Macau: Asia’s second largest foreign telecoms operator expects a soon-to-be-launched Indian business to turn in an operating profit three years after its start, as the Norwegian firm muscles deeper into the region with growth slowing elsewhere.
Telenor ASA still intends to push a controversial rights issue to bankroll a $1.1 billion (Rs5,467 crore) deal for a 60% stake in India’s Unitech Wireless Ltd, but was considering other options, Jon Fredrik Baksaas, president and CEO of Telenor, said at a mobile forum in Macau.
Telenor, which vies with Swedish-Finnish TeliaSonera AB and Vodafone Group Plc. globally, plans to issue 12 billion crowns ($1.8 billion) in shares, despite opposition from shareholders.
Optimistic: Telenor’s president and CEO Jon Fredrik Baksaas. Xabier Mikel Laburu / Bloomberg
“We have nothing new to add. The viewpoints of our shareholders are coming forward and we are having a look at that,” Baksaas said.
Media reports have said the company is considering alternatives such as a dividend cut or sale of assets.
The chief executive added that the firm’s 62%-owned Grameenphone, Bangladesh’s top mobile operator, was still on track to float shares in the first quarter of 2009. Grameenphone said this month it had more than halved a planned share sale to $125 million due to a sharp downturn in global markets.
Although the chief executive expressed optimism over the Indian operation, which is expected to be launched in 2009, JPMorgan has warned the company’s expansion into India would come at a high cost.
“Despite Telenor’s belief that the move to India makes strategic sense, we estimate it will destroy $2 billion of value and give earnings dilution of greater than 30% in the near term,” JPMorgan said in a November report. But Baksaas said telecom was a long-term business. “It took us more than 10 years to build a customer base in Bangladesh of more than 20 million customers...where analysts said it was impossible to run successful mobile operations,” he said.
Telenor has expanded its business to Asia with operations in Pakistan, Malaysia, Thailand and Bangladesh.