U.S. West decides to pull out of India

U.S. West decides to pull out of India

NEW DELHI (AFP): India's reforms in the telecommunications sector got a jolt Friday when U.S. West Inc., the first foreign company to invest in the sector, said it was pulling out of the country.

"We are closing down our business division in India by middle of January," a source in the company said. "But our joint venture commitments for cellular telephony will continue."

U.S. West, along with its joint venture partner BPL Ltd., has been granted licenses to operate cellular telephone services in three Indian states of Maharashtra, Tamil Nadu and Kerala.

The multinational company has committed US$147 million to the joint venture.

The source said the company's "global thrust" had changed since it took over the U.S.- based Continental Cable Vision six months ago and it was now "mainly geared to concentrate on U.S. market."

"The company has decided to concentrate on the U.S. domestic cable telephone market and it is closing down most of the other offices around the world," he said.

"As a part of that strategy U.S. West is not looking at business development opportunities anywhere else."

The source said a telecommunications scandal which rocked India three months ago played no role in the company's decision to stop its operations in India.

Former telecommunications minister Sukh Ram, who oversaw the opening of the telecom market, faces corruption charges after raids by the Central Bureau of Investigations (CBI).

The CBI during raids at Ram's houses in September recovered 1.3 million dollars in cash but Ram has denied any wrongdoing, saying the cash was elections funds owned by the Congress (I) party.

"The telecom scandal and the its effect on the reforms in the sector have not played a role in us pulling out," he said.

U.S. West Inc. was the first telecommunications company to initiate a telecommunications project in 1991 in India, long before the market was fully opened up.

But its plan to link three districts in southern India through a wireless telephone project was grounded by the Department of Telecommunications.

The company's bid for operating basic telephones in five Indian states also received a setback when the government capped the telephone licenses to three states.

India has said its telecommunications sector needs $40 billion investment by the end of the century, and has invited overseas capital with concessions and lucrative offers.

According to government figures, the country of 950 million people requires 40-to-50 billion telephone lines by the year 2000.

Foreign firms including France's Alcatel-Alsthom, American Telephone and Telegraph Co., Bell Canada and Nokia Corp. have entered India since the sector was opened in line with the sweeping economic reforms of 1991.