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Business News/ Companies / Telenor threatens to exit India, runs up huge operating loss
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Telenor threatens to exit India, runs up huge operating loss

Telenor posts operating loss of 3,100 million Norwegian Krone (around Rs2,530 crore) for its Indian telecom business

The company’s average revenue per user fell by 8% to Rs90. Photo: ReutersPremium
The company’s average revenue per user fell by 8% to Rs90. Photo: Reuters

Visakhapatnam: Posting a huge operating loss of 3,100 million Norwegian Krone (around 2,530 crore) for its Indian telecom business, Telenor on Wednesday threatened to exit India if it fails to procure spectrum at reasonable rates. At the same time, the Indian arm of Telenor looks to expand 4G footprint and said it would offer the lowest tariff for these services as part of its affordable pricing strategy.

While announcing financial results in Norway, Telenor global chief executive Sigve Brekke said, “Long term presence in India is dependent on our ability to secure additional spectrum. We are not able to compete with the current spectrum portfolio we have in growing data market."

Brekke said that the company is looking at a solution to procure spectrum and “a price that we can justify". “We are looking at upcoming auctions and also looking at potential trading options... Need to be pragmatic to consider other alternatives, if that turns out not to be a possible to find value focused solutions. We are looking at all sustainable business model option," Brekke said.

Telenor India offer CDMA-based services in six out of 22 circles in the country. Telecom Regulatory Authority of India (Trai) has recommended 11,485 crore per Mhz as a base price for the spectrum auction in the 700 Mhz band, the highest ever for any radiowave. “We are in India to make money, if we don’t see returns, then we need to look at other alternatives," Telenor chief financial officer Morten Karlsen Sorby said.

Telenor India’s operating loss widened to NOK 3,100 million in the January-March quarter of 2016 compared to NOK 159 million in the same quarter a year ago. The revenue during the reported quarter, however, rose by about 11% to NOK 1,306 million compared to NOK 1,171 million a year ago. “Operating profit was negatively impacted by NOK 2.9 billion in impairment and write-down," Telenor said.

The company calculated impairment charges by applying “fair value less cost of disposal when determining recoverable amount of Telenor India." An impairment loss of NOK 2.3 billion has been recognized in the first quarter of 2016, of which NOK 1.4 billion mainly relates to network equipment and the remaining NOK 0.9 billion mainly relates to spectrum. The recoverable amount of tangible and intangible assets in Telenor India after impairment is NOK 4.5 billion, as per the company’s calculation.

The company’s average revenue per user in local currency fell by 8% to 90. The decline was primarily driven by lower voice consumption. “Telenor India is a mass market operator. We are committed to providing most affordable services," Telenor India Communications chief executive officer Sharad Mehrotra said after launching pilot 4G service here.

Telenor, which has already launched 4G services in Varanasi, intends to roll out high speed services in six to eight cities across six circles in the next 45-60 days. The company has operations in Andhra Pradesh, Uttar Pradesh East and West, Bihar, Gujarat and Maharashtra and had 51.6 million customers on its network in February.

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Published: 27 Apr 2016, 03:02 PM IST
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