Telenor to leave India?

Telenor to leave India?

Following controversial regulatory proposals on Monday that would see India’s 2G spectrum licences re-auctioned at nearly 10 times the original price, there has been speculation that Telenor will cut its losses and leave the Indian market.

In response to the proposed starting prices Telenor’s VP of group communications, Tor Odland, told Capacity: “While we study them in detail, it seems obvious that some of these recommendations will create severe negative impact on the entire telecom industry in India. It is up to the political leadership of India to now ensure that the gains of the past few years of affordable phone calls for India’s people are not undone.”

India’s Telecom Regulatory Authority recommended an auction starting price of $695 million for every megahertz of nationwide spectrum in the 1800MHz band, compared with the $73 million paid in the controversial 2008 sale.

It is estimated that Telenor would have to spend nearly $3.6 billion for 5MHz of spectrum in all 22 of India’s licence regions.

Newsire Reuters reports that UBS analysts told their clients that Telenor was now highly unlikely to bid for a nationwide licence, with the most likely course of action a significant scale-back or a complete exit.

Indias Supreme Court cancelled 122 2G licences in February having deemed the 2008 auction process “totally arbitrary and unconstitutional”. The court said on Tuesday that it would allow companies affected by the cancellation to operate until September 7 2012, an extension from the original deadline in June. The court also asked the government to complete the auction process by August 31.

The country’s telecoms ministry has previously said that it could take more than a year to re-auction the licences.

India’s 2G auction scandal has been a source of frustration for Telenor, having not only seen its Indian joint venture, Uninor, lose its licences but also been involved in a legal dispute with partner, Unitech.

Telenor blamed Unitech for the loss of the licences and has since been seeking to migrate Uninor’s customers to a new joint venture.

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