Telenor open to mergers and acquisitions, finds Indian laws discouraging
October, 16th 2014
A top executive of Norwegian telecom firm Telenor has said the company is open to merger and acquisitions in India but the country's rules don't encourage it. Telenor's chief executive Jon Fredrik Baksaas, who is in India to review the progress of the company's Indian unit, Uninor, also urged the government to release more spectrum.
"In India, only a portion of the available spectrum has been distributed for commercial purposes, and this is rare if you compare it to other countries, which are distributing more or less at 100% for commercial usage. This (distribution of more spectrum) needs to be speeded up," Baksaas told ET during an exclusive interaction.
He added that the Indian government should not charge hefty upfront payments from the industry on account of airwaves but should allow the industry to grow, which would bring higher profitability and, in turn, mean more taxes for the government.
India's telecom sector is one of the most regulated industries where cost of airwaves is far higher than that for its international counterparts. The industry has been demanding lower base prices for airwaves, such that it can take telephony and data services to people countrywide.
Uninor provides 2G services in its six circles but needs to take a decision soon on how to address the issue of data growth in India, given that it doesn't have 3G spectrum and 4G is still a long way from a broader adoption.
"We need to address the transition to data...We are not there as of today," Baksaas said, indicating that the company could try to win spectrum in the 900 Mhz band in the upcoming auctions.
He, however, said competition would be tough as incumbent operators would bid aggressively to buy back their bandwidth, which will be put up for sale as permits are expiring.
Telenor bought liberalised spectrum in the 1,800 Mhz band, which can be used for offering highspeed wireless internet services on 4G. However, the ecosystem is yet to develop and at the same time other carriers are expanding their 3G networks. Uninor doesn't have 900 Mhz spectrum, which can be used for 3G services.
"It's tough to leapfrog from 2G to 4G. In theory, it could be done, but remember, 2G handsets need to be exchanged for 4G handsets. It happens over a period of time," Baksaas said.
He added that the Indian arm of Telenor is a long-term investor in India and will explore all options for growth here. Baksaas said he hoped 50% of Telenor's customer base by 2017 would be active internet users.
The Telenor chief said that in the longer term, there are three very strong players in the Indian telecom market, referring to Bharti Airtel, Vodafone and Idea Cellular. "Our ambition is to climb underneath them from where we are in our six circles in the medium term," he said.
On M&A, Baksaas said some discussions had happened in India but nothing has materialised. "There are probably still details to be addressed (in the M&A) policy.
And those details, if they aren't clarified, you won't see consolidation." Having begun operations in 2009, Baksaas said the company was "at ease in terms of doing business" in India, compared to about five years ago.
"The new government has brought in a lot of enthusiasm for international investors like us and we would like the government to follow up with concrete actions, including making more spectrum available which will help us cater to Indian citizens at affordable prices and help fulfill the Digital India project," he said.