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New Operators Struggle – Analysts Grill Telenor [Uninor’s Promoter]

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New Telecom Operators with the Weakest Business Case are under fire from various corners. For instance, Etisalat DB is unwilling to even start its operations [Company full of Question Marks and Indian Government’s unwillingness to investigate the funding pattern] while Uniinor a JV of Telenor & Unitech is under fire from the former’s investors. While management has a different story to tell – Uninor reiterated their financial targets: achieve EBITDA breakeven in 3 years, cash flow breakeven in 5 years and peak funding below Rs155bn. Uninor management continues to focus on: dynamic pricing, cost efficiency and strengthening its distribution model. All the new operators combined together just have a Revenue Market Share of 1%.

Under Fire to Withdraw, Management highlighted that they would seek network sharing to meet new rollout requirements if approved. They also believe that exit of new entrants will not be straightforward or quick. We believe a new operator has no business case in India as they have poor quality (1800 MHz band) and insufficient spectrum (2x 4.4 MHz), which limits its coverage & capacity per base station.

Finally, plain vanilla voice service will no more be the milking cow in Indian Telecom business as the market is firmly in the hands of incumbent operators. Four years after having coined – goBroadband, data is all set to take the center stage. In line with my views MTS India / Sistema Shyam’s CEO C. Seshadri says – Our Strategy is Data, Data and Data [Good Read – EVDO Spectrum as Good as 3G for Data]. MTS Wireless Broadband is far better than Tata Photon+ / Reliance NetConnect Broadband+ but has very limited coverage. Hopefully, they will improve the coverage and let more Indians goBroadband :-)

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