Telenor warned it could be forced to reconsider its presence in India if the New Delhi revises the terms of its spectrum licence amid a political scandal over regulation of the Indian telecoms industry.
Jon Fredrik Baksaas, Telenor chief executive, said the Norwegian mobile operator was committed to India “as long as the Indian government is committed to its side of the agreement” to make more spectrum available to the company.
He said: “If there are changes to that agreement then of course we may be forced to rethink”.
His comments came less than a week after Indian prosecutors alleged in court that Unitech Wireless, the Indian company acquired by Telenor in 2008, had received favourable treatment in the award of mobile licences shortly before the takeover.
Unitech, since renamed Uninor, is one of five companies alleged to have benefited from irregularities that an official audit claimed had cost the Indian government $39bn in lost revenues from spectrum licences.
The operators face fines or even cancellation of licences if wrongdoing is proved. Telenor has said it can find no evidence of irregularities involving its Indian affiliate and points out that the alleged offences occurred before it bought the company.
Telenor is battling to build its presence in India, the world’s second-biggest mobile market after China, amid fierce competition and heavy start-up costs that have caused some investors to question the wisdom of staying in the country.
Mr Baksaas insisted the company was gradually gaining traction in India, with 20m subscribers signed up at the end of the fourth quarter, but admitted market conditions remained challenging.
Telenor’s Indian problems have coincided with an escalating legal dispute with VimpelCom, the company’s Russian affiliate, highlighting the risks involved in its aggressive expansion in emerging markets over recent years.
Mr Baksaas on Tuesday stepped up his rhetoric against VimpelCom in Telenor’s battle to stop the Russian mobile operator pushing through a $6.5bn merger with Weather Investments, which holds the telecoms assets of Egyptian entrepreneur Naguib Sawiris.
Telenor, which owns nearly 40 per cent of VimpelCom, has questioned the financial and strategic rationale for the deal and fears it would badly dilute its influence over the Russian company.
Telenor announced fourth-quarter net profits of NKr2.1bn ($365m), down from NKr2.17bn a year ago.
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