Uninor posts Q3 revenue increase, EBITDA improvement

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Indian operator Uninor reported a 22% sequential increase in Q3 revenues and showed consistent earnings before interest, taxes, depreciation and amortization improvement. The company, which is owned by Norwegian-based Telenor Group, said it added 2.8 million customers during the quarter.

Revenues

The company reported revenues of $154.3 million for the third quarter, compared with $128.7 million reported during the second quarter and $39.4 million reported during the third quarter of 2010.

Uninor recorded an an improvement in EBITDA loss from $246.3 million during Q2 2011, to a loss of $156.4 million during the third quarter and improved 15% year-over-year due to increased volume, scale efficiencies and cost optimization. Operating losses for the latest quater came it at $199.7 million. Telenor, which launched services in India in 2009, aims to achieve EBITDA break-even within three years and operating cash flow break-even within five years of launch. If Uninor can consisntently repeat the considerable change in EBIDTA achieved this quarter for the rest of the year and beyond, it may reach the expected break-even by then.

Subscriber Base

Uninor added a 2.76 million subscribers for the quarter taking the yearly tally for 2011 to a total of 24.190 million.  This is 31% less than last quarter’s additions during when the operator had added 3.99 million subscribers. Interestingly Uninor had the highest number of additions for September 2011 among all operators in India with 1.92 million subscribers added in the month alone, according to the report released by Cellular Operators Association of India (COAI).

Uninor currently has a total subscriber base of 29.7 million with a market share of 4.8%. The market share is expected to increase if Uninor’s services get operational in Punjab, Haryana and Madhya Pradesh circles. Uninor currently has services in all states in East, West and South India, with coverage in Uttar Pradesh, Uttarakhand, Jharkhand and Bihar in the North.

Capex

Capex was steady compared to last quarter with NOK 196 million in Q3. Uninor had added 682 new sites to the existing 26,623 sites, making it a total of 27,305 sites across the country.

Outlook for 2011
In the Q3 release, Telenor based on the current group structure including Uninor and currency rates as of 30 September 2011 stated its Outlook for the year as below :
• Organic revenue growth in the range of 6–7%.
• EBITDA margin before other income and expenses above 31%.
• Capital expenditure as a proportion of revenues, excluding licences and spectrum, in the range of 11–12%.

Mentioning specifically on Uninor, it said the operator will contribute with an EBITDA loss in the range of NOK 3.5–4.0 billion and capital expenditure around NOK 1.0 billion.

In terms of financial risks and uncertainities, the release specified, Uninor having NOK 7.0 billion in current interest-bearing borrowings, all with financial guarantees from Telenor ASA 30 September 2011 which is an increase of NOK 2.5 billion since 31 December 2010.

Legal Disputes

The release also mentioned about the 2G scam in which Uninor has also been named as one of the respondents in public interest petitions filed before the Supreme Court. It said “the Indian Central Bureau of Investigation presented its first charge sheet, naming the managing director of Unitech Ltd., Mr. Sanjay Chandra, and also naming Unitech Wireless Ltd. for actions when it was fully owned by Unitech Ltd., prior to Telenor Group entering India. On 22 October, the criminal court formally charged everyone mentioned in the charge sheets. The trial will begin on 11 November”.

Shareholding and Funding Disputes
Unitech Ltd. initiated arbitration proceedings in Singapore on the board of directors of Uninor for having approved rising of funds through a rights offering of up to INR 82.5 billion, which is now under process of being implemented.

In a separate process, Unitech Ltd. initiated a process before the special judicial body Company Law Board (CLB) in India by filing a petition against Uninor, the Telenor-appointed directors on the Uninor board, Telenor Asia Pte Ltd. and Telenor ASA. In its petition, Unitech Ltd. alleged that the respondents have oppressed the minority shareholders and mismanaged the business of Uninor. Telenor expressed in the release that there was no legal or factual basis to support the claims and allegations made by Unitech Ltd.

At the end of the second quarter of 2011, Telenor’s ownership interest in Uninor was 67.25%.

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