2G scam: Telenor seeks $14bn in damages from govt
Norwegian telecom operator Telenor, which faces the prospects of its Indian joint venture losing 22 2G mobile licences due to the Supreme Court order, on Monday served a notice on the government, threatening international arbitration and claiming damages of nearly $14 billion (around Rs 70,000 crore).
Telenor invoked the provisions of India’s Comprehensive Economic Cooperation Agreement (CECA) with Singapore to slap a notice seeking a solution from the government within six months or drag the matter for an international arbitration for failure to protect its investment.
“The cancellation of licences, and the resultant loss of investments made by Telenor Asia Pte Ltd constitute a breach of India’s obligation under the CCEA. It is also possible that there could be a further breach of CCEA from the manner in which these licences are now redistributed through auctions,” Telenor said in its notice, which was sent to the Prime Minister’s Office, the telecom department and the corporate affairs ministry.
Telenor, which holds a 67% stake in Unitech Wireless, is engaged in a separate legal battle with its Indian partner Unitech, and has made public its decision to begin its hunt for another local ally. The Norwegian firm entered the Indian market through its Singapore arm.
In its notice, the telecom firm said that it invested in India based on licences issued by the government “in accordance with their own policy and process” and cited approvals from the Foreign Investment Promotion Board and the Cabinet Committee on Economic Affairs (CCEA) to argue that it had complied with the laid down procedure. “Despite having no role to play either in the policy or in the process through with these licences were awarded, Telenor stands to lose its entire investment made in India,” it said.
For the government this is the second such notice after Sistema invoked the provisions of the India-Russia Investment Agreement a few weeks ago. Telenor’s notice coincides with Russian president Dmitri Medvadev’s India visit this week where he is expected to broach the Sistema notice with Prime Minister Manmohan Singh.
“We can confirm that we informed the government of India of our intent to invoke the provisions of the CECA between India and Singapore. We are hopeful that it remains the government’s intent to protect and encourage bona fide foreign investment in the country. We are convinced that we can resolve this matter through continuing dialogue with the government such that Telenor Group remains a serious and long term participant in the Indian market that brings the benefit of competition to the Indian consumers,” a Telenor Group spokesperson said in response to a questionnaire from TOI.
Citing clauses of the CCEA, the notice said that the compensation has to be equivalent to the market value of the expropriated investment at the time of the decision, which in case of Unitech Wireless is February 2, the day when the Supreme Court cancelled 122 licences issued during ex-telecom minister A Raja’s term. Till then Telenor claims to have invested close to $14 billion in its Indian operations.