OSLO: Norway’s Telenor confirmed its commitment to India on Friday, even as a scandal over the awarding of licences roiled India’s government and telecom sector of its presence in the subcontinent.
“We are in India to compete and do business. We’re definitely a part of the mobile game in India,” Telenor spokesman Esben Tuman said. Shares in Telenor and other operators in India were lower on Friday as the scandal over the allocation of telecoms spectrum deepened, which a government audit said may have cost India $31 billion and led to the weekend sacking of Telecoms Minister Andimuthu Raja.
A source with direct knowledge of the matter stated that telecoms regulator had recommended cancellation of 38 licences, including eight held by Telenor’s Indian operations, as the operators did not meet rollout obligations.
Telenor shares squeezed by 1.5 percent at 92.2 crowns, while the STOXX 600 European telecoms index was down by 0.35 percent.
Tuman said that Telenor had not received any official communications regarding any recommendation to cancel the licences held by its joint venture with Unitech.
“We have launched operations in 13 circles, and the latest figures reveal that we have 13.5 million customers in India while we are adding huge (subscriber) numbers each month,” Tuman said.
Analysts have long been cool on Telenor’s entry into India, a market of growing fast but wafer-thin margins, where few believe the Norwegian company can quickly turn a profit.
Analysts expect Telenor, which has operations throughout emerging Asia, Eastern Europe as well as the Nordics, to remain in India for now, as the licences row plays out.
“They’re not just going to give up and go home,” said John Davies, an analyst at ING, adding that Telenor could be a buyer or a seller in Indian mobile consolidation, which is expected in a year or two. Davies said: “People were already of the view that it’s a difficult market because they’re in the hands of government rather than a well understood and objective process. Basically, you’re either optimistic on India or you’re not.”
Telenor has praised its strong market development in India over the third quarter but said it would post an EBITDA loss of 4.5 billion crowns ($775 million) for its Indian operations in 2010. Analysts said that a majority of the investors would prefer the Norwegian company simply to pull out of India at the earliest. “There is no doubt about that in the financial community.
That view (that Telenor should exit India) is the consensus,” said DnB NOR Markets analyst Frank Maaoe.
