Telenor ‘cautious’ as 2G spectrum probe rolls, but won’t stop investing

Even as realtor Unitech, along with a host of other firms, is under the government scanner for disclosing incomplete information and misrepresenting documents to get telecom licence in 2007-08, its Norwegian joint venture partner Telenor says it is not worried over the issue.

Asked if it was mulling a new Indian partner given that the government could even cancel some of the licences linked to the 2G spectrum scam, Telenor’s Asia head and group executive vice-president Sigve Brekke dismissed it as a hypothetical question.

However, in an interaction with select media on the sidelines of the Telecom GSM Congress in Hong Kong on Wednesday, Brekke said the company’s investment strategy in India would be cautious for the time being. He, however, assigned other reasons for the “cautious’ investment in India.
Excerpts from the interaction:

The Comptroller and Auditor General of India has said in its report on 2G spectrum that Unitech and others misrepresented company documents at the time of getting the telecom licences. The Department of Telecommunications may even consider cancelling some of these licences. What do you anticipate?
Cancellation of licence is a hypothetical question. Telenor entered India on a clear understanding of the licence obligation that they had. After entering India, we also asked the government for FIPB (Foreign Investment Promotion Board) approval, allowing us to invest above 50% and that took nearly 4-5 months. They really scrutinised about Telenor and our investment in Unitech Wireless (the licensee). I assume that they (government) also scrutinised the whole process around it. We need to respect and also need to assume that the government is standing by its responsibility. We entered India with a clear understanding that everything is okay. We have invested $1.2 billion in India already.

Is the government scrutiny worrying for you?
I’m not thinking about this. I’m only thinking about how many customers I can get tomorrow. Right now, I’m really thinking about where I should roll out the next round of base stations to cover more of India. That’s what I am worrying about. The other stuff (referring to licensing issue and Unitech probe) I briefly read about in the newspapers. I am really, really focused on making Uninor (Telenor-Unitech JV) a success story.

If the allegations about Unitech are true, would you contemplate changing the partner?
As far as we see it, we did our investigation when we came in. We did not find anything wrong. We assume that everything in the process has been following the rules set by the government. And I will be very surprised if the government goes back on some of the responsibilities it also has for us entering the market and for us rolling out our services. I’m thinking of it from that point of view rather than if and maybe. If I start going into hypothetical ifs, it ends nowhere. So, as I said, Telenor will always comply with rules and regulations in the countries it operates. Currently, we are complying with rules and regulations and with the rollout obligations.    

What if the rules of the land say that you have to change the partner?
That’s a very ‘if’ and hypothetical question. The only thing that I can say is that we can guarantee you that we will comply with whatever the rules and regulations say. That’s my answer. I can’t answer hypothetically to your question.

What are your investment plans in India now? With your Indian partner under the scanner, are you cautious on investing in the market?
Yes, we are cautious. But the reason we are cautious is not that we don’t believe in the Indian market. It’s just that we want to make sure that when we spend here, we should get returns.

You have already spent $1.2 billion in the Indian market, and you may be worried whether you will get the returns because of the 2G licensing controversy…
Not really. My concern is much more. For instance, the concern is whether I am ready to make business out of the new investments. To set up an operation in India is a tremendous challenge. So, I don’t want to end up investing in a lot of new network and then keep it empty. The moment I roll out a new network, I need to have a retail distribution. So, it’s a question about operational readiness and getting returns on your investment.

Are you planning to keep your investment on hold in view of Unitech being probed?
No. We will continue to invest, but gradually.

Are you talking to them (Unitech) on the matter?
No, this is not an issue that we discuss.