'Telenor may claim damages from Unitech'
MUMBAI: Norway-based Telenor is likely to claim the cost of losing Indian telecom licences from Unitech, its partner from whom the company is parting ways, said Telenor's Asia head. "We have served an indemnity notice (to Unitech).
The damages will be the cost we will have to incur as a result of losing the licences," said Sigve Brekke, who is also the managing director of Uninor, a joint venture between Indian realestate major Unitech and Telenor.
Earlier this month, the Supreme Court cancelled 122 licences, including 22 of Uninor, that were issued in 2008 - the period being re-examined under the corruption scam in 2G, or second generation, airwave allocation.
Brekke said that Telenor has started its search for another Indian partner who would own 26% in Telenor's joint venture as required by India's foreign direct investment policy. While Brekke did not specify the current Uninor valuation at which a new partner will be inducted, he said the valuation will factor the loss of licences, the trouble the company has in raising debt, and other regulatory factors.
Telenor will look at settling its new partner before it enters into an auction for airwaves to be organised by the department of telecommunications. On losing its licences in India, Brekke said the company has an option to exit, but for now it is not taking that recourse. "We have said, we came here for the long run, and we will stay.
In India, you have to be patient and think of the long run." Nearly all of Telenor's global growth currently comes from its Asian markets besides India. However, the India operations , the biggest in Asia, are yet to break even, and were expected to do so by 2013.
That deadline is likely to suffer a setback resultant of recent developments, Brekke said. Meanwhile, Uninor's licences will lapse within four months of the Supreme Court judgement and a lag is likely between that time and the airwave auction that will substitute the allocation of cancelled licences.
Brekke said, "We have the assurance from the government that there will be alignment between the auction and the termination of our licence." Telenor's recommendation to the Telecom Regulatory Authority of India, that is laying benchmarks for the auction, is the new proposal should ensure as much competition in the Indian market as the initial allocation.
As a result, the company proposes two auctions, the first only for new players with 6.2 MHz spectrum blocks, and a second in which all can participate for incremental spectrum, Brekke said.