Telenor not to participate in upcoming spectrum auction in India

NEW DELHI: Norway-based Telenor Group's Indian telecom arm Telenor India has decided not to participate in upcoming spectrum auction  in India as the reserve prices are too high compared to the possible return on investment.

Recently, India’s telecom minister Manoj Sinha said that the next round of spectrum auction for telecom operators will be start by end of September this year.

Before available for sale, the Prime Minister Narendra Modi-led Cabinet has cleared the way for mega auction of spectrum in which airwaves worth Rs 5.66 lakh crore will be put for sale in country.

After approval, more than 2300 MHz spectrum is available for auction across 7 bands and the 7 bands are : 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands.

"We recognize the significant operational and financial improvement delivered by our Indian operation. We have however, after thorough consideration, decided not to participate in the upcoming spectrum auction, as we believe the proposed spectrum prices do not give an acceptable level of return. We will continue our efforts to meet customer demands and grow the business based on the current spectrum holding. As we evaluate our options in India, we will be disciplined on capex," said Sigve Brekkeat, Telenor Group Chief Executive Officer Sigve Brekkeat while announcing company's second quarter results.

"We are pleased to deliver strong results for the second quarter with an EBITDA* of NOK 11.5 billion. The organic EBITDA growth exceeded 6 per cent, while revenues were impacted by low device sales. We have taken several initiatives to further strengthen our data position across our footprint, and we see encouraging signs of data monetization in several of our markets. Digitizing our core business, combined with efficiency measures, will be key to drive value creation going forward,'' he added.

Second quarter revenues were NOK 32.5 billion. Organic mobile subscription and traffic revenues were up by 4%, while total revenues were impacted by lower handset sales. EBITDA* was NOK 11.5 billion and the EBITDA margin improved by more than one percentage point to 35.5%. EBITDA* less capex (excl. licences) was NOK 6.3 billion. 3.4 million mobile subscribers were added during the quarter, taking the total mobile customer base to 211 million.

"In Norway, Denmark and Sweden, we have removed roaming barriers by introducing new mobile offerings enabling our customers to use their voice and data packages while travelling within the EU. While this is impacting our roaming revenues and costs in the short term, we see solid uptake on our new tariffs. The number of new high-speed broadband connections is also showing encouraging trends, both in Sweden and Norway this quarter. To maintain our superior position in Norway, we continue investing significantly in fixed and mobile networks, and we expect to spend more than NOK 4 billion also in 2016," said Brekkeat.

I"n Bangladesh, Pakistan and India the strong revenue growth continued during the quarter. We have secured additional spectrum in Pakistan and completed a major 3G network expansion in Bangladesh, facilitating continued growth in data consumption. While market conditions remain challenging in Thailand and Malaysia, we have succeeded in the contract segment. Both dtac and Digi reported strong contract revenue growth and improving EBITDA margins this quarter," according to Brekkeat.

"In Myanmar, our investments remain high to secure service quality to our 17 million customers and pave the way for further expansion and growth. The strong EBITDA* has already brought cash flow into positive terrain," he said.

"Based on the performance in the first half of 2016 and the outlook for the second half, we revise the financial guidance for 2016. We expect an organic revenue growth in the range of 1% to 2% and an improved EBITDA margin of around 35%. Our expectation for the capex to sales ratio, excluding licences, is lowered to around 17%," concluded Brekkeat.

Key Figures Telenor Group