It started with cancellation of all of its telecom licenses in India by the Supreme Court, followed by increasing tension with estranged joint venture partner Unitech and now the company's inability to win back spectrum in as many as seven telecom circles where it had already rolled out operations.
Telecom sector, as a whole, has seen prolonged uncertainty. While several other global players like Etisalat and Bahrain Telecom have decided to walk way, Telenor has refused to hang up on India and has infact reported profits in UP (East) circle.
In an interview to CNBC-TV18's Malvika Jain, Jon Fredrik Baksaas, chief executive officer and Sigve Brekke, MD, Telenor speak about the company's journey in India so far and the road ahead.
Baksaas says India will grow for the next 20 years. "The Indian economy is a big economy on the move. The basic of telecom is that telecom enables economic development at large in the society. So, in every small individual, up against big organisations, they need modern telecommunications. That is what Telenor and Uninor is about. We are there to help our customers to get the full benefit of modern communications," he elaborates.
Also read: 2G spectrum was auctioned in all service areas, says goverment
Below is the edited transcript of his interview on CNBC-TV18.
Q: Since February 2, when the Supreme Court decided to cancel your telecom licenses, at each investor conference, you have been advised to quit India. Why have you been so unrelenting? Why have you decided to stay back?
A: First of all, I don't think it has been that strong as you describe it in your question. But it is also true that, at the initial phase in 2008-2009, when the financial crisis in the global economy came in as a big Tsunami, the critics were very high. But later on Uninor has had good performance.
Q: But it was never a stable journey for Uninor in India, right?
A: That is true. The event of February 2, we have never seen in any other country, where the license basically was taken away. I must say that the next step forward for Telenor taking with Uninor, after this auction, is coming from one source only and that is from the people within our organisation, within Uninor has been able to produce progress under those very difficult terms. That's most admirable. I am actually very much in admiration of the people making this possible.
Q: What is the reason of staying back in India because people would only come with you would have profits? You wouldn't be able to keep those people, if you don't have profits.
A: Remember, this is a 20-year license. India will grow for the next 20 years. The Indian economy is a big economy on the move. The basic of telecom is that telecom enables economic development at large in the society. So, in every small individual, up against big organisations, they need modern telecommunications. That is what Telenor and Uninor is about. We are there to help our customers to get the full benefit of modern communications.
Q: Why did you just stop at six telecom circles, if you think that the prospects in the telecom sector are so good and it is only going to grow going forward?
A: That's the circumstances to which you pointed in your first question, namely the fact that there was a complete new framework for investment coming up. It changed, a new licence had to be established.
Q: You have three telecom circles where you have operations at this point in time, but over there you will have to shut shop. So, why did you choose to not actually bid in those circles?
A: In the city areas, as we could see, no spectrum is coming through. Since there was no spectrum coming through, it is a clear indication that the reserve price was too high.
Q: Mumbai circle, if we look at that as case in point, out of the three telecom circles of Kolkata, West Bengal and Mumbai, there is a possibility that the government would reduce the reserve price. That is being discussed actively. So, if that were to happen and telecom circle of Mumbai is one of the lucrative circles, it is probably the fifth most lucrative circle, why would you be interested in participating in the auction, if the reserve price is lowered?
Baksaas: We are today in six circles. If government comes up with a new package or rather framework for those circles, which did not achieve any sale of frequencies, then we will take a look at that package. Our position is okay where it is, but if government changes parameters then we will take a look at that position.
Q: You also had differences with your joint venture partner Unitech, but those issues are now settled. At what price did you buy out Unitech's stake in Uninor?
Baksaas: It is a confidential agreement between two parties. We have reached a settlement.
Q: What are the terms of settlement? Can Unitech at any stage enter the telecom market at a later date if it wants to?
Baksaas: That is again a part of the settlement, so I cannot comment.
Q: Now, you have formed a new company Telewings and have a new joint venture partner Lakshdeep. There is an entry fee which you had paid earlier with Unitech. Even though you are expecting that this amount will be adjusted for the new auction price that you will have to pay, Department of Telecom (DoT) does not think so. How will you handle this issue?
Baksaas: We believe very strongly that we are eligible for a refund. All obligations have been transferred between the two entities and we are awaiting DoT's confirmation on that.
Q: You mentioned that you are looking at all options. Are you looking at partnering with another company besides Lakshdeep for financial or strategic reasons?
Baksaas: As things stand now, just only a week ago we have been through an auction. We have concentrated our presence in six circles, which is half of India's population and there is growth in these areas and we want to impact the telecom markets in this geography.
Q: Now you now have presence only in six circles. I am sure that was not the original plan. Why not partner with another company?
