The Foreign Investment Promotion Board (FIPB) has deferred a decision on Uninor’s Rs 1,200-crore rights issue. The Board took this decision pending a security clearance from Ministry of Home Affairs with respect to Telenor’s operations in Pakistan. The FIPB also took a decision to seek Uninor’s response to Unitech’s concerns against the rights offer.
Uninor, in which Telenor owns 67.25 per cent stake, had approached the FIPB, seeking to bring in Rs 1,200 crore as part of a rights issue. The cash-strapped company wants to use the additional funding for meeting operational expenses. However, the rights issue had hit rough weather with the Indian joint venture partner Unitech opposing the move.
Unitech Ltd had written to the FIPB that its nominees on Uninor’s board had not given their consent for the rights issue. It also alleged that the rights issue was an indirect attempt by the Nordic company to bring in a new partner into the venture.
Pending issues
The Department of Telecom had also raised some concerns and had told the FIPB that a decision on Uninor’s rights issue should be taken after looking into a number of pending issues.
This includes the legal notice issued by the Norwegian firm against the Indian Government under a bilateral investment treaty. The Department has also told the FIPB that a decision on the rights issue should be taken only if the company meets the FDI norms and complies with security guidelines. In addition, there are pending issues related to the company’s proposed amalgamation of seven subsidiaries.
Unitech has already informed Telenor that it will not subscribe to a rights offer. The DoT has told the FIPB that in case Telenor brings in a new partner then it should get security clearance for the same. The Board has taken note of the conditions imposed by the DoT.
The Department of Revenue objected to the proposal on grounds that it was a case of round tripping. The FIPB has rejected this saying that the revenue department’s views were generic in nature.
However, the FIPB has sought Home Ministry’s views on media reports alleging that Uninor’s managing director Sigve Brekke was a Director in Telenor’s Pakistan operations. Comments of Ministry of External Affairs has also been sought on this matter.
Rejects allegations
Uninor has rejected all allegations in this regard. The company had earlier clarified that Brekke has never been employed in Telenor Pakistan.
According to Uninor, Brekke held a non-executive position on the board of that company, which too he resigned a full year before taking up the Uninor managing director role.
The company has also rejected Unitech’s claims on the rights issue saying that the Indian partner was misrepresenting facts.