Telenor India, with spectrum in seven circles and operating in six zones with airwaves only in the 1800 Mhz band, may be exiting the Indian telecom market. Vodafone is the front-runner to buy Telenor India, says media reports.
The shares of Telenor SA soared by 2.3 percent as the reports of a possible acquisition were out.
The company is said to expect a sum in the range of $1.6 billion to $1.8 billion for its Indian business, though analyst predictions are around $1 billion.
The telecoms though sidelined to a small user base in India at Andhra Pradesh, Uttar Pradesh East and West, Bihar, Gujarat and Maharashtra, has a significant market over Asia, particularly in Pakistan, Bangladesh and Myanmar.
The company has invested over $3 billion since its entry in 2008 in the country, but failed to make progress and lost all its Indian licenses in the 2G scam. Later it acquired bandwidth in six circles, and bought out its Indian partner following regulations.
This February, Telenor had revealed plans to acquire more spectrum in India, either via trading or an auction, but failed to do so owing to the expensive price tag on it.
Telenor CEO Sigve Brekke later conveyed in April that there will be a need to “consider other alternatives” if acquiring spectrum is not possible.
The Norwegian state telecoms has a 5 percent share in the Indian mobile market as per Telecom Regulatory Authority of India (TRAI) reports in April.
The operating loss of Telenor India increased to NOK 3100 million in the first quarter of 2016 in comparison to NOK 159 million in the previous year quarter.
The carrier ranks eighth in the country led by Bharti Airtel, Vodafone India and Idea Cellular, at a time when the Indian market is said to have the maximum potential for growth in the telecom sector.
Telenor India added 250,000 subscribers to its user base in February, in comparison to 2.9 million additions by Bharti Airtel and more than 2 million and 1.5 million additions by Vodafone and Idea, respectively.
Vodafone has been looking for spectrum acquisition for some time now, in order to compete with the upcoming 4G markets of Airtel, Idea Cellular and Reliance Jio. Vodafone India has a 198 million customer base in April, with a market share of 19 percent, says TRAI.
With auctions for 700 MHz, 800 MHz, 1800 MHz, 2.1 GHz, 2.3 GHz and 2.5 GHz bands up soon, all Indian telecoms are gearing up in order to achieve more spectrum for the upcoming 4G and 5G deployments.
Reports from ET convey that Vodafone does not want to wait till then and will hence be trying to acquire Telenor India.
The added spectrum will do benefit to the leading telecoms. It should also be noted that Telenor has a low ARPU, which will not contribute much to Vodafone India once acquired.
Vodafone may go for a full acquisition as well as spectrum trading or sharing arrangements.
Telenor, in the meantime, is undergoing a network modernization of 10,000 network sites in all operating circles, as a course of its network modernization program initiated in 2015.
The company aims to complete the swap of its remaining sites by Q1 of 2017 and has offered LTE mobile broadband on a narrow band of spectrum in Varanasi. But analysts have been skeptical about the move as ideally LTE is deployed over a minimum of 5 MHz of contiguous spectrum.
Also, Telenor India does not have 3G and 4G networks and relies solely on its 2G customers, which is believed to add to its losses.