Baksaas: We have been through a very difficult period and I am very impressed that people have been able to stay the course through 2012 where the degree of insecurity has been very high for everyone. Now they have produced progress and now we need to concentrate on getting into breakeven in 2013 and then we will have to take the future from there. This is a 20-year license in a very big geography and we will look forward to be present here.
Q: When you say break-even by 2013 are you also including the write-off which you undertook earlier in 2012 and the amount that has been invested in this venture?
Baksaas: Break-even is to get balance between operating income and operating expenses. The long-term pick up also in profitability will cater for your question.
Q: Right now are we only talking about six circles or when you say break-even it is on a PAN-India basis in view of all the investments that you have made?
Baksaas: This relates to the operating side of these six circles.
Q: So you mean that you are not in talks with the Mahindra's or the Tata's or anybody else at this stage. What happens to your existing customers because on January 13, your licenses will get quashed as per the Supreme Courts directive and there is a one month period before which you must inform your customers where they stand? So, in circles like Bombay, Kolkata and West Bengal what happens to the customers?
Baksaas: If there are no frequencies by mid January then we will namely inform our customers by the timeline in December that our licenses will get cancelled by mid January. That is according to the procedures. Unfortunately, the reserve price in Mumbai in particular is standing so high, that for us to even think about that in the first round was not possible.
Q: Despite the turmoil, which the company has seen you have been able to keep your team together. Your employees say that the retention has been significant and attrition rates have been normal. How have you managed to do that?
Baksaas: I think first the realisation of the crisis emerged when the licenses went away in February, after the Supreme Court's decision, which we have never seen in any telecom market before that situation of a crisis made people very united to go full-steam into the next phase and look forward to the competition for licenses. But I think the energy that the employees and the management managed to create together on that task is great.
Q: Did they never complained to you. You were dealing with them everyday. Fredrik must have been providing you guidance and you must have been consulting each other. Did they never complain to you? Was there ever a time when they wanted to give up and just move to competition?
Brekke: I think that's the secret, to never give up. This is a competitive market where you cannot give up only for one day. So, I think during the last one year when they have had these tough times, I think this is the 9th time; I am visiting our teams in Lucknow. It is all about to built momentum with the people and being out in the market.
Q: What is the one thing that you have learned from India what would that be and are you able to use that elsewhere in other international markets?
Baksaas: Telenor as a group is quite good in distribution and market tactics. But we have brought that to a next level. We also brought better systems with us and now we are taking these systems to enter other Asian market . So, it is a constant learning curve and in that sense we as a group have learned a lot in India.
Q: Uninor's moto in India has been Sabse Sasta and you have been the price challenger in most of the circles. Will you continue to maintain that? There is financial pressure, there are substantial investments which the company has made so far and when you go back to Norway, your shareholders would ask, what are you doing with our money? In India your partners must be asking you are we safe and secured because if today you have decided to shut shop in seven circles, in three you could not manage spectrum and in four you had already scaled down your operations, how do you handle such concerns?
Baksaas: Telcom is about getting the network into the geography and start selling quality network . That's exactly what we are doing. In UP East circle and in Lucknow specifically, we are now reaching break-even on an operating basis which means that we are through the loss making period on operating issues and we can concentrate on the phase coming after, namely making money as well.
Q: There are circles where you don't have spectrum now, what happens to the infrastructure in those circles? Are you going to sell it off because I don't think you are using infrastructure from Indus or Bharti Infratel, most of it is coming from other sources?
Brekke: Now, after auction, we have a very solid base. We are in the six biggest circles in India, covering more than 600 million people. We will now concentrate our business in these six circles, meaning moving infrastructure from other circles into these circles so that we can cover the entire population.
Q: The Indian government is also looking at a proposal to re-farm spectrum of incumbent telecom companies. They might have to also pay a one time spectrum fee. Do you see any sort of advantage from that?
Baksaas: We know that we have spectrum for 20-years and how can we put that into play.
Q: What about competition losing out, that must benefit you?
Baksaas: Then we have to address future processes on spectrum according to the market development and needs. We are now concentrating on the six circles that we have and make an impact.
Brekke: One thing we have learned from India, is that one needs to have an extremely long term view. At the same time one have to be extremely short term while beginning in market everyday and that's the combination we will see of all the surviving players in India. Those are the ones that are going to make money and make big in this very tough environment.
More to come.
Anda sedang membaca artikel tentang
See good growth in India for next 20 years: Telenor
Dengan url
https://kebugaranhidup.blogspot.com/2012/12/see-good-growth-in-india-for-next-20.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
See good growth in India for next 20 years: Telenor
namun jangan lupa untuk meletakkan link
See good growth in India for next 20 years: Telenor
sebagai sumbernya
0 komentar:
Posting Komentar