Telenor may exit India, write downs $682 mn India exposure
Norwegian firm Telenor Monday decided to write down its Indian assets worth USD 682 million and said it will be forced to exit the country if the regulator TRAI's proposals to auction airwaves at 10 times the price used in 2008 are accepted.
New Delhi: Norwegian firm Telenor Monday decided to write down its Indian assets worth USD 682 million and said it will be forced to exit the country if the regulator TRAI's proposals to auction airwaves at 10 times the price used in 2008 are accepted.
"If these recommendations become policy, then the Government of India will be forcing Telenor Group to exit. It will be almost impossible for us to participate in the upcoming auctions," Telenor Group Executive Vice President Sigve Brekke said in a statement.
Also, the company in a filing to the Oslo Stock Exchange said it will write down USD 682 million (Norwegian Kroner 3.9 billion), thereby bringing its accounting exposure in India to nil.
Telenor holds around 67 percent in telecom venture Uninor with the rest of the stake being owned by Unitech.
"Following the Supreme Court's ruling in February to cancel Uninor's licences and the recent recommendation from TRAI regarding the 2G licence re-auction, the uncertainty has increased significantly," Telenor said.
"As a precautionary measure, Telenor ASA has decided to write down the remaining fixed and intangible assets in India amounting to NOK 3.9 billion (NOK 2.6 billion after non- controlling interests)," it said.
The write down will be included in Telenor's results for the first quarter 2012, to be presented on May 8, 2012.
"After the write down, Telenor has no further accounting exposure related to India as of March 31, 2012," it added.
TRAI on April 23 recommended a base price of Rs 3,622 crore for a megahertz of pan-India spectrum, which is around 10 times higher than the price 2G licences were allocated in 2008 during the tenure of the then Telecom Minister A Raja.
According to TRAI recommendations, a minimum of 5 Mhz should be allotted, which means that pan-India spectrum in 1800 MHz band will cost Rs 18,000 crore.
Brekke said that with these recommendations, the Government will not be following the court order.
"We hope that the Government will look at issues such as only 5 Mhz in the auctions, participation not just for fresh licence seekers but all operators and impractical rollout obligations, in addition to the reserve price, when it devises the auction rules," Brekke said.
TRAI has also recommended that service providers using 800 and 900 Mhz spectrum (being used for 2G CDMA and GSM service respectively) be shifted (through re-farming) to of 1800 Mhz after the licences come up for renewal.