By R. Jai Krishna
NEW DELHI--Norwegian telecommunications company Telenor ASA's
(TEL.OS) India unit, Unitech Wireless Ltd., said in a statement
over the weekend that it had shut down its Mumbai operations as of
midnight Feb. 16 in compliance with a top court order Friday
related to alleged corruption in telecom permit allotments
involving several companies.
The shutdown will affect about 1.84 million users out of
Telenor's total subscriber base in India of 41.52 million as of
end-December. Those affected will have to switch to other
operators.
"We have pursued every alternative possible to continue our
operations in Mumbai until the new [bandwidth] auction takes place.
Now the [Supreme] Court has ordered an immediate closure of
operations, and no temporary license is available to allow a
gradual [shutdown] process. Unfortunately, we have no choice now
but to follow the court's order and close down our network
immediately," Sigve Brekke, managing director of Unitech Wireless,
said in the statement.
The company said it would help its Mumbai employees find new
jobs and would also look at redeploying network equipment in other
service areas where it operates.
The Supreme Court of India on Friday ordered Unitech Wireless
and other companies whose telecom licenses were cancelled last
February to immediately stop services unless they had already
acquired fresh permits. These companies were allowed to continue
providing services to the areas where their permits had been
revoked until the government completes bandwidth auctions, the
first round of which was held in November last year.
Friday's order followed the court's ruling last February
revoking as many as 122 telecom permits held by several companies,
citing alleged corruption in their allotment. The court asked the
government to auction the bandwidth given under the cancelled
licenses and allowed the affected companies to provide services
until the auction and bandwidth allotment were completed.
In October 2012, Norway's Telenor ended a nearly four-year-long
telecommunications venture with India's Unitech Ltd. (507878.BY).
Telenor had bought its majority stake in the joint venture, Unitech
Wireless Ltd., after Unitech Ltd. got the licenses to provide
services in India's 22 service areas. While Telenor blamed Unitech
for the license cancellations in November, the local company denied
any wrongdoing.
The government held a fresh auction in November, but Unitech
Wireless bought permits for airwaves in only six of the 22 service
areas where its licenses were revoked, as these areas were the most
profitable and offering bids were too high for the other areas.
Under current law, companies need separate licenses for each of the
22 areas.
As a result, Unitech Wireless didn't get bandwidth in the Mumbai
service area.
Write to R. Jai Krishna at krishna.jai@dowjones.com
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