Norwegian incumbent Telenor is writing down its fixed and intangible assets in its Indian joint venture Uninor, as a result of a regulatory decision to re-auction 2G licenses at premium prices.
The European telco notes it is still hopeful of resurrecting its Indian venture, but is booking a 3.9 billion kroner ($681.6 million) charge on the business in its first quarter results as a precaution against losing its operating licenses in the country. The write down cuts Telenor’s exposure in Uninor to nothing for the period to March 31, and reflects the firm’s lack of confidence in the re-sale process.
Telenor states that recent proposals on the sale by TRAI will make it “almost impossible to participate in the auction,” if accepted by the government. However, it notes Uninor’s business “has developed according to plan” during 1Q12, and indicates it is keen to remain a player in the market by working with “Indian authorities to bring forward an acceptable framework for continued operations.”
Regulator TRAI last week caused outrage among local carriers when it detailed proposals to re-sell 2G licenses at premium rates, which would increase the cost to telcos by 13 times. The regulator claims its plans could net the government up to 7 trillion rupees ($132.9 billion).
India’s Supreme Court in February cancelled all 122 licenses awarded in a 2008 2G auction, due to concerns over the allocation process.