Telenor, Asia's second-largest foreign telecoms operator, expects a soon-to-be-launched Indian business to turn in an operating profit three years after it starts up, as the Norwegian firm muscles deeper into the region with growth slowing elsewhere.
-- India business to be EBITDA-positive 3 years after launch
-- No change to rights issue plan to fund India investment
-- Grameenphone IPO still on track for Q1 2009
The firm still intends to push a controversial rights issue to bankroll a $1.1 billion deal for a 60 percent stake in India's Unitech Wireless but was considering other options, Jon Fredrik Baksaas, Group CEO, told Reuters during a mobile forum in Macau.
Telenor, which vies with Swedish-Finnish TeliaSonera and Vodafone globally, plans to issue 12 billion crowns ($1.8 billion) in shares, despite opposition from shareholders.
"We have nothing new to add. The view points of our shareholders are coming forward and we are having a look at that," Baksaas said. Media reports have said the company is considering alternatives such as a dividend cut or a sale of assets. The chief executive added that the firm's 62 percent-owned Grameenphone, Bangladesh's top mobile operator was still on track to float shares in the first quarter of 2009.
This month, Grameenphone said it had more than halved a planned share sale to $125 million because of a sharp downturn in global markets.
Although the chief executive expressed optimism over the Indian operation, which is expected to be launched in 2009, J. P Morgan has warned the company's expansion into India would come at a high cost. "Despite Telenor's belief that the move to India makes strategic sense, we estimate it will destroy $2 billion of value and give earnings dilution of greater than 30 percent in the near term," J. P Morgan said in research report this month.
But Baksaas said telecoms was a long-term business.
"It took us more than 10 years to build a customer base in Bangladesh of more than 20 million customers in a country where analysts said it was impossible to run successful mobile operations," he said. "There's unanimous agreement that penetration in India will grow," he added.
Telenor has expanded its business to Asia with operations in Pakistan, Malaysia, Thailand and Bangladesh. It plans to launch its Indian operation in 2009 but has no plan to enter other Asian markets at this time.
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