Oslo: Norway's Telenor will write down 4.2 billion crowns related to its Indian operations after a court there ordered its licences revoked, in a move analysts said was long overdue and had been expected by investors.
Thursday's order by the Supreme Court to revoke 122 licences issued under a scandal-tainted 2008 sale forced Telenor to do what markets had already priced in given weak prospects at its Indian unit, which has 22 of the licences, analysts said.
Indian state auditors and the court found that the telecom firms were not eligible to gain the licences as they had suppressed facts or given false information to win the lucrative permits and the state could have lost up to $36 billion as a result of corruption surrounding the sale.
"It should have been marked down a long time ago," said Ole Petter Kjerkreit, a telecoms analyst at ABG Sundal Collier. "The investor market wrote these values down on the date of the announcement in 2008, when the share price dropped 26 percent."
He added, "Telenor has continued to invest with highly questionable logic, but now they have chosen to adapt to reality."
India is the second-largest mobile phone market in the world with around 900 million subscribers but call rates are among the lowest due to fierce competition, and analysts have said that India is a drag on Telenor's profits.
Telenor shares traded up 0.59 per cent at 94.25 crowns at 1609 GMT after losing 1.4 per cent on Thursday following the court decision.
Telenor can continue to operate in India for four months while regulators there come up with new market rules, but the firm's chief executive said Telenor may quit India rather than wait for new market rules to be framed.
"The ruling is a very serious attack on our investments, (which are) based on the licence framework that was spelt out in 2008," Chief Executive Jon Fredrik Baksaas told Reuters late on Thursday.
Following the writedown, which will be booked in fourth-quarter results to be published on February 8, Telenor's exposure to Uninor, its Indian provider, will be 2.4 billion crowns after taxes, the company said.
"What probably happened is that their accountant told them you have to write this down after the court ruling but it's mostly a technicality at this point," said Fondfinans analyst Arild Nysæther.
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