OSLO: Norway’s Telenor fears that a telecom corruption scandal rocking India may damage its fledging mobile operations there and says a $6 billion expansion deal by partly-owned Vimpelcom carries too much uncertainty.
India is mulling whether to cancel dozens of mobile licenses, including those held by Telenor’s Indian unit, after reports of corruption and billions of dollars in potential losses for state coffers.
Asked if he was concerned that Telenor’s India operations might be damaged, Chief Executive Jon Fredrik Baksaas said: "Of course that is something we are concerned about. We are working to give our views and bring clarity on our role, position and intentions in the Indian telecom market."
Baksaas said India’s reputation as a good place for foreign investment may be damaged if the row is protracted.
"If this kind of unclear situation is not resolved in a reasonable time horizon it will hamper investments from here onwards," he told Reuters on the sidelines of a conference.
"It doesn’t benefit the industry that these things are hanging around and not being resolved," he said on Wednesday.
Telenor is one of the world’s largest mobile operators in terms of subscriptions, with operations in the Nordics, Eastern Europe and throughout emerging Asia.
It had 195 million mobile subscriptions in September, including 91 million held by Russia’s No. 2 mobile group Vimpelcom, in which it owns a 36 percent voting stake.
"Meagre" deal
Baksaas said Telenor opposed Vimpelcom’s proposed deal to buy control of Orascom and Italy’s Wind from Egyptian tycoon Naguib Sawiris’ Weather Investments because of economic and strategic concerns.
Telenor voted against the deal at last month’s Vimpelcom board meeting, triggering a revised offer by Vimpelcom which is now being evaluated by Sawiris.
"The strategic and economic rationale for the whole thing became too meagre, and that was the overall evaluation seen from a shareholder perspective by Telenor. We know also that there are other shareholders that share the same opinion," Baksaas said.
He also said the deal was too dilutive for Vimpelcom shareholders and had too few prospects for capturing emerging market growth, especially with the "jewel" in Orascom’s portfolio, Algeria’s Djezzy, facing nationalization.
"Too many of the assets are impacted with too many uncertainties," he said.
Baksaas also blasted the rationale for investing in Italy’s Wind which he said has "a third-player position, with a heavy debt load and with no upstream cash for quite a number of years".
