Telenor makes its Indian play amid economic turbulence
Norwegian operator aims to expand global base via acquisition of Unitech Wireless
Telenor’s entry into India is a brave move, especially in the current economic climate; it has already been forced to look at alternative ways to fund the Unitech deal after some shareholders objected to its original plan of raising NOK12 billion (US$1.7 billion) via a rights issue. As was the case with Etisalat's similarly-sized US$900 million investment in Swan Telecom, there are also fears that the new Indian GSM licensees are being overvalued by the international players looking for a route into India. Further investment will be required if Telenor wants to secure 3G spectrum in the forthcoming auctions. While the Indian market appears to have plenty of room for subscriber growth, competition is fierce and double-digit competition is probably unsustainable longer term, suggesting some consolidation will occur. On the plus side, the Indian regulator’s move to encourage tower-sharing between operators will help Unitech build-out its network to the more rural B and C circles, which is set to account for the majority of subscriber growth moving forward. Nevertheless, Telenor may still struggle to sufficiently differentiate its Indian offering in such a crowded marketplace.