Norwegian firm Telenor, on Tuesday, reported a 79.12 per cent plunge in its first quarter net profit at 583 million kroner (about $100.3 million) due to a 3.9 billion kroner ($682 million) write-off in India, where its unit has lost all telecom licences.
The company's net profit stood at 2.79 billion kroner ($0.48 billion) in the first quarter of 2011.
Telenor holds about 67 per cent in the Indian joint venture, Uninor, with the rest of the stake being owned by domestic real estate major Unitech.
Following the Supreme Court order in February, cancelling its 22 licences, Telenor has written-off 3.9 billion kroner ($682 million) as announced on April 30, thereby bringing its accounting exposure in India to nil.
Given the uncertainty, Telenor has, for the first time, excluded India from its financial outlook for 2012.
“As a result of high uncertainty in India, we present the financial outlook for 2012 for the group without Uninor. On a comparable basis, the positive outlook maintained,” Telenor CEO Telenor Jon Fredrik Baksaas said in a statement.
Telenor had also warned it would be forced to exit India if the sectoral regulator TRAI's proposals to auction airwaves at around 10 times the price used in 2008 were accepted. “The recent recommendation from the regulator on spectrum auction, following the Supreme Court's ruling to revoke all licences issued in 2008, has severe negative impact on both the telecom industry in India and Uninor,” Mr. Baksaas said.
Saying that it would be difficult for the company to participate in the proposed auction if the recommendations were accepted, Mr. Baksaas said, “We are working actively to safeguard our investment and urge the Government of India to clarify a sound framework for the industry.” Revenues, however, increased by 4.23 per cent to 25.11 billion kroner ($4.32 billion) in the reported quarter from 24.09 billion kroner ($4.14 billion) in the year-ago period. “I am pleased to present probably another quarter of solid operating results for the Telenor Group,,” he said.
