Norwegian major will stick to offering affordable voice calls

Norway’s Telenor may have spent over Rs 4,000 crore to buy spectrum in the recently concluded auction but it does not plan to launch third generation services anytime soon. The company will stick to its strategy of offering affordable voice calls to the subscribers in the six circles where it won spectrum.

“We have succeeded this far by focusing on one thing alone – being the most affordable in local voice. In the six circles where we continue, real penetration on voice is still only 40 per cent. So, for now, this is what we will continue to do,” Glenn Mandelid, spokesperson for Telenor Group told Business Line.

Interestingly, the Government had fixed a high reserve price for the 1800 MHz spectrum band on the grounds that it would allow winners to offer any type of service. The current spectrum allocation in the 1800 MHz band is only for 2G services.

Clearly, operators are not attaching much value to the ‘liberalised’ spectrum.

When asked if Telenor would participate in the next round of auctions, Mandelid said, “For now, we have secured spectrum in six circles that together account for more than half of India’s population. Our focus is on ensuring a seamless transition of business to the new company and continuing services to our customers in these circles.”

Telenor has won 5 MHz of spectrum in Andhra Pradesh, Uttar Pradesh East, Uttar Pradesh West, Bihar, Gujarat and Maharashtra. With a total population of about 600 million people and an actual mobile phone customer penetration of just 40 per cent, these States represent a strong growth opportunity for Telenor Group. All Uninor assets in these circles, including customers, employees, partners and infrastructure will be seamlessly transferred to a new company and services will continue uninterrupted.

Telenor did not win spectrum in Mumbai, Kolkata and West Bengal. In these circles operations will cease.

Hobson’s choice for Idea

Idea Cellular, which won spectrum in seven circles, said it participated in the auction faced with a Hobson’s choice, which it may not have considered in a normal start-up situation. Four years after full-fledged operations in these service areas, events placed Idea Cellular in an unenviable situation where it could either continue operations or abandon the business in these circles. During this period, the company incurred Rs 5,100 crore expenditure in capital and start-up losses. It also made additional human investments of around 2,000 team members, 200,000 channel partners and eight million subscribers.

Himanshu Kapania, Managing Director, Idea Cellular, said, “The high reserve prices notwithstanding, the need and desire to ensure continuity of service to our subscribers was uppermost in our mind.”

(This article was published on November 15, 2012)
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