Telenor scales back India operations
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Norway's Telenor won back its telecom operating licences in six of India 's most populous states, paying less than markets expected and ending 10 months of uncertainty after courts cancelled its permits.
Telenor, which has over 150 million customers in Europe and Asia, agreed to pay 4.2 billion crowns ($731 million) for the six licences, a relief to investors who feared the firm would go after more permits and could end up paying twice the eventual figure.
We will stay present in areas that make up over half of India 's population and continue to have 34 million customers, Chief Executive John Fredrik Baksaas said.
This puts us on track to break even in India †by the end of next year, Baksaas said.
India †cancelled 122 operating permits awarded in a corruption-tainted licensing round, forcing Telenor and others to reapply and raising the risk of a cost blow out for a venture that has never made a profit.
To cap the risk, Telenor scaled back operations to nine India n circles from 13 and said it would quit the country altogether if the auction price went too high.
†I didn't expect them to cut back to six circles; it shows they were disciplined, Sparebank 1 Markets analyst Tore Toenseth said. They look to have paid the minimum price and that's good.
India †is the world's second biggest mobile market by customer numbers but margins are low and investors have argued that Telenor could make higher returns elsewhere.
The cost to re-purchase the original 13 circle holdings would have been around 11.1 billion crowns and for the 9 current circles around 7.9 billion, Bank of America Merrill Lynch said in a note.
In other words, by this measure, the company is scaling back the original exposure to India †by around 60 percent and even the revised exposure by about one-half.
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