Telenor expects financial break-even in India next year

November 30, 2012 - 5:27:22 am

NEW DELHI: Norway’s state-run telecom giant Telenor said yesterday that it expects to achieve financial break-even on its mobile operations in India by the end of 2013 following a tough year in the South Asian nation.

Telenor’s Indian unit Uninor said one of its telecom zones in the most populous state of Uttar Pradesh had already balanced its books, representing a big achievement in a growing but competitive and overcrowded market.

“We’ve had a bumpy ride but we’re very, very satisfied with our performance now,” Telenor chief executive Jon Fredrik Baksaas said here. “This achievement starts the countdown towards a profitable Uninor,” he said.

Telenor has been rebuilding its operations since its Indian unit was among eight mobile operators whose licences were cancelled by India’s Supreme Court earlier this year on grounds that a 2008 permit sale was under-priced.

Baksaas downplayed reports that Telenor, one of the world’s largest mobile operators, is in talks with local firm Tata Teleservices to combine operations and enlarge its footprint in India’s vast mobile phone market.

Tata Teleservices—part of the tea-to-steel Tata conglomerate—has licences to operate in all of India’s 22 mobile zones, making it an attractive partner for Telenor, analysts say. “Speculation is on every corner,” Baksaas said. “Right now, we’ve got a good structure and we’re on target to achieve overall break-even in 2013 so we have no further comment.”

While expansion would be addressed in coming years, the advantages of being a nationwide operator may be over-rated, he said. “It’s more important to be profitable in a more concentrated geography,” he said.

Telenor, which has more than 150 million customers globally, won back the right to operate in six cellular zones in an auction earlier this month after the Supreme Court cancelled its previous 13 permits awarded in 2008. Telenor’s six zones cover more than 50 percent of India’s population and have a mobile penetration of as low as 40 percent. It now has a subscriber base of around 30 million, down from 40 million before the ruling.

“This (area) is where the real future growth is happening,” Baksaas said, adding the company would focus more on voice rather than high-end data data services as it seeks to reach out to a broader range of customers.

Even if the court ruling leads to industry consolidation—there are more than a dozen operators who have pushed talk rates down to a cent or less a minute—competition would remain stiff and call rates low, he predicted. While Telenor has had a rough time it is keen to remain in the world’s second-largest wireless market by subscribers after China, he said.