2G auction: Telenor wants 50 per cent cut in Mumbai licence fee

Telecoms firm Telenor asked Indian authorities to reduce the licence fee for the Mumbai region by 50 per cent, otherwise it would be nearly impossible to take part in the auction, chief executive Jon Fredrik Baksaas said on Friday.

"We expect the upcoming auction to be sub-optimal if the current price level is maintained - it will be comparable to the November auction, with limited participation," Mr Baksaas told Reuters after meeting with Indian officials in Davos on the sidelines of the World Economic Forum.

"It is nearly impossible to participate in the Mumbai auction at the current price level," he said after discussing several topics with Indian officials.

Telenor had, almost a year ago, lost its licences after Supreme Court cancelled 122 permits that were awarded in a tainted licensing round in 2008. When 2G spectrum freed from the cancellation was auctioned in November last year, Telenor won permits in six states, but couldn't get the same in three circles including in Mumbai.

"The Government has been giving right signals to industry leaders. We are hopeful that the pricing issues would be resolved and we will wait for March. But as the indications stand, the reserve price is likely to be brought down," Mr Baksaas told PTI.

Telenor had, at the time of losing its licenses in February last year, stated that it would give up some of the 13 circles it operated in and would aim to win spectrum in nine areas in the November auction.

Ahead of the November auction, it ended its partnership with real estate firm Unitech and set up a new joint venture called Telewings.

The new joint venture paid Rs. 4018 crore to win spectrum or airwaves that carry mobile phone signals, in Andhra Pradesh, Uttar Pradesh East, Uttar Pradesh West, Bihar, Gujarat and Maharashtra. It could not manage spectrum in Mumbai, Kolkata and West Bengal.

The company had previously indicated that it may bid for airwaves for the Mumbai zone in the March auction. The firm, which operates under Uninor brand name, has continued to operate in Mumbai after Supreme Court allowed more time for revoked permits to continue operations. However, it continues to scale down operations in Kolkata and West Bengal zones as planned earlier.

On his meeting with Commerce Minister Anand Sharma on the sidelines of WEF, Mr Baksaas said the Minister informed of the growth potential of Indian markets and the recent steps taken by the government as part of its reform agenda.

"The discussions were mostly of general nature, but I told the Minister about the very difficult period that telecom sector has faced and he also made very clear references to the fact that the first auction did not attract satisfactory response in 100 per cent of geography," he said.

With inputs from PTI