Uninor today said its business in UP East has become profitable and expects to break-even in rest of its telecom service areas by the end of 2013.
"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 told reporters here.
Norwegian firm Telenor holds majority stake in the Indian telecom operator Uninor whose licences are valid till January 18, 2013 as per Supreme Court order.
Post this date, assets and business of the company will be transferred to new entity Telewings in which Telenor has around 74 per cent stake.
"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.
At the time of starting operations, Uninor had set a target of 2013 to be positive EBIDTA and 2014 to be cash flow positive.
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 at around eight times higher price compared to the price that were paid for permits till 2008.
In contrast to claims by various telecom operators that telecom tariff will rise by up to 100 per cent after spectrum auction, Telenor CEO said he does not expect any increase in tariff offered by company in coming days.
"As a challenger in the market place, 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 by offering phone calls at low rate of up to 2 paise per minute.
Baksaas said that company will make payment for spectrum in parts as being offered by government and will look to offset first set of payments against licence fee of Rs 1,658 crore which its India partner Unitech Wireless had paid in 2008.
Telenor CEO 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.