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Indian Supreme Court on Thursday cancelled second-generation (2G) mobile licences issued in 2008 after the alleged corruption by Norwegian company Telenor. The court ordered some of the 10 operators to pay as much as 50 million rupees ($1 million) as penalty,
The Norwegian firm paid $1.10 billion for a majority stake in the venture with Indian property developer Unitech, which bought a licence in a distribution process that was under-priced and allegedly corrupt.
Uninor which is a joint-venture of Unitech and telenor complained that the company was being "unfairly treated." "We are shocked to see Uninor is being penalised for faults the court has found in the government process," it said.
The court ruling said the licenses must be put up for re-bidding, but it remained unclear whether the firms "will have the stomach or resources to invest more to defend businesses which are still in start-up mode," said Fitch ratings agency.
Telenor, which has been struggling in the Indian market, and other overseas companies "will have to decide whether they want to continue to do telecom business in India," said Gartner's Bhatia.
The ruling affects about 70 million subscribers -- out of India s 894-million odd mobile users -- who are clients of the operators which lost their licences, forcing users to seek out other providers.
The decision also raises new uncertainty about India as an investment destination at a time when the country is seeking to raise about $1.0 trillion over the next five years to upgrade its dilapidated infrastructure.
"This (decision) could mean that investors may shy away from other priority sectors such as roads and highways, energy and power utilities," Naveen Mishra, lead telecoms analyst at CyberMedia Research, told AFP.
The licence cancellation follows on the heels of a high-profile government U-turn late last year on allowing foreign supermarkets to enter India.
"There is no regulatory consistency," said Ashish Basil, partner at consulting firm Ernst & Young India s telecom group.
The court ruling's big winners are local phone service providers such as Bharti Airtel and Vodafone India whose unaffected licences were awarded before 2008.
The ruling may also result in a long-anticipated industry consolidation as weak operators fall by the wayside or are swallowed up by stronger rivals.
This is an epic fall for the India's self-proclaimed rising economy and will alarm the investors whether or not invest further in India. The investors should not need any further warning. Investors should now know that they are putting all their assets on stake by investing further in India.
Investors should not be worried as we have a good news for them. Pakistan can proof to be a better alternate in this regard with the surety that their assets will be safe. PTA has recently advertised for third generation license auction notice in papers and will sell 3 technology neutral licenses. In addition PTA will also auction InstaPhone’s 800 MHz license to interested buyers,
Pakistan Cyber Force
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