Norway's Telenor Group on Tuesday said it will form a new entity to carry forward its Indian operations. The new entity will bid for 2G spectrum in the upcoming auctions. As a part of this process, the new entity will also seek requisite approvals from the Foreign Investment Promotion Board (FIPB) to allow Telenor Group to take up 74 per cent ownership.
Consequently, the Norwegian major will exit Uninor, the existing joint venture with Unitech. Telenor Group has also issued to Unitech Ltd a notice of voidance of the current shareholders' agreement on account of fraud and misrepresentation as established by the Supreme Court judgment. The company said that it plans to transfer Uninor's employees and customers into the new entity at a fair market value. Telenor said it did not require 75 per cent shareholder votes for transferring business since Uninor is a private company. It also said that it can unilaterally declare the shareholder agreement void in a case of fraud and misrepresentation.
According to sources, Telenor has already started talks with other potential Indian partners including Sterlite Group and Viom Networks. “Till such time that Uninor's business is transferred to the new Indian company, Uninor operations will continue as before,” Telenor said.
Telenor has also issued a notice for indemnity, seeking compensation from Unitech for damages caused by the Supreme Court order on cancelling all 21 licences held by Uninor.
Unitech to veto
Unitech said that Telenor cannot transfer any assets of Uninor without its consent. The real estate major said it had veto right in the shareholders’ agreement as well as in the articles of association for such matters.
“We would like to clarify that the shareholders’ agreement cannot be terminated by any party unilaterally. Telenor has again erroneously taken a plea of the order passed by the Supreme Court for terminating the shareholders’ agreement. In our view this action of Telenor is nothing but an attempt to circumvent the non-compete provisions of the agreement, pointed out earlier,” Unitech said in response to Telenor’s move to float a new entity.
“It is shocking that Telenor intends to transfer the entire business to a new affiliated entity owned by itself. This not only shows complete disregard and oppression of the minority shareholder by Telenor, but is also against all principles of related party transactions,” said a statement from Unitech.