Telenor committed to India, despite growing losses

The Norwegian telecoms operator Telenor has denied analyst speculation that the company is planning to exit its loss-making venture in India. The company, which owns nearly 70 per cent of the Indian mobile operator Uninor, is reported to have racked up US$556 million in operating losses, prompting analysts to question the company's ability to become profitable in three years.

While Telenor has denied that it is under any pressure from investors to sell off its interest in Uninor and rethink plans to stick with its long-term plan for India, Uninor currently has less than 1 per cent market share in India's fiercely competitive mobile market.

Regardless of this, Telenor Group regional head Glenn Mandelid said, "Uninor's target is still to secure an 8 per cent market share by 2018 and become cash-flow positive in five years... We are committed to India and our investment in Uninor."

However, recent studies into the Indian tariff wars indicate that ARPUs have dropped significantly, making Telenor's earlier guidance irrelevant.

Uninor, which launched its first service in December 2009, now provides coverage to 13 regions in India. Some observers believe that consolidation will happen in the next 12 to 18 months among the 15 operators that presently provide mobile services in the country.

Earlier this year, Uninor accepted the resignation of Stein-Erik Vellan as MD, who was transferred back to a post within Telenor. Sigve Brekke, head of Telenor Asia Region, took over the CEO role at the company.

For more on this story:
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