Telenor to skip upcoming spectrum auction

Telecom operator Telenor, which is looking at exiting the India market, said on Tuesday it will not participate in the upcoming spectrum auction, but will continue to operate for some more time to lower exit costs and to find alternatives for its business here.

The company will also evaluate the impact of Reliance Jio’s commercial launch in India before deciding on its future. Reliance Jio’s offering in India is expected to disrupt the market, and as a reaction telecom majors have already started slashing mobile internet rates. Telenor India offers GSM-based services in six out of 22 circles in the country. The company has operations in Andhra Pradesh, Uttar Pradesh East and West, Bihar, Gujarat, and Maharashtra.

“Long term presence in India is dependent on our ability to secure additional spectrum,” Telenor Group CEO Sigve Brekke said,and added, “The reason we are not participating is the price levels that regulator has proposed. In the meantime, we will fight to take our market share and take our fair share of market growth.” Telenor India has about 4.4 crore subscribers on its network, and it is looking at targeting subscribers with low spending capacity.

The Telecom Regulatory Authority of India (TRAI) has recommended Rs. 11,485 crore per MHz base price for auction of spectrum in 700MHz band, the highest ever for any radio wave and the same has been accepted by the government. Out of total spectrum value of Rs. 5.66 lakh crores, the quantum of airwaves frequency in 700MHz band being put for auction alone constitutes about Rs. 4 lakh crores.

Telenor’s operating loss widened in India to about Rs. 105 crore in the second quarter ended June 2016, compared with Rs. 71.3 crore a year ago. The company’s losses expanded as it wrote off certain assets in India. However, the company’s total revenue grew by about 12.73 per cent to Rs. 1,230 crore, from Rs. 1,080 crore during the same period last year.

“If you look at accounting point of view, you apply fair value less cost of disposable assets related to recording value in India. This led to an impairment loss of NOK 2.3 billion in the first quarter and the recoverable amount of intangible assets which are still in the books is NOK 4.4 billion,” Brekke explained.