Telenor to launch in India Q309 and invest US$3.13 billion

Telenor plans to launch commercially in India in the third quarter of this year and raise its stake in GSM licensee Unitech Wireless to 74 per cent, the Oslo-based operator has revealed. It is also targeting eight per cent market share in India by 2018, and will invest NOK22 billion (US$3.13 billion) in the joint venture over the next five years.

Telenor believes it can replicate in India its success in other Asian countries – Pakistan, Bangladesh, Thailand and Malaysia – to gain eight per cent mobile market share by 2018, across the country of 1.14 billion people

Telenor signed an agreement in October last year to acquire 60 per cent of Unitech Wireless, with the transaction expected to close within Q109. Upon completion of the transaction, Telenor will gain management control of Unitech Wireless, will appoint four out of seven directors of the board and has the right to appoint the managing director. It will also make an application to the Foreign Investment Promotion Board (FIPB) to own up to 74 per cent of the subsidiary, with the approval process expected to take between two to six months.

Telenor is targeting pan-India market share of eight per cent by 2018, and expects lower than average market ARPU in the near term, but expects the ARPU to increase in the longer term.

However, it will face stiff competition from established players, with market leader Bharti Airtel having 25 per cent market share, followed by Reliance Communications with 19 per cent, Vodafone Essar 17 per cent, BSNL 12 per cent, Idea Cellular 10 per cent, Tata Indicom nine per cent, and Aircel six per cent. The country’s mobile penetration rate stands at 31 per cent across its population of 1.14 billion people, meaning approximately 800 million are still unconnected.

Unitech Wireless has Unified Access Service (UAS) licences valid for 20 years for all 22 telecoms circles in India, or 98 per cent population coverage, and has gained 4.4MHz of spectrum in all but one circle.

The operator’s strategy will focus on excellence in distribution – including one million pan-Indian retail points within three years, targeted offerings for different customer segments, a focus on customer lifecycle management, and a strong emphasis on network coverage and quality. It plans 60 per cent population coverage within one year of launch.

A key part of its strategy to quickly rollout its network and reduce CAPEX is an infrastructure sharing agreement signed with Wireless-TT Info Service Ltd – Tata Teleservices’ tower subsidiary – and Quippo Telecom Infrastructure Limited. The tower sharing agreement allows Unitech Wireless to mount its mobile network antennas onto existing towers owned by Tata and Quippo, as well as any new towers that are built. The two India tower companies are currently in the process of merging their businesses to become one of the country’s largest tower companies.

Telenor said the agreement covers approximately 40,000 sites, of which approximately 22,000 sites will be in place by April 2009. The remaining towers will be built in 2009 and 2010 in accordance with Unitech Wireless’ needs. The tower sharing and transmission agreements both have 20-year terms with options to extend the contracts for a subsequent 5-year period.