Telenor has ruled out its participation in India’s mammoth upcoming spectrum auction, prompting speculation that it may be planning to leave the market.
The Norwegian firmed revealed its intention during its second quarter results statement, noting that it had “decided not to participate in the upcoming spectrum auction, as we believe the proposed spectrum prices do not give an acceptable level of return”.
Currently expected to be held in September, the auction will be India’s largest ever. The premium 700MHz band will be available for bidding, and in anticipation of high bids, reports are indicating that the auction could raise as much as INR5.6 trillion ($85 billion).
One of the market’s largest operators, Vodafone India, has reportedly been considering an acquisition of Telenor’s Indian operators. The Norwegian firm abstaining from the auction will certainly add weight to this rumour. Telenor has 54 million mobile connections but no mobile internet coverage for either 3G or 4G.
Telenor CEO Sigve Brekke has noted that the firm is looking to secure the long-term future of its Indian unit “as soon as possible”, noting that “we will be disciplined on capex”. He stated: “We need more spectrum in India to be able to compete in the data segment and that solution we don’t have. That is why I am saying we need to consider all different options. What those options may be in a very dynamic market, I don’t want to speculate on what.”
Telenor’s financial report saw its net income plummet by almost two thirds to NOK1.11 billion ($130 million), compared to NOK3.5 billion a year ago. While falling device sales were a significant factor, the firm also faced an impairment charge over VimpelCom’s involvement in a bribery scandal in Uzbekistan.
The Norwegian operator is looking to shift its 33% stake in the Russian firm, but notes that “VimpelCom will continue to be classified as an associated company, until it is highly probable that a sale within 12 months will occur”.
Despite the fall in income, Telenor’s Q2 revenue was up year-on-year from NOK31.4 billion to NOK32.5 billion, with Brekke placing greater emphasis on increasing the company’s data capabilities across its operations, noting that Telenor had seen “encouraging signs of data monetisation in several of our markets. Digitising our core business, combined with efficiency measures, will be key to drive value creation going forward”.
In India, Telenor’s Q2 revenue grew 23% compared to last year, with Bangladesh and Pakistan – where it offers 3G services - showing a similar gain.
