Norwegian telco Telenor has said it will start looking for a new partner in India after the country’s supreme court ordered the cancellation of 122 2G licences.
The company added it would seek indemnities from its current partner Unitech after their…
Norwegian telco Telenor has said it will start looking for a new partner in India after the country’s supreme court ordered the cancellation of 122 2G licences.
The company added it would seek indemnities from its current partner Unitech after their joint venture Uninor lost its 2G licences.
In early February, the court had decided to revoke 2G licences that, it said, were illegally granted by former telecoms minister A. Raja in 2008.
Uninor, which is 67.25%-owned by Telenor while Indian real estate conglomerate Unitech controls the remaining stake, has lost 22 of its licences, making it one of the companies hit hardest by the ruling.
But Telenor claimed that “it has always been clear that this [the allegations] pertains to actions that happened much before we entered India [in 2009].”
Today, the company added: “It is Telenor’s Group’s position that the strategic partnership with Unitech Limited does not have a future, and it therefore will start the process of looking for a new Indian partner.”
As for the indemnities, Pal Wien Espen, Telenor’s general counsel, argued that “the legality and validity of the licences was fundamental term of the share subscription agreement between Telenor Group and Unitech Limited. We believe that the Supreme Court’s cancellation of the unified access service licences (UASL) conclusively demonstrates a clear breach of Unitech’s warranties.
“Telenor will therefore exercise its entitled right under the share subscription agreement to hold Unitech Ltd. liable to indemnify and compensate Telenor Group for its investment in India,” Espen added.
Nirjhar Goel, Unitech’s nominee on the Uninor board, responded to Telenor’s comments, saying: “We empathically deny that the cancellation of the UAS licences by the Hon’ble Supreme Court demonstrates a breach of any warranties on our part and the court also has not concluded any wrongdoing on the part of the licensee companies. We are surprised to receive the indemnity claim from Telenor taking a plea of the order passed by the Hon’ble Supreme Court and simultaneous release of press statement by Telenor, which is a clear violation of the confidentiality covenants of the shareholders’ agreement.
“At best, Telenor can claim damages from the government under the investment bilateral treaty. We reserve our right to take appropriate legal action against Telenor for damages caused to Unitech Group from breach of the confidentiality obligation by Telenor.”
Relationships between Telenor and Unitech have been tense for about a year now.
In early 2011, Uninor’s planned rights issue was brought to a halt after Unitech reportedly claimed that the transaction was not in the best interests of the shareholders.
In November, Uninor finally got the green light from India’s Foreign Investment Promotion Board (FIPB) to go ahead with the transaction.
Meanwhile, Unitech reportedly accused Telenor of mismanaging Uninor.
