Foreign telecom firms in a fix

They consider legal recourse to save their investments

Facing an uncertain future following the Supreme Court order cancelling 122 licences issued in 2008, foreign telecom firms are contemplating taking legal recourse to save their investments and future in the Indian telecom sector. The affected global giants are the UAE's Etisalat, Norway's Telenor and Russia's Sistema Group that have already invested heavily in their India operations.

A similar opinion was expressed by Communications and IT Minister Kapil Sibal when asked about the impact Thursday's judgment will have on foreign firms which have already invested in India after getting all necessary clearances from the government. “It is for them [foreign investors such as Telenor and Etisalat] to vindicate their rights in an appropriate manner…they should seek court's intervention,” he told journalists here.

Seeking a fair deal

In a statement, Telenor, which is present in India in partnership with the Unitech Group, said: “When we have not caused any of the faults found by the courts, it is obvious to everyone that our investment must not be jeopardised.” The Norwegian firm has already invested over Rs.6,100 crore in equity and over Rs.8,000 crore in corporate guarantees as a foreign investor.

“We are reviewing the order and will consider necessary actions to safeguard our investment. We urge the government to ensure that a foreign investor that had nothing to do with these processes is not harmed… we look to the government to arrive at a fair outcome,” it added.

Similarly, Etisalat said it would work closely with its Indian partner (DB Group) and legal counsel to understand the judgment, its ramifications for its operations, particularly its customers and employees, as well as its right to seek a review of the Supreme Court's decision.

“The Supreme Court decision relates to events that occurred in January 2008, well before December 2008 when Etisalat invested in Swan. Etisalat has no knowledge of what occurred in the licence application process for Swan, far less any involvement,” it added.

Sistema-Shyam, a joint venture between Russia's Sistema and India's Shyam Group, said it was still awaiting the full text of the judgment... “the company would like to state that being a law abiding organisation, it reserves the right to protect its interests by using all available judicial remedies.” The company has invested over $2.5 billion [about Rs.12,500 crore] so far in acquiring licences and rolling out services.

“Unfortunate”

Among old operators that have been affected by the judgment include Idea Cellular whose 13 licences have been cancelled, including four of the erstwhile Spice Communications that merged with the company.

Noting that it has “unnecessarily been caught in this situation,” it said it was unfortunate that it was being made to suffer owing to this cancellation of licences, despite being fully compliant at each stage with the licence allocation process.

“We will study in detail the Supreme Court judgment and explore all possibilities to protect our investment,” it added.