Cancellation-hit telcos won't pull their punches

Say will protect their investments legally foreign govts get in on the act as well

There’s still plenty of fight left in the telecom companies hit by the cancellation of 122 licences issued in January 2008. Uninor, Sistema Shyam, Etisalat DB and others are ready to dig in their heels and take legal action. Telenor, Unitech’s joint venture partner in Uninor, has gone to the extent of saying it may exit India. It is writing off about Rs 3,500 crore from its books related to its Indian investment following the licence cancellation.

Sistema is expected to file a review petition against the Supreme Court order, while sources in S Tel say it may also take legal recourse. Etisalat DB is exploring all the legal options available. Videocon group chairman Venugopal Dhoot declined to comment on the future course of action. But, company insiders confirmed its lawyers would advise on the issue soon.

Telenor CEO Jon Fredrik Baksaas, when asked in an interview with news agency Reuters in Oslo whether the company should heed calls by several investors and analysts to quit the Indian market and cut its losses, said, “That is one alternative that is on the table... the ruling is a very serious attack on our investments, (which are) based on the licence framework that was spelt out in 2008.”

However, in a statement back in India, the company said, “Telenor Group wants to be clear that the Uninor operations are continuing. Our intention is to fight to protect our lawful investments in the country. The Norwegian government has said it is monitoring the situation and will actively contribute to finding solutions to secure Telenor’s investments and presence in India.” It also said, “According to the IFRS accounting standard, Telenor is committed to continuously assessing its book value of assets and liabilities. Following the current developments regarding the award of 2G licenses, Telenor ASA has decided to write down NOK 4.2 billion related to its investments in India. It is an accounting exercise and has no impact on the running of Uninor’s operations.”

TIME TO STRATEGISE

TELENOR CEO Jon Fredrik Baksaas says the company may exit India. “The ruling is a very serious attack on our investments, (which are) based on the licence framework that was spelt out in 2008,” he says

SISTEMA JSFC says it is disappointed and to safeguard its interests, it will contest the order by pursuing all the legal remedies available

ETISALAT says it will work closely with the Indian unit’s management and legal counsel to understand the judgment, its ramifications on the operations, particularly customers and employees, as well as its right to a review of the decision

Affected companies include Uninor (a joint venture between Norway’s Telenor and Unitech), Sistema Shyam (a JV between Russia’s Sistema JSFC and Shyam Telecom), Etisalat DB (a JV between UAE’s Etisalat and Swan Telecom), Videocon, S Tel, Idea, Tata Teleservices and Loop Telecom (whose investment of Rs 35,000-40,000 crore is now in limbo).

Sistema JSFC in a statement said the company was very disappointed with the Supreme Court’s decision and to safeguard its interests, it would contest the order by pursuing all available legal remedies. In the meantime, Indian operations would remain as usual, it said.

The third foreign investor, Etisalat, said it would work closely with the Indian unit’s management and legal counsel to understand the judgment, its ramifications on the operations, particularly customers and employees, as well as its right to a review of the decision.

Financial Services Secretary D K Mittal said, “Of the total exposure of Rs 14,345 crore, only Rs 2,888 crore given to big companies, including Idea Cellular, Tata Telecom, Uninor and Videocon, is unsecured.” He said though the PSU bank loans to telcos hit by the order amounted to Rs 14,345 crore, the amount involved in the 122 cases was Rs 3,299 crore and was not a matter of concern.