Telenor will take a 60% stake in new Indian operator, Unitech Wireless, for US$1.07 billion (€812 million).
Unitech holds licences for all 22 telecom circles across India and plans to launch service in mid-2009.
Explaining the company's decision to invest so heavily in a start-up, Telenor CEO Fredrik Baksaas said it "enables us to take part in the development and growth opportunities in one of the fastest growing telecom market in the world."
The Norwegian telco pointed to India's 1.2 billion population and mobile penetration of 26%. Existing mobile operators are adding about 8 million subscribers per month.
Unitech was established in 2007 and has already recruited more than 250 employees.
The investment will be funded either through a draw-down on existing credit facilities or the possible issuance of short-term commercial paper, or a combination of both. The company aims to raises NOK12 billion (US$1.5 billion) through a rights issue in the first quarter of 2009.
Separately, Telenor, who already controls stakes in mobile carriers in Pakistan, Bangladesh, Thailand and Malaysia, announced a 41% fall in earnings which it blamed on the "turbulent" business environment, especially in Asia.
Its stock price fell 39% in trading on the Oslo stock exchange, AP reported.
Profit fell from NOK5.097 billion to NOK2.995 billion on 4% higher sales of NOK27.6 billion.
"Our business environment is currently more turbulent and we foresee a period with lower growth," Baksaas said.
Asian revenue "continues to be affected by the macro economic development as well as strong competition," the company said.
In Pakistan the company faced "a challenging market with reduced consumer spending, increased competition as well as an increase in consumer sales tax."