Telenor forced to rethink its India move

The Financial Times reports that Telenor, Norway's leading telecoms operator, is considering abandoning a NKr12bn ($1.8bn) rights issue that is supposed to fund much of its expansion into India because of investor opposition.

Jon Fredrik Baksaas, Telenor's chief executive, told the Financial Times the company was looking at alternatives to a rights issue that some shareholders had put forward.

He said these included cutting dividends, selling assets or reducing capital spending.

Telenor's share price fell 26% last Wednesday, after it unveiled plans to pay $1.1bn for a 60% stake in Unitech Wireless, a new Indian mobile phone operator that is aiming to start services in the middle of 2009.

Unitech requires capital spending of $2bn over the next three years to roll out a mobile network from scratch, and Telenor does not expect the Indian operator to break even at the level of earnings before interest, tax, depreciation and amortisation until 2012.

Shares in Telenor, which has a market capitalisation of NKr68bn, have fallen 70%  this year on investor concerns about its performance.

As well as its presence in Scandinavia, it is a leading mobile operator in emerging markets across eastern Europe and Asia, and has 159m customers.

In July, Telenor cut its revenue guidance because growth at some of its Asian mobile businesses was curbed by the deteriorating economic environment.

The Norwegian government owns 54% of Telenor, with the remainder held by shareholders spread across Scandinavia, western Europe and the US.

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