![](http://www.konnectworldwide.com/wp-content/uploads/2016/03/TEL_h_pos_3D_4cp_200mm.jpg)
NEW DELHI: Telenor has decided against participating in the upcoming spectrum sale in India, signalling the Norwegian mobile phone operator’s clear intent of exiting a market where it has been making losses and has struggled to expand operations.
The Nordic mobile carrier has “after thorough consideration, decided not to participate in the upcoming spectrum auction (in India), as we believe the proposed spectrum prices do not give an acceptable level of return,” Sigve Brekke, CEO at Telenor Group, said in a statement Tuesday, shortly after the announcement of second quarter results ended June 30.
Brekke said the decision was regardless of “the significant operational and financial improvement delivered by our Indian operation”.
Telenor India currently has 4G airwaves in the 1800 Mhz band in seven circles but offers 2G services in six of them – Andhra Pradesh, Uttar Pradesh East and West, Bihar, Gujarat and Maharashtra. It hasn’t yet started services in Assam.
Now, it’s clear that it won’t participate in the next spectrum auctions, while it hasn’t been able to secure any additional bandwidth through any spectrum trading or sharing deals, limiting its options for adding to its comparatively sparse spectrum pool.
While announcing the March quarter results, Telenor had said it may leave India unless it was able to secure additional capacity for its networks at a reasonable cost. It had said that long term presence in India was dependent on its ability to secure additional bandwidth.
The government is planning a mega-spectrum auction likely in September in which a record quantity of airwaves, including those in the coveted 700 Mhz band, will be up for the sale. Through Telenor had backed the sale of the 700 Mhz airwaves, the base price of Rs 11,485 crore per Mhz base has been termed very expensive by the industry. Global telecom industry body GSMA said the total value of spectrum auction at base price of Rs5.66 lakh crore is more than 20 times the annual free cash flow of the entire mobile industry in India and almost double the cost of all spectrum investments to date in the country.
The Telenor CEO Tuesday added the company would, however, continue its efforts to meet customer demands and grow the India business based on its current spectrum holding. “As we evaluate our options in India, we will be disciplined on capex”.
Brekke’s comments come at a time when the country’s No 2 carrier, Vodafone has reportedly emerged the frontrunner to buy out Telenor’s India arm. ET had in its edition dated July 6 reported that Telenor’s spectrum — in the 1800 MHz band that can be used to carry 4G but currently being used to offer 2G by Telenor India — is being valued at roughly $1 billion (Rs 6,800 crore).
Telenor has been pushed into a corner in India, with no 3G or 4G services, thanks to its very limited data spectrum holdings, and also being confined to just a few pockets, especially when incumbent carriers such as Bharti Airtel, Vodafone India and Idea Cellular have grown stronger as they prepare to take on heavyweight 4G entrant, Reliance Jio Infocomm, later this year.
The telco’s Indian unit earlier booked an impairment charge of NOK 2.3 billion (about Rs 1,879 crore) related to tangible and intangible assets, besides writing down NOK 0.6 billion in non-interest-bearing receivables in the quarter to March.
For the second quarter, Telenor India’s operating loss widened to NOK 132 million (about Rs 105 crore) compared with NOK 90 million (Rs 71.3 crore) it posted a year ago.
Total revenue, however, grew by about 13%, but average revenue per user, a key operational parameter, in local currency fell by 2% to INR 93, due mainly to lower voice consumption, partly compensated by increased data usage.
The company’s India experience has been fraught with disappointment, given that it has invested over $3 billion since 2008-09 in trying to build a business in the country, now the world’s fastest-growing mobile phone market. After losing all its India licences in 2012, Telenor sought to fight back by buying back airwaves in seven circles in subsequent auctions but hasn’t been able to make much headway.
Experts said its reluctance to buy 3G or more 4G spectrum beyond a certain price with an eye toward profitability meant that after eight years, it is still a relatively small regional player with its 2G-only operations having just over 5% of subscriber share and much lesser revenue market share.