Norway’s Telenor distanced itself further from the Indian market on Tuesday, excluding the country from its 2012 forecasts for the first time after licencing problems there led to massive writedowns that weighed on its quarterly results.
State-controlled Telenor posted a quarterly net loss of 390 million crown including minority interests after writing off the remaining 3.9 billion crown ($672.45 million) value of its Indian unit Uninor. That compared with a profit of three billion a year earlier.
The group’s troubles in India contrasted with an improvements in several key markets that had been struggling with margin pressure.
India’s Supreme Court earlier this year ordered the cancellation of 122 telecoms licences after a corruption-tainted licensing round. The proposed fee for a replacement licence is prohibitively high. “This (fee) package will make it almost impossible for incumbents like Telenor to stay in India,” chief executive Jon Fredrik Baksaas said on Tuesday.
Analysts welcomed Telenor’s possible exit as the low-margin market has been a drag on the firm’s earnings, and winding up would be a short-term boost to earnings and the stock.
Telecom honchos meet Sibal
Telecom service providers on Tuesday said there would be a minimum 30 paisa per minute impact on call rates, if the sectoral regulator’s recommendations on spectrum auction were accepted.
Against a 3.6 paisa per minute impact as calculated by the Telecom Regulatory Authority of India, the actual consumer impact would increase by more than eight times, without including the effect of price elasticity, they said in a presentation to communications and information technology minister Kapil Sibal. This was the second time in a week that telecom companies met the minister over the regulator’s proposals on spectrum auction.
Bharti Airtel chief executive Sanjay Kapoor, Vodafone India chief executive Marten Pieters, Idea Cellular managing director Himanshu Kapadia, among others, met Sibal. Top officials of code division multiple access operators Sistema Shyam Teleservices, Reliance Communications and Tata Teleservices, along with representatives of the Association of Unified Telecom Service Providers of India, also met the minister.
2G case: Government to withdraw review petition
The Centre on Tuesday decided to withdraw its plea from the Supreme Court seeking a review of its 2G judgment that had held that natural resources should be allotted to private companies only through ‘auction’ and not on the basis of first-come-first-served (FCFS) policy.
A letter, circulated in this regard to the parties linked to the matter, said an application would be moved on May 10 for withdrawing the petition seeking review of the February 2 judgment, which held the FCFS policy unconstitutional, while cancelling the 122 2G licences allotted during the tenure of former telecom minister A Raja.
The SC on April 13 had admitted the government's plea seeking review of its 2G ruling on a limited aspect that natural resources should be allotted to private companies only through ‘auction’, but had refused to hear the affected telecom firms, whose petitions for reconsideration of the verdict cancelling their licences were dismissed.