Uninor to scale down operations in 4 circles

Uninor to scale down operations in 4 circles

Uninor today said it will scale down operations in four telecom circles - Tamil Nadu, Kerala, Karnataka and Orissa, while sharpening focus on 9 other areas in view of continuing uncertainty over spectrum auction.

"In light of the continuing uncertainty around the auctions, the Uninor management has decided to focus its resources by strengthening nine of its 13 commercially active circles," the company said in a statement.

It said it will strengthen operations in UP East, UP West, Bihar and Jharkhand, Kolkata, West Bengal, Andhra Pradesh, Mumbai, Maharashtra and Goa and Gujarat. This will place the company in a stronger financial and operational position to enter the auctions, rules permitting, the company added.

Uninor has 6.8 million customers in these four circles and 400 direct employees. It said it will "evaluate possibilities of relocating some of the employees to other circles and also provide assistance in securing employment outside the company".

Uninor, in which Norwegian firm Telenor holds over 67 per cent stake, was one of the operators impacted by the Supreme Court order cancelling 122 licences in the 2G spectrum allocation case. All its 22 licences were quashed by the apex court and are set to expire on September 7. The court has also ordered conducting fresh auctions by August 31.

At the end of May, Uninor had 45 million subscribers nationwide. It said the uncertain environment has also affected its ability to secure operational funding. "Since the Supreme Court order, we have pursued every possible measure to take our business forward in its current form. However, we are now forced to take this difficult but necessary decision," Uninor Managing Director Sigve Brekke said.

The plan now is to enter the auctions with a very strong presence in these nine circles, auction rules permitting, he added. "We will focus funds, resources and all our efforts to meet even more aggressive targets in these nine circles," Brekke said.

The Telecom Regulatory Authority of India (Trai) has recommended a base price of Rs 3,622 crore for a megahertz of airwaves to be auctioned, and over Rs 18,000 crore price for pan-India operations. Uninor has already expressed concerns over the "extremely high" price.

Uninor said it will maintain a smaller network and remain operational in the four circles.
"Network in these four circles remains operational and the scale down of operations in these circles will be gradual. Uninor will give all its existing customers a 30 day notice before any network scale down is expected to begin," it said.

Uninor will also stop activation of any new subscribers in these circles with immediate effect.

The company said it will closely work with each of its distribution channel partners in the four circles to enable liquidation of market stock or compensation as needed.

"The company will work jointly with its business partners to together recast several agreements in line with the new focus," it added.

Meanwhile, Telenor Group President and CEO Jon Fredrik Baksaas said in a statement, "Since February 2 (when the Supreme Court cancelled the licences), Telenor Group has continued to single-handedly provide financial backing to Uninor on the belief of an early resolution.

"However, with no sight of either auction rules or dates six months later, we support Uninor in taking this financially prudent decision."

Baksass said the group will continue to extend funding support to Uninor in the nine circles. "We urge the Indian Government to provide clarity on the auction policy at the earliest," he added.

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