Indian 2G auction looks to be expensive

Newspaper Dagens Næringsliv writes that comments coming out of India now suggest that the local authorities will aim to maximise revenue and keep high minimum bids in the upcoming 2G license auctions following the cancellation of 122 licenses by the Supreme Court due to the uncovering of foul play in the awarding of the said licenses several years ago in the beginning of the year.

The suggested minimum bids amounting to billions of kroner would likely be too steep for Telenor (OSE: TEL , NASDAQ: TELNF) to pay, particularly in the event that it is unable to carry over existing millions of customers without a gap in between services, although the company has continuously said it views Indian presence as very important. Such an event, the legal implications in what looks like a company being shafted billions by the partner and the authorities will play out over the next several years. Investors seem to treat the original investment, and even the large customer base, as a sunk cost and hardly flinch on the news.