Telenor India's soft 2QCY16 is reflected in top-line growth similar to Airtel/Idea despite its smaller scale & shows a challenging environment for sub-scale biz. 2Q top line grew 12%yoy with 11%yoy total mins growth & broadly flat rev/min. Growth was similar to
Airtel/Idea mobile biz despite its smaller scale (8/12% of Airtel/Idea).
Telenor has further disclosed that it won?t participate in the upcoming auction. Media has reported (last 2 months) of talks with Idea/Voda for a potential sale; this would help them expand their 4G footprint. Smaller telcos have been losing revenue share to the top 3 telcos and are likely to find it difficult to compete in the absence of 3G/4G spectrum and Balancesheet size.
Telenor has at least 5MHz in 1800MHz band in 7 circles; can be used for 4G. It also has 4-9% rev shr in 6 circles. Media reports indicate Idea or Vodafone. Idea/Vodafone have 4G spectrum, which covers ~60/35% of their revenue base. Acquiring Telenor would help bridge the gap. Idea?s 4G footprint would rise to 85% (from 61%) while Vodafone?s to ~65% (from ~35%).
