Telenor won't exit India

Roz Roseboro and Sourabh Kaushal/Analysys Mason
01 Oct 2010

Telenor used its annual capital markets day on 21 September 2010 to re-affirm the company’s commitment to the Indian telecoms market, following speculation that it may leave the country.

Analysys Mason believes that India offers tremendous opportunities for telecoms operators, but that conditions will remain challenging in the near term. Telenor launched operations there (under the Uninor name) in December 2009.

It has seen healthy subscriber growth, but continues to post losses. Still, its guidance remains unchanged; projecting EBITDA breakeven three years after launch, and OCF breakeven five years after launch.

With a population of 1.2 billion, wireless penetration of approximately 57% and monthly additions of around 18 million net new subscribers, India is one of the most attractive regions in terms of potential telecoms revenue growth.

Analysys Mason believes the future growth in the number of mobile subscribers in India is likely to come from the medium- and low-income segments of the population. Teledensity in the high-income segment of the population was almost 100% at the end of 2009, while for medium- and low- income segments, teledensity was approximately 65% and 25%, respectively.

Furthermore, decreasing voice tariffs and declining handset prices have reduced the total cost of owning a mobile phone, thus removing the affordability barrier. Our research shows that while low-end subscribers make up the majority of subscribers (79%) - and will continue to drive growth in subscriber numbers - this segment contributes only 30% of revenue and one tenth of EBITDA margin.

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