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IndiaWatch: Telenor Still Committed

Ray Le Maistre
LR Mobile News Analysis
Ray Le Maistre, Editor-in-Chief
12/23/2008

Telenor Group (Nasdaq: TELN) is still committed to its $1 billion investment in Indian mobile new entrant Unitech Wireless, the carrier announced Tuesday morning, but the deal will now not close until some time in January.

The Norwegian operator announced its intention to take a 60 percent stake in the GSM license holder in late October, when it said it planned a new rights issue to help fund the deal. (See Telenor Takes Mobile Stake in India.)

In late November, though, Telenor engaged the services of Deutsche Bank AG to "reassess the alternative ways of funding the investment," a move that lead some to suggest Telenor might pull out.

Telenor, which isn't the only overseas player investing in the Indian mobile services sector, says the deal is still on and expected to close during January 2009, but that its funding evaluation process is still ongoing, with a decision on the funding to be announced "at, or prior to, the closing of the Unitech Wireless transaction." (See NTT Takes $2.7B Stake in Tata, Sistema Adds to Shyam Stake, and India: Still Booming, Attracting Investment.)

Unitech Wireless is yet to launch its services, but will be able to advertise them to all of India's near 1.2 billion inhabitants as it has a national license. (See A Guide to India's Telecom Operators and Indian Gov't Grants Mobile Licenses.)

And there's still strong demand for mobile services. In October, 10.4 million new lines were activated, of which just more than 8 million were GSM, while in November a further 7.6 million GSM lines were added, taking the total number of GSM connections to 249.3 million, according to the Cellular Operators Association of India . (See India Adds 10.4M Mobile Subs in October.)

At the end of October, India had 325.73 million wireless lines (GSM, CDMA, and fixed wireless) and 38.22 million fixed lines in operation, for a total of 363.95 million.

Earlier this month, Indian Prime Minister Manmohan Singh, said he expected India to have 700 million telecom lines in use by 2012 (650 million mobile and 50 million fixed line), according to a report from the Business Standard.

3G developments
With state-owned operators Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) having already allocated their 3G spectrum, which MTNL is already putting to commercial use having launched its services on December 11 in New Delhi, the remaining operators will get their chance to bid for 3G spectrum on Jan. 15. (See MTNL Launches 3G, MTNL Deploys Tanla for 3G, and India Edges Closer to 3G.)

India's telecom minister, A Raja, speaking at MTNL's 3G service launch, said he expects the government to bank 160 billion rupees ($3.3 billion) from license fees and spectrum charges in the current financial year, which closes at the end of March 2009.

Raja also noted that mobile number portability is due to be introduced in the country's metro and 'A' circles by mid-2009 and throughout the country by the end of the year.

BSNL is expected to launch its 3G services in Chennai next month. (See BSNL Trials 3G.)

While the operators will be keen to launch their 3G services as soon as possible, that rush might not come with as great a surge of capital expenditure as some might have hoped. According to a recent Bloomberg report, KPMG director Romal Shetty estimates the total capex spent by india's mobile operators during 2009 might be 25 percent to 30 percent lower than the previous forecast of more than 1 trillion rupees ($20.6 billion).

Other news of note from, or impacting, India includes:

— Ray Le Maistre, International News Editor, Light Reading

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