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
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