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Uninor to scale down operations in 4 circles

Uninor to scale down operations in 4 circles

New Delhi: Norway-based telecom company Telenor ASA’s India joint venture Uninor has decided to scale down operations in four of the 13 zones in which it offers services, attempting to strengthen its finances and operations in preparation for the coming auction of 2G spectrum.

Simultaneously, it will strengthen its operations in Uttar Pradesh-East, Uttar Pradesh-West, Bihar and Jharkhand, Kolkata, West Bengal, Andhra Pradesh, Mumbai, Maharashtra and Goa, and Gujarat, the company said.

“This will place the company in a stronger financial and operational position to enter the auctions from, rules permitting," it said.

Uninor is a joint venture between real estate company Unitech Ltd and Telenor, which holds a 67.7% stake. The telco is one of nine operators that had their collective 122 telecom licences and 2G spectrum cancelled by a 2 February Supreme Court verdict.

The apex court ordered the government to auction the freed-up spectrum. This is expected to take place towards the end of September. As per the latest court order, the government must conclude the auction by 31 August and cancel the licences of the nine telcos by 7 September.

Uninor will continue to maintain a smaller network and remain operational in the four telecom circles where it plans to scale down operations.

Around 400 employees will be affected. “Uninor will evaluate possibilities of relocating some of the employees to other Uninor circles and also provide assistance in securing employment outside the company," Uninor said.

Customers in the four circles will be given 30 days’ notice before the scale-down starts. The telco will also stop signing up new subscribers in the four circles with immediate effect.

The telco has 6.8 million customers in these circles, of which 46% are referred to as active subscribers, or those that have used the telco’s network in a 30-day period.

“As things stand today, we do not foresee the need for any major changes after this in our circles. We plan to use the remaining months to aggressively build operations in these nine circles. Rules permitting, we will enter the auctions fighting fit," said Sigve Brekke, managing director of Uninor.

Telenor welcomed Uninor’s decision.

“Since 2 February, Telenor Group has continued to single-handedly provide financial backing to Uninor in the belief of an early resolution. However, with no sight of either auction rules or dates six months later, we support Uninor in taking this financially prudent decision. Telenor Group will continue to extend funding support to Uninor with its focus on nine commercial circles and urges the Indian government to provide clarity on the auction policy at the earliest," said Jon Fredrik Baksaas, president and CEO, Telenor Group.

The Indian joint venture has been able to cut down its operating loss on the back of increased subscriber additions, Telenor said in its earnings report for the quarter ended June.

Uninor registered an operating loss of 619 million Norwegian kroners (NOK), or around 570 crore today, in the quarter, against 1.2 billion NOK in the year-ago period, Telenor said in a statement.

The telco posted a 48.2% jump in revenue to 1.03 billion NOK in the quarter under review. Uninor added 2.2 million new subscribers during the period, taking the total base to 33.7 million.

shauvik.g@livemint.com

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