Last week the Telecom Regulatory Authority of India (Trai) proposed that the government should auction unites of the spectrum for 3,622.18 crore each. That is a 13-fold increase over what Unitech paid back in 2008 when licences were sold under the then telecom minister A Raja. To Times of India Unitech Wireless CEO Sigve Brekke proclaimed: “In totality, if this is becoming policy, then the government is forcing us to leave. It’s quite clear it will not work for us… We are willing to write off the Rs 14,000 crore we have invested.” It is not only the price Unitech and Telenor dislike, but also the spectrum offered in the proposed tender: “Auction of 5 Mhz spectrum is not an auction. It’s a trial balloon and the government is only trying to set the price level for future rounds. We can’t do with so little spectrum”, Brekke adds.
And in Norway news headlines proclaim that Telenor have already withdrawn from India and lost all of their assets, even as everyone knows that this is due to technical aspects of accounting and to threaten the Indian government. As Telenor state in a press brief: “The write-down will be included in Telenor’s results for the first quarter 2012, to be presented on 8 May 2012. After the write-down, Telenor has no further accounting exposure related to India as of 31 March 2012.” Someone wants to save on taxes.
And Norwegian Minister of Trade and Industry Trond Giske has already announced that now, when the Trai is finished and the process gets political, he is prepared to make new trips to India in order to convince the officials there that they need to consider India’s reputation.
At the same time, Vice President of Group Communications at Telenor, Tor Odland, hesitantly confirms to NRK Radio that he understands the need for the India government to do something concerning the previous “auction” or the way licenses had been distributed.
With the Teri recommendation at the table, the case now rest with the Indian Department of Telecommunications. In the future it will be interesting to see to what extent Indian ministers get affected by Norwegian threats and visits by the Norwegian Minister of Trade and Industry. India’s need to establish a more correct (read incorrupt) price level for the future is easy to accept. If they will use the coming 2G tender as a test balloon is highly uncertain.
However, even as one accepts the right of Norwegian ministers and Telenor to do whatever they think would benefit Norway and Telenor the most in terms of influencing political decisions, it is difficult to see that they are able to contribute with arguments unknown among Indian counterparts.
It all boils down to two, connected issues: First, India’s need fight corruption and establish transparent and open procedures in the realm of investments. Second, what would benefit India economically.
Concerning the latter, Norway has already threatened India that they might not invest as much in India as they plan if Telenor through Uninor does not get a fair chance of re-buying the licenses they have lost. Can Norway’s proposed investments affect India’s decision? Is it enough?
And, will the Indian High Courts withdrawal of 2G licenses, with the economical consequences it already has for Telenor, make potential international investors shun India? Will the fight against corruption make India less interesting in the future? Is it a possible low risk, low return scenario international investors fear the most?