Telenor will not participate in spectrum auction, loss widens

New Delhi: Telenor India will not participate in the upcoming spectrum auction which is in line with its earlier announcement indicating exit from the country.

"We recognise the significant operational and financial improvement delivered by our Indian operation. We have however, after thorough consideration, decided not to participate in the upcoming spectrum auction, as we believe the proposed spectrum prices do not give an acceptable level of return," the Norwegian telecom operator said in its financial report.

While announcing the March quarter results, the company had said that long terms presence in India is dependent on its ability to secure additional spectrum.

For the June quarter of 2016, the company has reported widening of operating loss to 132 million Norwegian Krone (about Rs 105 crore at present exchange rate) compared to NOK 90 million (Rs 71.3 crore) it posted a year ago.

"Operating profit was negatively impacted by NOK 224 million (Rs 178 crore) in impairments and write-downs, but offset by lower depreciations following the impairment and write-down of assets in the first quarter," it said.

The total revenue of the company, however, grew by about 12.73 per cent to Rs 1,230 crore from Rs 1,080 crore for the said quarter.

Announcing financial results for first quarter ended March 31, 2016, Telenor Global CEO Sigve Brekke had said, "long terms presence in India is dependent on our ability to secure additional spectrum. We are not able to compete with current spectrum portfolio we have in growing data market."

Brekke had said the company is looking at solution to procure spectrum and "a price that we can justify". Telenor India offers GSM-based services in six out of 22 circles in the country. The company has operations in Andhra Pradesh, Uttar Pradesh East and West, Bihar, Gujarat and Maharashtra.

Telenor in its report for the second quarter said: "We will continue our efforts to meet customer demands and grow the business based on the current spectrum holding. As we evaluate our options in India, we will be disciplined on capex."

The government is planning mega-spectrum auction in which airwaves worth Rs 5.66 lakh crore will be up for the bids. As per global telecom industry body GSMA , the total value of spectrum auction at base price is more than 20 times the annual free cash flow of the entire mobile industry in India and almost double the cost of all spectrum investments to date in the country.

Telenor during consultation with telecom regulator Trai to decide base price for mobile airwaves was among couple of companies that pushed for auction of most valuable spectrum in 700 Mhz band.

Trai has recommended Rs 11,485 crore per Mhz base price for auction of spectrum in 700 Mhz band, the highest ever for any radiowave and the same has been accepted by the government.

Out of total spectrum value of Rs 5.66 lakh crore, the quantum of airwaves frequency in 700 Mhz band being put for auction alone constitutes about Rs 4 lakh crore.