India, watch out!

Geir Heierstad, IKOS, UiO

On a detour back from Japan and South Korea, Norway’s Minister of trade and industry is set to pay a new visit to India on Saturday 12 May.  According to E24 the Minister, Trond Giske, will make another attempt to save Telenor’s investments in India’s mobile sector after Uninor lost its licenses. Officially he wants to get an update from the Telenor/Uninor staff. However, he will also make attempts to influence the outcome of the Indian government’s decision concerning the design of the coming tender for the lost licenses.

It is evident that Telenor still wants to do business in India. When they wrote down the value of its assets in India to zero, it was due to technical aspects of accounting. And to create enough press coverage such that the Indian government could feel at least some pressure concerning how they will deal with the Telecom Regulatory Authority of India’s (Trai) proposed tender. Trai wants an open tender, which probably will imply that Telenor/Uninor has to pay a 13-fold increase of what they initially paid through Unitech.

The Minister now wants to pressure the Indian Government not to follow Trai’s recommendations. If the Government follow Trai on this, Telenor’s Indian adventure becomes history. As a majority shareholder of Telenor, the Norwegian Government supported the company’s investments in India. But most of the remaining Telenor shareholders did not respond positively to Telenor’s attempt to build up an Indian mobile service provider. Thus, as an ardent supporter of Telenor’s India investments, the Norwegian government has more than assets to lose if Uninor crashes and sinks.

State ownership is common to Norway, but controversial. Trond Giske is, as a representative of the incumbent Labour Party, in favour of  active state ownership. Given the development of Telenor in India, of which the Norwegian state at least was very positive, the future of Uninor also concerns the popular support in Norway of large scale state ownership.

And it is mainly within this framework Giske’s coming India visit should be understood. He has to defend his and the government’s claim that the state is able to carry out “good corporate governance”. However, many questions the state’s capability to contribute to growth, development and income for the Norwegian society through government-owned corporations. Telenor’s India adventure seems not contribute to popular support of state ownership.

Thus, if they are not able to implement the “flexible and dynamic ownership” necessary to create high returns and development, why should then the state own any companies at all unless it directly affects Norway’s infrastructure or security concerns?

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