Exit option tough for Telenor as India is top growth market

Telenor’s revenue growth of over 84 pc in India was the highest in all of its 11 major markets

Written by Anil Sasi | New Delhi | Published: May 14, 2012 12:26:09 am

It’s not difficult to see why the Norwegian government has thrown its full weight behind its flagship telecom firm Telenor ASA. For Telenor,which is 54 per cent state-owned,its $3 billion investment in India has been one bright spot,at a time when the saturated Scandinavian markets are seeing sluggish sales,the euro zone crisis has pulled down consumer appetite in key European markets and the firm is witnessing tepid growth in most of its other Asian markets.

During January-March,2012,Telenor’s revenue growth of over 84 per cent in India was the highest in all of its 11 major markets,a trend that has been evident in most of the previous quarters.

In fact,if India were to be excluded from Telenor’s markets during the three months period,the Norwegian firm’s topline growth would have been just 2.4 per cent during the quarter.

On the earnings front too,India has been consistently among the top three markets. During the previous reported quarter too,(October-December 2011),total revenues were up over 134 per cent,the highest among all of its markets.

It is no wonder that now with its investments in jeopardy and participation in the upcoming spectrum auctions looking bleak,the Norwegian government has stepped up the political pressure on India.

Telenor,which holds over 67 per cent in Uninor,was the most serious among all the new players who lost their licences in the wake of the February 2 Supreme Court ruling,having significantly achieved its roll-out targets prior to the court verdict.

On Saturday,Norwegian trade and industry minister Trond Giske was the latest in the series of emmissaries to visit India and issue an upfront warning of political implications if the company’s investment were to fail,making it probably the biggest loss a Norwegian company has suffered in foreign investments ever.

Late last month,Telenor had announced its decision to write down the remaining fixed and intangible assets in India amounting to 3.9 billion kroner on account of the uncertainty caused by proposals announced by the telecom regulator,Trai.

Telenor had earlier written off 4.3 billion kroner as a result of the Supreme Court’s ruling to cancel licences.

“The value of our Indian operations is now at zero in our books but this does not mean we are exiting,’’ said Sigve Brekke,Head of Telenor’s Asia operations said at the time of the write down. 

As many as 22 licences of Uninor were among the 122 licences cancelled by the Supreme Court in February,issued during the tenure of the then telecom minister A Raja in 2008. Uninor has been permitted to operate till September 7. 

To continue its telecom operation,Telenor needs to acquire new licences and win spectrum through the upcoming auction. However,the company has expressed concern over the auction proposals of Trai.

Telenor has objected to the high base price recommended by the telecom regulator along with network roll-out obligations and the quantum of spectrum proposed for auction.

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