Telenor’s Global strategies in entering Indian telecom market

Harish HLSantosh Kumar

Why India

• Population of 1.2 billion, growing yearlyby 1.3%

• 28 states with population spanning from0.5-166 million

• Hindu main religion (80%) - Hindilargest native language (30%)

• English extensively used inadministrative and businesscommunication

• Stable political environment and maturelegal institutions

India - A large and fast growing Economy

India - A large and fast growing economy• World’s 12th largest economy

in GDP, 4th largest in GDP (PPP)• High single digit real GDP

growth• Favorable climate for foreign

investments• Young and highly educated

population• Sizeable and growing middle

class

India - Strong growth expected to continue

Large untapped mobile potential

• 300 million subscribers, growing by approx 8 million

per month• Mobile penetration expected

to reach 60% in 2013• ARPU of INR 250-350 (USD

5-7)• Net industry revenue of USD

12 billion (2007) - annualgrowth rate of 40%

• 3% fixed line penetration and1% broadband penetration

India – A uniqueopportunity for Telenor

• One of the world’s largest and fastestgrowing markets• Solid contribution to Telenor’s growthand long term industrial development• Strong fit with our expansion criteria• Leverage on Telenor’s provengreenfield expertise• Attractive business case

Telenor and IndiaTelenor to inject USD 1,070 million of new equity into Unitech

Wireless in multiple tranches to reach 60% stake

– USD 250 million of primary equity upon closing– Remaining USD 820 million in three additional tranches by

September 2009• Enterprise value of Unitech Wireless of USD 1,100 million

– Assumption of debt of approx USD 400 million• Telenor gets management control from day 1, and will occupy 4

of7 seats on the Board of Directors

Uninor logs in 1.2 mn subscribers in first month of operation ...

Uninor,s strategies

• Large population with low penetration• Creation of regional clusters• Predictable regulatory environment• Cultural fit• Strong business case

Transparent regulatory framework

• 22 telecom circles subdividedinto Metro and Circle A, B and C– Future growth mainly from B

and C circles• Spectrum allocation according to

customer base• Regulator encouraging

infrastructure sharing

Telenor - Competitive in a fragmented market

• 3 operators with establishednationwide roll-out• 2 operators on CDMA, expectedto be converted to GSM• Our value proposition:– Differentiation– Distribution– Network quality

Leveraging on the Telenorbusiness model

• Group leverage – local drive• Telenor competence and experienceGovernance model

• Replicate management philosophy• Utilize economies of scale across Group• Deploy Telenor concepts• Strong governance and principles

Attractive business case• Service launch mid 2009• Instant access to 30,000 – 50,000existing sites through tower sharingagreements• Accumulated capex of USD 2 bn firstthree years• EBITDA breakeven in approx three yearsfrom launch

22 growth opportunities with different marketcharacteristics

Significant scope for penetration growth in B and C circles• High potential from churn in Metros and Acircles• Inter-circle segments can be targeted for example by age groups and disposable income

Re-use of proven conceptsfrom other Asian markets

• Excellence in distribution• Targeted offerings• Customer lifecyclemanagement• Organization and culture

Targeting 8% pan-Indian market share and average market ARPU

• Service launch Q3 2009

• Large share of net adds first years due to low churnfrom own subscriber base• Significant differences in market share betweencircles• Sub-market ARPU near term, but longer termincreasing towards market

Low cost operational model

• Gradual network build-up• Infrastructure sharing• GSM equipment at competitive cost• Full-scale IT outsourcing• Long term cost and capex efficiency

Infrastructure agreement with Tata/Quippo

• Tower sharing agreement with Tata/Quippo provides requiredcoverage at launch and flexibility for further expansion– 40,000 towers by end 2010, of which 22,000 available byApril 2009• Lower opex in 2009-2010 than previously anticipated– Tower sharing priced at fixed monthly rate per site, pluspayment for actual power consumption– Transmission between sites at a fixed monthly rate providedby Tata Teleservices• Unitech Wireless may enter into additional tower rentalagreements, in line with launch strategy and subscriber growth

References

www.tenorgroup.comwww.uninor.in