Uninor's business in UP East has become profitable and the telecom company expects to break-even in rest of its telecom service areas by the end of 2013.
Norwegian firm Telenor holds majority stake in Uninor, whose licences are valid till January 18, 2013, according to a Supreme Court order. Post that, assets and business of the company will be transferred to a new entity Telewings, in which Telenor has around 74 per cent stake.
"I am delighted to celebrate our first break even in India. We expect to not only have positive EBIDTA (Earnings Before Interest, Taxes, Depreciation and Amortisation) but also turn cash flow positive by 2013 in all circles. Cash flow date has been advanced by one year," Telenor Group President and CEO Jon-Fredrik Baksaas said.
At the time of starting operations, Uninor had set a target of 2013 to be positive EBIDTA and 2014 to be cash flow positive.
"At present, we have 30 million subscribers in six circles where have secured spectrum. In UP East, where we have reached EBIDTA break-even before target date of 2013, there are over 7.2 million customers," Baksaas said.
Telenor Group recently secured spectrum through auction to operate in six telecom service area - UP East, UP West, Bihar, Andhra Pradesh, Gujarat and Maharashtra - for around Rs 4,018 crore, a price around eight times higher that what was paid for permits till 2008.
Baksaas said the company will make payment for spectrum in parts, as offered by the government, and will look to offset first set of payments against licence fee of Rs 1,658 crore, which its former India partner Unitech Wireless had paid in 2008.
In contrast to claims by various telecom operators that telecom tariff will rise by up to 100 per cent after spectrum auction, Baksaas said he does not expect any increase in tariff offered by Uninor in the coming days.
"... The challenger will always be on the low side of the tariff side. That's the only way of to getting position in the market place...Low tariff environment in telecom is not over thats for sure," he said.
Uninor was one of the companies that started offering low tariffs in 2010 - up to 2 paise per minute.
Baksaas said operations of Uninor will continue in the circles till the time licences are valid and there can be impact on jobs of around 400 employees working with the company in Mumbai, Kolkata and West Bengal.
"We will not be able to absorb everyone of the three circles that we are scaling down, but we will assist people to move forward," Baksaas added.
With inputs from PTI