Today Telenor presents its updated plan for the company's operations in India, bringing a challenging year to an end.
(Fornebu, Norway -14 December) Telenor Group executives including CEO Jon Fredrik Baksaas and India Managing Director Sigve Brekke take to the stage at Fornebu today to share the company's strategic direction and financial objectives in India.
Today's update will delve into securing spectrum in six best-performing circles, breakeven targets and Telenor's cluster strategy and circle-by-circle approach. Telenor plans to bring the company to operating cash flow breakeven by the end of 2013 by executing its established strategy, while focusing on operational efficiency.
- Aims to be best in mass market distribution, best in servicing basic, best in low cost operations
- Confirms operating cash flow breakeven end of 2013
- Committed to INR 155 billion peak funding
- Targets above 25% equity return on new money invested in India
"The decision by India's Supreme Court in February to revoke all our licenses took the entire industry by surprise and we were faced with an intense period of uncertainty for the next 10 months,'' said Jon Fredrik Baksaas, Telenor Group Chief Executive Officer and President. "An extraordinary turnaround operation followed and very early on we left no doubt about our intentions to stay and secure our future operations in India. Telenor has a growth strategy and we consider India to be one of the world's biggest growth markets for many years to come."
India's future growth engine
The Indian operations already enjoy decent market positions in terms of subscriber and revenue market share in all six circles and plan to further improve this in the coming years by taking a number 2-3 position in the clusters where we are present. Telenor's cost per minute in India is already below incumbents'.
Telenor has the potential to reach every second person in India, after securing its license to operate in six telecom circles. These circles are home to more than 600 million people. The circles are among the most populous regions in the country and strong economic growth is expected to continue. The footprint also has the lowest mobile penetration in India; with real penetration estimated to around 40% at the end of 2012. This represents a significant growth opportunity in terms of acquiring new subscribers and there is significant room for growth in basic voice services.
Telenor announced last month that Uttar Pradesh East became its first circle to achieve break-even, three years after the launch. The company expects its remaining circles to begin achieving the break-even targets in the months to come and Gujarat and Maharashtra are expected to break even in early 2013.
Telenor has secured 5 MHz spectrum UP East, UP West, Bihar, Andhra Pradesh, Gujarat and Maharashtra in the recently concluded auctions. In combination with the planned business transfer from Uninor to a new entity, this allows Telenor's India operations to continue seamlessly in the new company for a period of 20 years.
"We are ready to move forward in India," said Sigve Brekke, Managing Director of Telenor's Indian operations. "We will continue to position our brand as the best price on local voice, to drive subscriber growth and increase customer loyalty in India as part of our continuous efforts of cost efficiency. Our operations are built around people, and it is the courage and strength of our employees that will drive our future growth and development and further broaden our distribution network. "