not Able to Com­pete in In­dia: CEO Sigve Brekke

Op­er­at­ing loss in March quar­ter stood at .₹ 2,530 cr, ARPU fell by 8% to .₹ 90

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

New Delhi: Nor­we­gian mo­bile car­rier Te­lenor said its In­dian unit booked an im­pair­ment charge of NOK 2.3 bil­lion (about .₹ 1,879 crore) in the quar­ter to March, lead­ing to the widen­ing of its op­er­at­ing loss in the coun­try and prompt­ing global CEO Sigve Brekke to say that the com­pany is “not able to com­pete” in In­dia with its cur­rent spec­trum port­fo­lio.

ET had on April 11 re­ported that Te­lenor may be look­ing to exit its In­dia tele­com busi­ness but hasn't been able to find a buyer so far. The Nor­we­gian telco has been pushed into a cor­ner, with no 3G or 4G ser­vices, hav­ing lim­ited data spec­trum and be­ing con­fined to a few pock­ets as ri­vals have be­come stronger and Re­liance Jio In­fo­comm pre­pares to launch op­er­a­tions. The im­pair­ment charge is 51.3% more than the com­pany’s first quar­ter rev­enue of NOK 1,520 mil­lion (.`1,227 crore). The com­pany on Wed­nes­day said op­er­at­ing loss for the quar­ter stood at NOK 3,100 mil­lion (.`2,530 crore) as against NOK 159 mil­lion in the year-ago quar­ter.

“As a con­se­quence of re­cent de­vel­op­ment in ob­served spec­trum trad­ing prices and up­dated as­sump­tions of con­trac­tual obli­ga­tions, Te­lenor recog­nised an im­pair­ment loss amount­ing to NOK 2.3 bil­lion re­lated to tan­gi­ble and in­tan­gi­ble as­sets in Te­lenor In­dia,” the com­pany said, adding that NOK 0.6 bil­lion in non-in­ter­est-bear­ing re­ceiv­ables have also been writ- ten down dur­ing the quar­ter.

An­nounc­ing the re­sults, Brekke said the com­pany’s long-term pres­ence in In­dia is de­pen­dent on its abil­ity to se­cure ad­di­tional spec­trum. “We are not able to com­pete with cur­rent spec­trum port­fo­lio we have in grow­ing data mar­ket,” he said, adding that the com­pany is look­ing at a so­lu­tion to pro­cure spec­trum and "a price that we can jus­tify". The com­pany, which has op­er­a­tions in Andhra Pradesh, Ut­tar Pradesh East and West, Bi­har, Gu­jarat and Ma­ha­rash­tra, is now look­ing at up­com­ing auc­tions be­sides ex­plor­ing po­ten­tial trad­ing op­tions.

Dur­ing the quar­ter, Te­lenor’s In­dian op­er­a­tion added 1.5 mil­lion sub­scrip­tions, while the sub­scrip­tion base was 15% higher than the same quar­ter last year. The com­pany’s av­er­age rev­enue per user (Arpu) in lo­cal cur­rency fell by 8% to .₹ 90, pri­mar­ily driven by lower voice con­sump­tion and the im­pact from re­duced mo­bile ter­mi­na­tion rate, partly com­pen­sated by increased data us­age.

Te­lenor said rev­enues in lo­cal cur­rency increased 7% over the same quar­ter last year, while sub­scrip­tion and traf­fic rev­enues in lo­cal cur­rency increased 9%. The com­pany’s over­all In­dia rev­enue stood at NOK 1,520 mil­lion, up from NOK 1,383 mil­lion a year ear­lier.

Cap­i­tal ex­pen­di­ture (capex) also increased in the quar­ter to NOK 409 mil­lion from NOK 109 mil­lion a year ago. The telco said the net­work mod­erni­sa­tion ini­ti­ated in July-Septem­ber 2015 con­tin­ued in the quar­ter to March 2016 and im­pacted the cap­i­tal ex­pen­di­ture for the quar­ter as well as ac­cel­er­ated de­pre­ci­a­tions of cur­rent net­work as­set. EBITDA im­proved as re­sult of the rev­enue growth and pos­i­tive ef­fects from the ongoing net­work mod­erni­sa­tion pro­gramme, in­clud­ing one-off pos­i­tive im­pact of NOK 26 mil­lion re­lated to set­tle­ments with var­i­ous ven­dors. Te­lenor In­dia, which of­fers nar­row-band 4G ser­vices in Varanasi un­der a pi­lot ser­vice, said that it will of­fer low­est tar­iff in the 4G seg­ment.

Dur­ing the quar­ter, Te­lenor’s In­dian op­er­a­tion added 1.5 mil­lion sub­scribers

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