It’s Friday again and we’re all doubtless looking forward to the weekend. Or the majority of us, at least; if you’re one of those people who love their job so much they can’t wait until Monday, I don’t want to hear about it!
Telenor more than most will surely be glad to put this week behind it. That said, things could get worse before they get better for the Norwegian incumbent.
The telco’s 33% stake in Russia’s Vimpelcom – which it is in the process of selling, although a buyer might not be easy to find under the circumstances – is causing it quite a serious headache.
Vimpelcom is at the centre of a corruption investigation in Uzbekistan. U.S. and Dutch authorities are probing its operations in the market, partic ularly its links with a company called Takilant, which helped it to acquire spectrum. As a minority shareholder in Vimpelcom, Telenor’s conduct is also being called into question.
The situation has already cost a number of Telenor’s top brass their jobs, and this week the telco announced it has suspended more staff as a result of the investigation.
Chief financial officer Richard Olav Aa and general counsel Pål Wien Espen have been temporarily relieved of their responsibilities, the operator revealed on Wednesday. The move was triggered by a Deloitte investigation into Telenor’s handling of its Vimpelcom stake.
Later it made the same pronouncement with regard to Fridtjof Rusten and Ole Bjørn Sjulstad, both of whom were formerly Telenor nominees to the Vimpelcom supervisory board; Rusten was serving as CFO at DTAC in Thailand, while Sjulstad was chief corporate development officer at Telenor Hungary.
In the cases of all four men, Telenor said it had no reason to believe they were involved in the alleged corruption at Vimpelcom, but that the suspension would stand "until the facts have been established."
When it comes to facts, some people seem to know more than others.
A fortnight ago the Norwegian government forced the resignation of Telenor chairman Svein Aaser after new information came to light with regard to the Vimpelcom probe.
Industry minister Monica Mæland said she had received new information about the case, information she should have had at an earlier date. "It’s serious," she said, but was unable to share further details because of the ongoing investigation.
Aaser’s departure was followed by that of Telenor’s former chief executive Jon Fredrik Baksaas, who has been serving the company in an advisory capacity since he hande d over the reins to current CEO Sigve Brekke in August.
"The recent developments in the ongoing investigations of Vimpelcom make my role as strategic advisor to the board in Telenor challenging," said Baksaas, in a statement.
The investigation is no picnic for Vimpelcom either. The Russian operator swung to a US$1 billion loss in the third quarter of this year, primarily as a result of a $900 million provision it made in relation to the Uzbekistan investigation.
"The discussions with the authorities are ongoing and, until concluded, there can be no certainty as to the final cost to the company of any such resolution or the nature, likelihood or timing of a definitive resolution," Vimpelcom said last week.
Also last week, its former CEO Jo Lunder was arrested in Norway in connection with the investigation.
With all of the above to contend with, failing to win an 1800-MHz 4G licence in Thailand probably barely registered on Mr Brekke’s radar this week.
AIS and True Corp were named as the winners of two 1800-MHz licences on Thursday after some pretty frenzied bidding activity; the pair paid a total of 80.78 billion baht (€2.1 billion) for the licences, meaning Telenor’s DTAC was left out in the cold.
DTAC on Friday issued a statement reminding the market that it has sufficient spectrum for its 4G needs, thanks to a concession with state-owned operator CAT Telecom, but it is on the list of prequalified bidders for next month’s 900-MHz auction in Thailand, so we will see then just how keen the company is to get its hands on more frequencies.
Thailand has proved a challenging market for Tele nor recently. "The competition is not easing," Brekke said on the telco’s third quarter results calls.
"We have to return to growth in Thailand," in the near term, he said.
Of course, on that same call Brekke also reiterated Telenor’s intention to sell off its Vimpelcom stake, without resorting to a fire sale.
The sale will be "an orderly process that will take time," Brekke said.
No kidding. 33% stake in a Russian telco anyone? One careful owner, only a hint of corruption…
