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Telenor: Defining Moment
Surviving in India is going to be a challenge for Telenor as it has focused only on 2G spectrum and services
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Norwegian telecom major Telenor might be planning to end its Indian presence, suggest various media reports.
With no 3G and 4G services, the company is exploring all options to compete with other players who are constantly expanding their broadband network and services. The forthcoming launch of Mukesh Ambani-led Reliance Jio has further put their future in jeopardy.
Telenor partnered with Indian real estate major Unitech, way back in 2009 to enter the Indian market. However its pan-India license was cancelled in 2012 as part of 122 licenses cancellation because of 2G Scam. Currently the company is operating in just six circles (though it has with the strategy of offering the cheapest connectivity.
The company has invested around $3 billion in Indian operations and hopes to get valuation of around $1.6-1.8 billion. Telenor has a significant presence in South East Asia, being a major player in several countries such as Pakistan, Bangladesh, Thailand, Malaysia and Myanmar.
It is also the only service provider which wanted 700Mhz spectrum auction to take place at the earliest. This is mainly because the company was not successful in procuring any spectrum in the last auction. It will be extremely difficult for it to survive if the company is unable to offer 3G and 4G services to its subscribers. It further might find the going tough with the imminent launch of Reliance Jio's 4G services.
Surviving in India is going to be a challenge for Telenor as it has focused only on 2G spectrum and services. The client base of the company also comprises of very low ARPU users. As the market increasingly becomes data centric subscribers might be forced to move away from Telenor.
What might be further irking the company is that the other smaller players, such as MTS India, Videocon and Aircel have found buyers while Telenor remains without a suitor. Reliance Communications acquired MTS India, while Airtel acquired spectrum assets of Videocon and Aircel.
However, the company has been making investment to upgrade its network. Telenor has also started a pilot to offer 4G in Varanasi. Telenor deployed Huawei's lean GSM technology for refarming its 1800Mhz spectrum for rolling out 4G/LTE.
Some time back the company was in news for merger talks with Tata Teleservices but they were not successful. The company would either need to procure spectrum to be able to offer 3G or 4G services to their subscribers or it might need to find a buyer soon, so it can exit the market. If Telenor procures spectrum in the forthcoming auction in July this year, it can be a game changer for the company.
Either way the next few months are going to be critical for the company as they are going to define its future in the country.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.