2G spectrum impact: Telenor threatens to exit Indian telecom market

By Telecom Lead Team: Mobile major Telenor is
likely to exit India after the Supreme Court revoked its mobile licences and
may not wait for new telecom guidelines to be introduced, according to media

Supreme Court revoked 122 telecoms licences issued in 2008, including 22
licences Telenor holds via Uninor, a joint venture with real estate firm


has 5.68 percent market share in India and posted around 651 crore revenue in
Q2 FY 2011-12.

Affected licence holders can operate for four months, during which regulators
will come up with new market rules. The telecom regulator TRAI has already said
it favors auction route to release 2G spectrum.

Asked whether Telenor should heed calls by several company investors and
analysts to quit the Indian market now and cut its losses, Jon Fredrik Baksaas,
CEO of Telenor told Reuters: “That is one alternative that is on the

“The ruling is a very serious attack on our investments, (which are) based
on the licence framework that was spelt out in 2008. 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 told
Reuters in an interview.

India is the second-largest cellular market in the world by subscribers, with
894 million at the end of December, although fierce competition means call
rates are among the lowest, hitting mobile operators’ margins.

Telenor was committed to invest a total of $3 billion in Asia’s third-largest
economy. “We are two-thirds of the way (in making those investments), to
see them completely revised by (India) saying that ‘oops, by the way, the 2008
licences have to be issued once more’,” Baksaas said.

Baksaas said the climate of uncertainty created by the ruling, and the four
months of waiting before new rules are introduced, would immediately hurt its
Indian joint-venture’s activities.

“Obviously in a situation with the threat of taking your licence taken
away, the value chain will start asking questions. This has an extreme negative
effect on further investments and further financing,” Baksaas said.

[email protected]