In India, it is a long-term game: Sigve Brekke

Interview with Executive Vice-President, Telenor

It has never been a smooth ride for Telenor in India. Despite all odds, the Norwegian telecom giant stayed back in the world’s fastest growing telecom market. Now, it wants 100 per cent control in the Indian business unit. Sigve Brekke, executive vice-president of Telenor, speaks to Sounak Mitra on the company’s plans in India. Excerpts:

With 100 per cent ownership in the Indian entity, will Telenor look for a pan-India presence now?

India is one of the most important markets in terms of prospects. Considering the macroeconomic scenario and the growth potential, we believe this is the time to invest. The decision to have full control came based on all factors taken into consideration. We have always said we would like to increase our holding in the business and this further investment demonstrates Telenor’s long-term commitment to India.

Yes, expansion is bound to happen. We’ll go step by step, not pan-India at one go. We would rather strengthen our presence in the existing circles, cover the most possible with our sabse sasta (the cheapest) strategy. It’s a long-term game and we look at 20-year perspectives. The most important thing is to ensure we make money.

The government had permitted 100 per cent foreign direct investment (FDI) in the telecom sector in July 2013. Why did you wait for almost a year to take this decision?

The decision for fresh investment is based on a lot of factors. One, stable government, which has increased our confidence. We have dealt with the earlier government. With a majority in Parliament, the current government is stable. We believe there would be more investor-friendly decisions and clarity on regulations. We might look for further investments in India as required. But there are many important issues the current government needs to settle. These include clarity on merger and acquisition regulations, guidelines on spectrum trading and sharing, among others.

You paid Rs 1,000 crore to raise stake in the Indian entity from 49 to 74 per cent. This time, you will pay Rs 780 crore for a 26 per cent stake. Why has the valuation changed?

The investment is not linked with Uninor’s market value. The value of the 26 per cent stake held by Lakshdeep Investments is decided based on the pact between the two shareholders.

What is the most preferred route for expansion for Telenor in India?

It depends on clarity on regulations. M&A and spectrum trading could be areas where we might focus. Acquiring fresh spectrum from future auctions could be another route for future expansion. In the previous auction, we  bought top-up spectrum in existing circles and added a new circle. We will look to strengthen our presence in the existing circles first and then expand.

As Telenor has deployed long-term evolution (LTE) services in five countries globally on the 1,800-MHz band, will you look at launching LTE on 1,800 MHz in India?

Our aim is to take the internet for all. Consumers are not bothered about the technology; they are concerned about quality service. We want to take the internet to the mass market with as much of services as possible. At the moment, we don’t see much scope for LTE in India. It will take time. For now, 2G is suitable enough for the markets we operate in India. But, in the long run, we’ll definitely need advanced technologies, like LTE, for data play.

How much do you plan to invest in India in the next couple of years?

There is no number firmed up. The Rs 780-crore we would pay to our investor in the Indian entity will come from Telenor Group. In India, we have already broken even in all the six circles (where we have a licence). And, most of our investments will come from cash flow in India.

You’ve earlier said the Indian model will be replicated in Myanmar. When are you launching services in Myanmar?

The commercial launch in Myanmar will happen in the fourth quarter of this financial year or before that. Yes, we are following the India model completely in Myanmar. Beside the vendors and other service providers, we are getting people from India. India has become the innovation hub for Telenor. In future, we see India as our recruitment hub for many countries.