UPDATE: Telenor Says Plans To Seek Compensation For India Investments
27 Marzo 2012 - 12:31PM
Dow Jones News
Telenor ASA (TEL.OS) has threatened to seek damages and
compensation for its investments from the Indian government as the
Norwegian company faces the risk of losing its permits to provide
telecommunication services in the South Asian nation.
Telenor's over 67%-owned joint venture, Unitech Wireless Ltd.,
is among several companies that would lose permits to operate in
India on June. 2 when a Supreme Court order to cancel their
licenses would comes into effect.
In its Feb. 2 order, the court said the process to allocate the
licenses in 2008 was "arbitrary and unconstitutional."
Telenor had bought its stake in Unitech Wireless from local
real-estate developer Unitech Ltd. (507878.BY), after the Indian
company got the licenses.
In an emailed statement Tuesday, Telenor said it has informed
the government of its intent to invoke the provisions of an
agreement between India and Singapore on economic cooperation to
resolve the matter. Telenor had made its investments in India
through a unit in Singapore.
The India-Singapore agreement allows arbitration to settle
conflicts that can't be resolved through six months of
consultations.
A Times of India report said Telenor has claimed damages of $14
billion from the government. Telenor, however, said it hasn't
stated any amount.
Telenor said also the company is "convinced that we can resolve
this matter through continuing dialogue with the government."
Government officials weren't immediately available to
comment.
Another affected company--Russian conglomerate AFK Sistema
(AFKS.RS)--has already asked India to settle its dispute by Aug. 28
or face legal action.
These developments add pressure on the federal government which
has been rocked by a spate of corruption allegations, political
instability and policy paralysis, denting India's image as a
favoured foreign investment destination. The 2008 telecom license
sale, which has allegedly been rigged, has been the most damaging,
leading to the resignation of the minister who oversaw the
transactions and his subsequent arrest.
The Supreme Court had asked the government to hold auctions to
reallot licenses and bandwidth. The government said to complete an
auction it expects to take at least 400 days, by which time the
Norwegian company would have had to stop its operations in the
country.
Telenor, which has about 40 million customers, recently
requested the Supreme Court to direct the government to complete
the auction by June 2.
Telenor's intention to seek compensation is a means to put
pressure on the government to carry through a swift rerun of the
licence auction, said Nordea analyst Stefan Gauffin.
-By Dhanya Ann Thoppil, Dow Jones Newswires; +91-9886929464;
dhanya.thoppil@dowjones.com
Grafico Azioni Telenor ASA (QX) (USOTC:TELNY)
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