Telenor writes off assets worth $681 million in India (India, Norway)

Telenor ASA has decided to write-down the remaining fixed and intangible assets in India amounting to $681 million. According to the company, following the Supreme Court’s ruling in February to cancel Uninor’s licenses and the recent recommendation from the Telecom Regulatory Authority of India (TRAI) regarding the 2G license re-auction, the uncertainty regarding the company’s future has increased.

If the recommendation from TRAI in its current form should be approved by the Department of Telecommunications (DoT), it will be almost impossible to participate in the auction for Telenor. Telenor is working actively towards Indian authorities to bring forward an acceptable framework for continued operations.

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.

TRAI may propose to cancel exit policy for telecom operators (India)

The Telecom Regulatory Authority of India (TRAI) is planning to make a recommendation to the Indian government claiming that telecom operators leaving the business do not need an exit policy. The authority is expected to have taken such a stand claiming that as the licences have been cancelled four months prior to the decision taken by the Supreme Court, they do not require an exit policy.

As per a statement made by TRAI, based on the comments received from stakeholders and keeping in view the Hon’ble Supreme Court Judgement of 2nd February 2012, the authority proposes to recommend to the government that there is no need for separate exit policy, that the entry fee paid by the licensees will continue to be non-refundable.

In a draft response, TRAI has said that the provision for surrender of licence is already prescribed in the draft guidelines. As such, the authority does not find any justification for a separate exit policy in case of Unified Licensing Regime.

TRAI also said that stakeholders have suggested that an operator be allowed to exit after giving adequate notice to subscribers and clearing all dues, and that the amount of refund may vary depending on the status of spectrum allocation.

STel to end network operations in India (India)

Telecom operator STel, has been asked to shut down its network in Indian regions –  Himachal Pradesh, Orissa and Bihar, by the Department of Telecom (DoT). According to reports, the decision was taken owing to security concerns. P. Swaminathan, Director, STel Pvt Ltd, said that they have received the government notice but details for the same have still not been given.

As per reports, Swaminathan has said that they have got the letter from the DoT, but it does not explain why they are being asked to shut down operations. They would like to ascertain the exact reasons for this decision so that they can help the Government in resolving any issue. Further, they had started offering services only after they received all permissions from various Government authorities; so this comes as a surprise to them.

Recent reports confirm that the operator is planning to shut down its operations in the country and has also helping consumers to switch to other operators by encouraging them to avail of the mobile number portability (MNP) service.

Following the Supreme Court’s decision to cancel 122 licences awarded in 2008, STel’s partner Bahrain Telecom also agreed to sell its stake in STel to Sky City Foundation for USD174.5 million. After considering all factors, the operator believes that shutting down its operations seems to be the best step.

Idea Cellular asks Supreme Court for clarification on licence cancellation (India)

Indian telecom operator Idea Cellular has asked for clarification regarding the Supreme Court’s order for cancellation of 122 licences auctioned in 2008, which impacts 13 licences held by Idea. According to reports, the operator has claimed that it had applied for the licence in June 2006, which should have been processed within 30 days but were delayed until 2008. Idea says that if the applications were processed on time, it would not be affected by the Supreme Court’s judgement.

As per sources, Idea has said that the clarificatory application has been filed, seeking further direction from the Hon’ble Supreme Court. Other telecom operators such as Telenor (operating in India through Uninor) and Bahrain Telecom (partnering with STel in India), have also been affected by the apex court’s decision.

Bahrain Telecom closed its operations in the country following this decision, while Telenor approached the Norwegian government to come to its aid and protect its investment.

The decision was taken in an attempt to root out corruption in the Indian telecom industry as the Supreme Court felt that the licences had not been obtained by legal means. However, this decision has not been received well by the affected operators who have been considering a legal retaliation in order to protect their investment.

Indian IT department asks Supreme Court to review Vodafone tax case (India, UK)

The Indian Income Tax department has asked the Supreme Court to review its decision in the Vodafone tax case. The Supreme Court had favoured the British telecom giant in its ruling, claiming that Vodafone was not required to pay taxes amounting to US$ 218 billion for the acquisition of Hutchison Whampoa Ltd’s Indian wireless business in 2007.

Chief Justice S.H. Kapadia, who gave the judgment, claimed that the government has no jurisdiction over Vodafone’s purchase of mobile assets in India, as the transaction took place in Cayman Islands between HTIL & Vodafone. Further, the apex body had also ordered the income tax department to return the US$ 495 million amount submitted by Vodafone during the trial, along with a 4 percent interest.

