Sucheta Dalal :Telenor cuts India capex by Rs3500 crore on lower equipment costs
Sucheta Dalal

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Telenor cuts India capex by Rs3,500 crore on lower equipment costs  

November 18, 2009


Norwegian mobile operator Telenor on Wednesday said that it has cut down its earmarked capital expenditure (capex) for India by Rs3,500 crore to Rs12,000 crore spread over the next five years due to lower equipment costs, reports PTI.

"The targeted rollout combined with better terms from equipment vendors will reduce the capex requirements. Accumulated capex for first five years is to be reduced by around Rs30 billion-Rs35 billion. The earlier communicated peak funding of Rs155 billion or Rs15,500 crore is now expected to be somewhat lower,” Telenor said in a statement.

Telenor, the joint venture partner of India's Unitech Wireless, is Asia's second largest mobile service provider with 172 million subscribers. The joint venture is due to launch its services in India later this year. Telenor, the majority partner in the joint venture, holds 67.25% stake in Unitech Wireless.

In October 2008, it bought 60% stake in Unitech Wireless for Rs6,120 crore. But later, Unitech, the cash-strapped realtor agreed to give away an additional 7.25% stake to Telenor.

The Foreign Investment Promotion Board (FIPB) had previously deferred a decision on allowing Telenor to hike its stake in Unitech Wireless in view of the security agencies' reservations regarding the Norwegian company's strong presence in Pakistan and Bangladesh. While the worries over Telenor's operations in Bangladesh, where it holds 62% of Grameenphone, were not so pronounced, both Intelligence Bureau (IB) and Research and Analysis Wing (RAW) were highly suspicious about the security implications of Telenor's presence in Pakistan.

"The market share ambition and other financial targets, including earnings before interest, taxes, depreciation, and amortization (EBITDA) break-even approximately three years after launch and operating cash flow break-even approximately five years after launch, are still valid," Telenor added.

The company said, in India it would go for a focused roll-out in majority of 22 circles, while meeting licence obligations in all circles which would also save the operational costs.

Telenor, the world’s sixth largest mobile service provider, has operations in the Northern Europe, Eastern Europe and across Asia.
-Yogesh Sapkale [email protected]

-- Sucheta Dalal