2nd UPDATE: Telenor Warns May Exit India; Norway To Raise Issue

Telenor ASA (TEL.OS) Monday indicated it may exit India if it fails to secure telecommunication licenses, after the country's Supreme Court last week ordered cancellation of the permits of its local unit and several other companies.

But, as of now, the Norwegian company doesn't plan to slow its operations in India, Sigve Brekke, executive vice president and head of Asian operations, told reporters. "We came here [to India] to win, we came here to stay."

The company is in talks with India's telecom regulator and the government to decide on the way forward, Brekke said.

Meanwhile, Rigmor Aasrud, Norway's information technology minister--in India on an official visit--said she will raise the Telenor issue at her meeting with Indian Communications Minister Kapil Sibal Tuesday, and seek a fair treatment for the Norwegian telecom major.

"It's in our interest to discuss and to inform about the Norwegian government's opinion on the case," Aasrud said. She added that many Norwegian companies have invested in India and that Norway would seek that its companies get a fair treatment in India.

Norway's government owns 53.97% of Telenor.

Officials at India's communications ministry couldn't be reached for comments.

Telenor entered India by acquiring a 67.3% stake in Unitech Wireless from real-estate developer Unitech Ltd. (507878.BY) in 2008 for around INR61 billion ($1.25 billion at current exchange rates). It has so far provided more than INR80 billion in corporate guarantees to the unit, making it the country's second-largest foreign investor in the telecom sector, after Vodafone Group PLC.

Unitech Wireless held 22 telecom licenses that allowed it to provide services across India, and has 40 million subscribers and 17,500 staff. The court order won't be effective for four months and the company could continue providing services at least during this period.

The court ordered cancellation of the licenses saying the allocation process was "arbitrary and unconstitutional," which facilitated corruption. A federal probe body alleges that the process favored some companies and cost the government $7 billion in potential revenue.

Although the order signals the Supreme Court is getting tough on graft, the decision to overturn all the licenses after foreign companies had invested billions of dollars has dented the country's image as a destination for foreign investment. As it is, many investors are dismayed by India's failure to push through economic reform to make it easier to buy land and set up factories.

Post the court order, Telenor said it is writing down NOK4.2 billion in relation to licenses and goodwill in India.

Brekke said that Telenor will look at the base price before deciding whether to participate in any fresh auction for licenses and bandwidth and that the company will decide shortly on its legal options.

-By R. Jai Krishna and Romit Guha, Dow Jones Newswires; +91-22-6145 6116; romit.guha@dowjones.com

Telenor ASA (QX) (USOTC:TELNY)
Historical Stock Chart
From Jun 2024 to Jul 2024