Uninor, Telenor’s India arm, grows blazingly fast in second quarter 2011

Uninor, the joint venture mobile operator from the Telenor group of Norway and India’s Unitech, has posted surprisingly robust growth numbers for the second quarter.

The firm’s revenues jumped 32% to Rs 572 crore in the just-concluded June quarter compared to the immediately preceding March quarter. Compared to the June quarter of last year, this year’s revenue is 6.77 times where it was.

However, the company continues to bleed heavily. On an operating basis (excluding final adjustments), it lost Rs 981 crore in just the June quarter itself — much more than its total revenues.

However, it was still better than Rs 1,080 crore that it lost in the same quarter a year ago. It made losses of around Rs 3,500 crore ($773 million) during the calendar year 2010.

Uninor and MTS are seen as the only two aggressive operators among the 6 or 7 introduced by Raja in 2008. Uninor, thanks to its GSM technology, has been by far the most successful of the new operators, often overtaking old operators like BSNL in subscriber addition.

Telenor holds around two-thirds of Uninor while the remaining is held by the Unitech real estate group.

Uninor has made a name for itself in India — particularly in the price sensitive rural markets — by offering the cheapest tariffs in the country. In some areas, it offers practically unlimited local (within the state) calls for around Rs 200 ($4) per month.

The low tariffs also mean that, at just above Rs 100 per month, it has one of the lowest per-subscriber revenues among the ‘serious’ operators in India. The traditional GSM operators in India have 50-100% more revenues per user.

Uninor is also in the news after the Telecom Regulator recommended the cancellation of some of its license areas. The firm has licenses across the country, but has only launched in 13 (out of the 22) license areas, primarily due to the quality of spectrum allocated at the other areas.

The telecom regulator, however, wants the licenses and spectrum allocation cancelled and penalties imposed for failure to meet roll-out obligations.

Telenor, the majority owner of Uninor which announced its results today, said it is interested in launching in circles where Uninor is not present, but has no spectrum in Delhi and partial spectrum in many others.

“So for the meantime, we will continue to build operational excellence in the circles we are commercially present in,” it said.

It spent around Rs 150 crore on capital expansion, primarily putting up new cell-sites, which stood at 26,623 at the end of the quarter. It was around Rs 262 crore in the first quarter of this year (March 2011.)

It said it has brought down the annual expenditure of capital structures (such as towers) from around $290 million for the whole of last year to an expected $180 million this year due to extreme efficiency measures.

“This is mostly due to high network efficiency achieved in India. Uninor has been able to engineer its networks to carry much higher traffic per base station than any other Telenor operation anywhere in the world,” Telenor said.

Having learnt the hard way the requirements of doing business in a cut-throat market like India, Telenor now feels that “Uninor’s base station efficiency learnings can be exported to not just 2G but also 3G and 4G operations of Telenor Group in other countries.”

“Uninor will focus on being an ultra-low cost operator by further improving efficiencies in distribution, network management and energy consumption,” it added.