Telenor cuts its losses in Mumbai

Norwegian operator group Telenor will cease operating in Mumbai, after being told by India’s Supreme Court to shut down its operations in the city. The operator’s Indian subsidiary, Uninor, will lose around 1.84 million customers as a result. Its total subscriber base in India was 42.07 million at the end of December 2012, according to Informa’s WCIS.

In February 2012, the country’s Supreme Court cancelled 122 2G licences that had been allocated in 2008 amidst allegations of corruption. While Telenor appealed this decision, the Supreme Court has now ruled that all GSM licences that were sold in 2008 will remain cancelled. Telenor said it would not appeal this ruling.

Telenor did not bid for spectrum in Mumbai in November last year when the 2G licences were reauctioned, claiming that the reserve prices were set were too high. In fact no operators bid, meaning that Mumbai, along with the capital Delhi, will continue to be served only by the country’s incumbent operators, such as Bharti Airtel and Vodafone.

Telenor will have the opportunity to bid for spectrum in Mumbai in March this year, when the remaining 2G licences will be auctioned once again. However, a spokesperson told Telecoms.com that Telenor will not participate.

“With no temporary license made available until the next auction, we are not participating,” the spokesperson said. “We have close to two million customers in Mumbai currently, and it is not an option to start from scratch.”

They added that Telenor kept its Mumbai services operational in the hope that the price would come down and that it would have been granted a temporary license until a new auction was finalised.

“As such, the impact of the ruling is that we are continuing operations in six circles of Maharashtra and Goa, Gujarat, UP East, UP West, Bihar and Jharkhand and Andhra Pradesh,” added the spokesperson. “Fresh spectrum for 20 years has already been secured for these circles in the auction held in November 2012. However, we are regrettably closing operations in Mumbai.”

Anubhuti Belgaonkar, senior analyst at Informa Telecoms & Media, sympathised with Telenor’s plight.

“Telenor now has no licence, no operations and no customers in Mumbai. Had it been allowed to continue operating in the circle, it would at least have had a customer base as a foundation, but now it has  had to close its network down completely,” she said.