Telenor takes a $721-mn hit,says quitting India an option

Telenor said,it would retain its Indian investments and was seeking a “fair solution” from the government.

Written by ENS Economic Bureau | New Delhi | Published: February 4, 2012 2:47 am

A day after the Supreme Court cancelled all 22 licences held by its joint venture with domestic partner Unitech as part of the 2G case verdict,Norwegian operator Telenor said it would write down its Indian investments (that is,reduce their book value) by $721 million. Telenor is a majority stakeholder in the Uninor joint venture.

However,Telenor said,it would retain its Indian investments and was seeking a “fair solution” from the government.

The apex court cancelled 122 2G licences yesterday terming them illegal and asked the government to issue spectrum by way of auction after seeking sectoral regulator Trai’s recommendations.

Speaking to Reuters in Oslo,Telenor CEO Jon Fredrik Baksaas said quitting India “is an alternative on the table” and they may not wait for new market rules to be decided. Reuters reported that several Telenor investors were demanding this.

“The ruling is a very serious attack on our investments,(which are) based on the licence framework that was spelt out in 2008,” Baksaas said. “We met every inch of that regulation… just to see a ruling that has significant consequences. It is an action that we have never seen in any country before.”

After the write-down,the group’s remaining accounting exposure to India is $413 million.

“The Uninor operations are continuing. Our intention is to fight to protect our lawful investments. We are looking to the government to arrive at a fair solution. We expect that the intention remains of bringing new competition,” the Norwegian company said in a statement. Uninor is estimated to have upwards of 36.30 million subscribers.

Russian conglomerate Sistema,that has a majority stake in Sistema-Shyam telecom and offers services under the MTS brand,also said it would “pursue all legal remedies”. Sistema-Shyam’s 21 licences were among those cancelled. It claims to have pumped in about Rs 12,500 crore and have more than 15 million subscribers.

Telenor Group said it has already invested over Rs 6,100 crore in equity and over Rs 8,000 crore in corporate guarantees as a foreign investor that trusts a licence stamped by the government.

“Telenor has continued to invest with highly questionable logic,but now they have chosen to adapt to reality,” an analyst told Reuters.

—with agencies

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