Justice Kapadia had claimed that shareholding in companies incorporated outside India is property located outside India. Where such shares become subject matter of offshore transfer between two non-residents, there is no liability for capital gains tax.

As per sources, the department’s appeal for a review is their final attempt to save face, and has not been received well by the industry. The decision by the Supreme Court was considered to be a landmark judgement in the Indian telecom industry, with many operators believing that this could encourage foreign investment in the nation.

Sources claim that the review plea may be considered by the court on 27 February 2012.

Telenor seeks help from Norway to protect Indian investment (Norway, India)

TelenorFollowing the Supreme Court ruling in India wherein it revoked 122 2G licences, telecommunications company Telenor has turned towards the government in Norway to help protect the future of its US$ 2.9 billion investment in India. Telenor controls a 67.25 per cent equity stake in Unitech Wireless and offers nation-wide mobile services under the brand name Uninor.

According to reports, Rigmor Aasrud, IT Minister, Norway met with India’s Telecom Minister Kapil Sibal to arrive at Telenor’s future in the country following the cancellation of the licences. After the meeting Aasrud said that they had a good, fruitful and constructive meeting with the telecom minister and they took up Telenor’s case along with other issues.

Kapil Sibal stated that both the IT minister and the Telenor official met him to share their perceptions and they had a dialogue on this issue. He told them that the SC verdict will bring clarity to the sector, the sector is robust and enough spectrum is available. Further, the National Telecom Policy 2011 which will be put out will be fair and robust.

Sibal added that India’s market is full of opportunities and no-one should be in doubt on the investments to come into India.

Sigve Brekke , managing director, Uninor has said that they are talking to the government because they need to protect their investment and they also need to make sure that there is a framework for continuing their operations in the country.

Indian regulator TRAI begins process for 2G spectrum auction (India)

The Telecom Regulatory Authority of India (TRAI) has begun the process for the 2G spectrum auction, following the Supreme Court’s order for the same.

According to reports, Sudhir Gupta, Principal advisor, TRAI has said that keeping in view the decision taken by the central government in 2011, Trai shall make fresh recommendations for grant of licence and allocation of spectrum in 2G band in 22 service areas by auction, as was done for allocation of spectrum in 3G band.

Gupta also said that TRAI recommended that all future licences should be unified licences under ‘Spectrum Management and Licensing Framework’ guidelines of May 2010. Further, it has said that spectrum should be delinked from licence. He added that pursuant to this recommendation, ‘Draft Guidelines for Unified Licensing Regime’ were also placed on TRAI website.

As reported earlier, the Supreme Court had cancelled 122 2G licences awarded in 2008 and has given the government till June to complete the new spectrum auction process.

Indian Supreme Court revokes 122 2G licences (India)

The Supreme Court in India has decided to revoke all the 122 2G licences awarded in 2008 in an unprecedented stance against corruption. According to reports, the ruling applies telecom operators inclusive of Uninor, Loop, Etisalat DB, Idea and Swan Telecom among others, over questions arising on the credibility of the auction.

Sources claim that the licences will be kept till June, post which new licences for the 2G spectrum will need to be issued. Telenor, which controls 22 licences under Uninor, has reportedly hinted at exiting the country if the Government or the Telecom Regulatory Authority of India (TRAI) does not intervene.

Industry analysts believe that while this move is aims to remove corruption in the telecom industry, it may also impact foreign investment in the same.

Lawyers say Etisalat’s deal violated foreign investment rules (India)

A lawyer for the federal investigative agency has stated that Etisalat’s 2008 deal to acquire a stake in an Indian telecoms firm, Swan Telecom, violated Indian rules on foreign investment and foreign exchange.

The federal investigators are probing into a multi-billion-dollar telecoms licensing scam. The Supreme Court is monitoring the probe by the federal agency.

 

Vodafone still considers no tax to pay (India)

Vodafone has stated that it continues to believe that it had no tax liability over its 2007 purchase of Hutchison Whampoa Ltd’s mobile business in India.

Vodafone, which has been fighting a $2.5 billion tax bill in India over the deal, stated its position had not changed with regard to the tax case.

According to the company, every adviser they have consulted, both during the transaction and since, is in unanimous agreement that no tax liability should arise.

India’s Supreme Court will hear the tax case on July 19 and Vodafone has stated thet it would continue to defend its position vigorously.