Telenor CEO Jon Fredrik Baksaas has expressed anger at the decision by India's Supreme Court to revoke the mobile licence it jointly holds with Unitech. Baksaas told Reuters that the ruling is a very serious attack on Telenor's investments, and withdrawing from the Indian market "is one alternative that is on the table."
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The court's decision to cancel 122 mobile licences, which also impacts Etisalat, Russia's Sistema and many local mobile operators, follows accusations that the licences were subject to corruption when sold in 2008.
But the Telenor CEO is adamant that his company is being penalised unfairly. "We met every inch of that regulation of that licence. We have brought competition to the Indian market ... just to see a ruling that has significant retroactive consequences. It is an action that we have never seen in any country before."
Baksaas added that the move created a high level of uncertainty, and would immediately impact activities with its partner Unitech that involves investments totalling $3 billion in India.
The CEO also stated that he would ask the company's largest shareholder, the Norwegian government, to lobby the Indian government on Telenor's behalf. "That is part of the tool kit," said Baksaas.
One institutional investor told Reuters that securing the Norwegian state's help would be the only route to salvaging Telenor from the situation.
Saeed Baradar, a telecoms specialist at Societe Generale in London, told Bloomberg: [Telenor] "really needs to get out because shareholders worry that capital discipline will be broken in India." He estimated that the operator may have to pay an additional $2.1 billion to rebid for the mobile licences that have been withdrawn by the court.
However, the court ruling seems likely to benefit some of the larger mobile operators, such as Bharti Airtel, Reliance Communications and Vodafone, which remain unaffected. Observers believe this upheaval could lead to much needed market consolidation.
"This verdict is good news for established incumbent operators and, in the short term, we are likely to see some increase in tariffs," a director of consulting firm Frost & Sullivan told Reuters.
For more:
- see this Reuters article
- see this separate Reuters article
- see this Bloomberg article
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