Telenor involved in further Indian trouble / News / The Foreigner

Telenor involved in further Indian trouble. Telenor could be part of a national corruption scandal after the recent implication of Indian subsidiary Uninor and associate Unitech. The scandal unfolded after Indian Minister of Telecommunications Andimuthu Raja was encouraged to resign three days ago. An Indian employee at the National Audit Office revealed that he was involved in telecommunications transactions that cost India a loss of somewhere between 900 billion and 1.4 trillion rupees (approximately USD 20 - 31 billion), according to Bloomberg, quoting Indian publication The Hindustan Times.

telenor, uninor, unitech, andimuthu, raja, jon, fredrik, baksaas, india, mobile, market, corruption



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Telenor involved in further Indian trouble

Published on Friday, 19th November, 2010 at 07:19 under the news category, by Ramona Tancau.
Last Updated on 19th November 2010 at 07:35.

Telenor could be part of a national corruption scandal after the recent implication of Indian subsidiary Uninor and associate Unitech.

Telenor / Uninor
Telenor / Uninor
Photo: Espen Klem/Flickr


Coercion

The scandal unfolded after Indian Minister of Telecommunications Andimuthu Raja was encouraged to resign three days ago.

An Indian employee at the National Audit Office revealed that he was involved in telecommunications transactions that cost India a loss of somewhere between 900 billion and 1.4 trillion rupees (approximately USD 20 - 31 billion), according to Bloomberg, quoting Indian publication The Hindustan Times.

“In order to avoid embarrassment to the government and maintain peace and harmony in Parliament, my leader has advised me to resign. My conscience is very clear.” Mr Raja told reporters after submitting his resignation to the Prime Minister.

Now former Telecommunications Minister Raja allegedly moved back bidding deadlines, selecting the companies that first registered for the tender himself.

The 85 licenses for the G2 frequency, obtained without bidding since 2008, were awarded at 2001 rates because of his “first come, first served” principle.

The Opposition has requested all licenses be revoked as the concessions were awarded on an unsound basis, according to NRK.

Disaster, or forgive and forget?

Technology strategist Karthik Jayaraman, who works as consultant for firms penetrating emergent markets, tells Dagens IT this could mean extremely negative financial consequences for the Indian market.

“It would be disastrous for India if the licenses were withdrawn as the Opposition demands. It [Telenor] has invested large sums of foreign capital in the Indian telecom industry, and the country must keep these,” he says.

He believes that the scandal will not have significant impact on Uninor, however, because of consumers’ forgive-and-forget mentality in their hunt for low rates.

“This state of affairs is probably harmless to Telenor. Customers are most concerned with getting affordable units and coverage, so Telenor and Uninor will probably not notice this affecting their revenues,” says Jayaraman.

Innocent victim?

Telenor alleges it learned of the scandal amid intense criticism for penetrating the Indian market, as well as a significant 2011 budget allocation reduction to Uninor of approximately half a billion kroner, reports E24.

Even though the two companies were not yet partners at the time of the alleged corruption, it could still have major consequences. Unitech may lose its concession, and the Indian government may fall after the yearlong corruption investigation stalled the Parliament, prompting Opposition calls for Andimuthu Raja’s resignation.

Furthermore, one managing director already resigned from Uninor in July, just over half a year after Telenor bought approximately 67 percent of Unitech’s shares. Telenor could also end up having to bid again, but this time at a much higher rate.

When Indian TV asked Telenor CEO Jon Fredrik Baksaas if he regrets the decision to buy into Unitech, he answered: "it is a very challenging question."




Published on Friday, 19th November, 2010 at 07:19 under the news category, by Ramona Tancau.
Last updated on 19th November 2010 at 07:35.

This post has the following tags: telenor, uninor, unitech, andimuthu, raja, jon, fredrik, baksaas, india, mobile, market, corruption.





  
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