Telenor’s India run troubled from the start

On October 30, 2008, when Norwegian telecom major Telenor announced its entry into the Indian market by acquiring 60 per cent stake in Unitech Wireless for $1.1 billion, it had believed that it could replicate its success in other Asian countries including Pakistan and Indonesia.

For Telenor, India was the gateway to its global ambitions as it hit near stagnation at its home market in Norway. Just over a 8 years later, the Norwegian dream lies shattered.

“The company had great ambitions here with pan India licences. The then global CEO Jan Fredrik Baksaas had pushed the team to be among the top four operators in the country. While some of the investors back home were sceptical, there was great excitement and hope when they entered the market,” said a former executive who left the company in 2010.

Initially, Telenor was very aggressive in the Indian market and came up with innovative schemes and plans such as the dynamic pricing, which allowed users to get tariffs based on traffic congestion at a given time and location.

It also engineered its network to make it one of its lowest cost operations worldwide without compromising on quality. In fact, Telenor’s Indian network design became a model for its subsidiaries in other parts of the world.

But things started going bad for the company after the 2G spectrum scam was exposed. Real estate company Unitech had acquired mobile licences under the infamous ‘first come first served policy’ of the then telecom minister A Raja.

This policy was later found to be dubious and in 2010 the Supreme Court scrapped all the licences issued under this policy.

What followed was a long battle for survival. After having invested into the country, Telenor could not pull out without facing the investors’ flak.

On the other hand, regulatory overhang did not give much respite. Soon things started going awry with its Indian partner Unitech.

Telenor Group had issued a notice to Unitech, which stated that it would seek indemnity and compensation following the cancellation of Uninor’s 22 licenses by the Supreme Court. The two companies fought a long legal battle, which ended only after Unitech said it would exit from the telecom joint venture with Telenor by selling its entire 32.75 per cent stake to the Norwegian firm for a nominal amount.

Looking to rebuild its operations, Telenor managed to win back spectrum in six circles for ₹4,018 crore through an auction conducted in 2012. The company secured 5 MHz of spectrum in Andhra Pradesh, Uttar Pradesh (East), Uttar Pradesh (West), Bihar, Gujarat and Maharashtra. The company tried to innovate by promising to be sabse sasta (cheapest). It also developed capabilities to offer basic Internet services using 2G spectrum.

“But in India, if you have to survive you need scale. You have to be a pan-India operator offering 2G, 3G and 4G to compete with the likes of Airtel, Vodafone and now Reliance Jio. Unfortunately, Telenor could not get national footprint or move into 3G and 4G at a time when data service is growing rapidly,” said an industry veteran.

To be fair, Telenor did try to forge alliances earlier with Tata Teleservices and also with Vodafone, according to market sources. But these talks did not move ahead. By 2015, Telenor investors had enough of the India dream and the company did not pursue any deals to acquire more spectrum.

Its fate was sealed once Reliance Jio launched its telecom juggernaut. Telenor said that it was exiting India with great difficulty. That’s the difficulty with ambitions that fall flat.