Norway warns India of 'political implications' if Telenor fails

Telenor's $3 billion investment in India will have political implications.

"Telenor is not just any company. 54% of the shares are owned by Norwegian people through state and thus, it has even further political implications that such a company will be harmed. If this investment fails, it will be probably the biggest loss a Norwegian company has in foreign investments ever.

I think also it will be fair to say that it will influence the view of India as an investment country," Norwegian trade and industry minister, Trond Giske, told reporters.

Giske is the representative of Norwegian government on the board of Telenor, which holds 67.25% stake in the telecom operator, Uninor. The balance is held by realty major Unitech.

As many as 22 licences of Uninor were among the 122 licences cancelled by the Supreme Court on February 2, issued during the tenure of the then telecom minister A Raja. Uninor has been permitted to operate till September 7.

Giske added that Norway and India share good bilateral relations and expressed hope that the issues will be resolved soon.

"Bilateral relations between India and Norway are strong and they can handle any challenges. It might have effect on investors but government to government cooperation continues throughout all problems," Giske said.

"This situation after the Supreme Court ruling with the withdrawal of licences and proposals from Trai for new auction, have created obstacles to our future engagement," he said.

To continue its telecom operation, Telenor needs to acquire new licences and win spectrum through the upcoming auction. However, the company has expressed concern over the auction proposals of telecom regulator, Trai.

The Trai had suggested a base price of Rs 3,622 crore for one megahertz (MHz) for pan-India spectrum. This is around 10 times higher than the price at which 2G licences bundled with 4.4 MHz spectrum were allocated in 2008 during Raja's tenure.

According to Trai's recommendations, a minimum of 5 Mhz spectrum should be allotted, which means that pan-India airwaves in 1800 MHz band will cost Rs 18,100 crore.

Telenor has objected to the high base price recommended by Trai along with network roll-out obligations and the quantum of spectrum proposed for auction.

Giske said the Norwegian government fully respects the rights of Indian institutions' to take decisions but have "innocently harmed" the interests of Telenor and Uninor.

"I think it is truly possible to strike a balance and find a common ground where both Supreme Court decisions are fully respected, revenues to the Indian government is secure and competition and good service are provided to customers through participation of Telenor," Giske said.