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Telenor : Urges India For Solution To Telecom Impasse

05/12/2012 | 07:59am US/Eastern

Telenor ASA (TEL.OS) Saturday urged the government of India to find a solution to the current impasse that has put the Indian operations of the Norwegian telecommunications operator in jeopardy.

Trond Giske, minister of trade and industry of Norway, is in India to give a diplomatic push for a possible resolution to the crisis precipitated by a Supreme Court order cancelling Telenor's licenses to offer mobile-telephone services in India following a scandal over possible corruption. He is scheduled to meet Indian telecom minister Kapil Sibal late Saturday.

Telenor owned 22 of the revoked licenses through its local joint venture Unitech Wireless Ltd. and the scandal has received a lot of media attention in Norway.

Giske represents the Norwegian government--which owns 53.97% in Telenor--on the company's board. Telenor has already invested about $3 billion in its India operations.

"If this investment fails, it will probably be the biggest loss that a Norwegian company has in foreign investments ever," Giske told reporters in India. The development will lead to "political implications," he added without elaborating.

Telenor has already written off about $1.38 billion of its investments in India.

In February, India's Supreme Court ordered a rerun of a mobile-license auction originally held in 2008, after concluding the previous allocations were rigged and underpriced. As a consequence, Telenor's majority-owned Indian joint venture Unitech Wireless was ordered to return all 22 of its mobile licenses.

In April, India's telecommunications regulator proposed that the government open the sale to all companies when it auctions mobile-phone bandwidth. It also suggested a base auction rate that is several times more than the price at which India allotted 122 licenses and bandwidth to several companies in 2008.

The proposals had led Telenor to warn that it might be forced to exit India completely if the government were to follow current recommendations for the planned renewal of an auction for mobile licenses in the country.

"It will be almost impossible to continue operations given the current regulator's proposals for limited bandwidth sale and high reserve price," Telenor chief executive Jon Fredrik Baksaas said Saturday.

India's top court has set an Aug. 31 deadline for the government to complete the renewed bandwidth auction, and allowed companies affected by the judgment to operate until Sept. 7.

   -By R. Jai Krishna, Dow Jones Newswires; +91 22 6145 6107; 

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