Europe's news in English

COPY LINK

TELENOR

Telenor teams up with new India partner

Norwegian telecom group Telenor said on Friday it had found a new local partner thereby saving its embattled expansion into India.

Published: 26 October 2012 15:39 CEST

Earlier this month Telenor settled a bitter dispute with former partner Unitech, after their jointly owned company's licences were cancelled by a court.

Telenor will now team-up with Lakshdeep Investments & Finance owned by businessman Sudhir Valia, in a move that allows Telenor to stay in India and bid in upcoming frequency auctions.

"Upon successful participation in the upcoming spectrum auctions and post all required government approvals, Telenor Group will eventually own 74 percent of the joint venture," Telenor said in a statement.

Regulations demand foreign companies join up with local partners in order to legally operate and invest in India.

The settlement between Telenor and Unitech ended a battle sparked with the cancellation by the Indian Supreme Court of 122 telecom licences over allegations of corruption.

Telenor opposed the court decision, arguing that the licences had been awarded soon after it had formed its Unitech partnership, and that it therefore could not be responsible for any alleged wrongdoing that took place before then.

Telenor had faced the prospect of losing its total Indian investment cost of 17 billion kroner ($3 billion).

Member comments

Log in here to leave a comment.

Become a Member to leave a comment.

Norway's Telenor sells out of India as tycoon weighs in

Former Telenor CEO launching the company's ill-fated India business in 2009. Photo: peerdahl/Wikimedia Commons

Tycoon Mukesh Ambani launched Reliance Jio's 4G network in September with an audacious free service for the rest of 2016, followed by vastly cheaper data plans and free voice calls for life.

The move forced rivals to slash their tariffs and scramble to match the deep pockets of Jio, which is backed by Ambani's vast energy-to-chemicals conglomerate Reliance Industries and picked up 100 million subscribers in its first six months

Bharti's acquisition is the latest movement towards consolidation in India's telecoms sector as major players try to position themselves to best face the tough new environment.

The move, which still needs to be approved by regulators, will enhance its coverage, the company said in a statement to the Bombay Stock Exchange (BSE), and see Telenor exit India.

“The proposed acquisition will include transfer of all of Telenor India's assets and customers, further augmenting Airtel's overall base and network,” the Indian firm said in the statement.

Last month British mobile phone behemoth Vodafone announced that it was in talks to merge its Indian unit with Mumbai-based Idea Cellular in its own move to counter Jio's rise.

That deal would create India's largest telecoms company. Global brokerage firm CLSA estimated that the pair would command a combined 43 percent share of market revenue, ahead of Airtel, which is currently the market leader, on 33 percent.

Reliance Communications — owned by Ambani's brother Anil Ambani — and Tata Teleservices, part of the sprawling salt-to-steel Tata conglomerate, are also reportedly in talks to join forces.

Reliance merged with telecom operator Aircel in September last year. Bharti Airtel's shares surged more than five percent in Mumbai morning trade following the Telenor deal announcement.

“The decision to exit India has not been taken lightly,” Sigve Brekke, Telenor Group CEO, said in the statement.

“After thorough consideration, it is our view that the significant investments needed to secure Telenor India's future business on a standalone basis will not give an acceptable level of return,” he added.

Telecoms analyst Baburajan Kizhakedath said Telenor was quitting India because the intense competition meant there was no scope for growth. “The Airtel-Telenor deal is probably the best exit route for Telenor,” he told AFP.

Url copied to clipboard!