Norwegian telecommunications operator Telenor ASA (TEL.OS) Monday warned the Government of India would be forcing it to exit the country completely, if it were to follow current recommendations for the planned renewal of an auction for mobile licences in the country.

In February, India's Supreme Court ordered a re-run of a mobile license auction originally held in 2008, after concluding it was rigged and underpriced. As a consequence, Telenor's majority-owned Indian joint venture Unitech Wireless was ordered to return all 22 of its mobile licenses.

Earlier this month, India's telecommunications regulator proposed that the government open the sale to all companies when it auctions mobile-phone bandwidth. It also suggested a base auction rate that is several times more than the price at which India allotted 122 licenses and bandwidth to several companies in 2008.

On Monday, Telenor warned in a statement: "If the recommendation from TRAI [Telecom Regulatory Authority of India] in its current form should be approved by [India's] Department of Telecommunications, it will be almost impossible to participate in the auction for Telenor." It added that it is now "working actively" to bring forward an acceptable solution.

In a separate statement, Telenor spokesman Glenn Mandelid said that if the recommendations of the TRAI become policy, "then the Government of India will be forcing Telenor to exit" the Indian market as the renewed auction could be too costly for Telenor to participate in.

Due to uncertainty regarding its future operations in India, Telenor said it will make another write-down of its remaining fixed and intangible assets in India, amounting to NOK3.9 billion ($0.68 billion), meaning it will no longer have any accounting exposure related to its Indian operations.

Telenor has previously written down NOK4.2 billion in relation to licenses and goodwill in India.

India's top court has set an Aug. 31 deadline for the government to complete the renewed bandwidth auction, and allowed companies affected by the judgment to operate until Sept. 7.

At 0813 GMT shares in Telenor traded 3% higher at NOK103, against a 0.5% gain for the broader Oslo stock exchange.

Handelsbanken analyst Thomas Heath said investors are probably relieved by Telenor repeating its conservative stance toward its future in India. He added that it now seems increasingly likely that Telenor will either leave India completely or continue its Indian operations with a much reduced size.

-By Sven Grundberg, Dow Jones Newswires; +46-8-5451-3098; sven.grundberg@dowjones.com

(Romit Guha in Mumbai contributed to this article.)

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