UPDATE 2-Telenor sets new India venture after divorce from Unitech

Thu Oct 11, 2012 1:37pm IST

Stocks

   

(Recasts, adds Telenor comment, detail)

* Telenor still needs local partner for new business

* Spectrum auction set for November for new licences

* Telenor has not yet decided to participate in new auction

* Unitech-Telenor JV caught in controversial court case

By Devidutta Tripathy and Victoria Klesty

NEW DELHI/OSLO, Oct 11 (Reuters) - Norwegian telecoms group Telenor has dissolved a joint venture with India's Unitech Ltd, hoping to distance itself from a scandal over the award of operating licences and setting out a new plan to win business in the subcontinent.

Telenor said on Thursday it would set up a new entity through which it could bid for operating licenses, after courts cancelled 122 regional operating permits held by eight carriers - including the Telenor/Unitech venture - granted in a scandal-tainted licensing round in 2008.

The move could make it easier for Telenor to continue doing business in India, although it still has decide whether to spend the billions of crowns required to buy back the lost licenses.

"Telenor is preparing to participate in the upcoming 2G spectrum auction through this new entity, but will take a final decision on whether to participate at a later date," the company said.

The 2008 corruption scandal in which lucrative mobile phone permits were sold at below-market price led to the resignation of two Indian ministers having cost the exchequer as much as $36 billion in lost revenue.

Telenor, which owned two thirds of the Uninor-branded venture with Unitech, had blamed the Indian company for the licence cancellation.

Unitech initially opposed the ending of the venture and had said it had veto rights to block any transfer of its assets, but has now agreed to sell its share of the venture for a nominal sum to the Norwegian group.

Telenor, which had threatened to exit India, has had to write down 8.1 billion crowns ($1.4 billion) worth of Indian assets as a consequence of losing the licences.

It has said it is in talks with several potential new partners in India and has given itself an Oct. 18 deadline to decide whether to participate in the upcoming state auction, set to start next month.

The new licensing round could be costly for Telenor and risks pushing it above a self-imposed investment cap, which it has repeatedly said it would not breach.

Telenor will have to sign a new local partner as Indian rules allow a maximum 74 percent shareholding by foreign companies in telecom carriers.

Shares in Unitech rose 13 percent after news of the settlement.

"Subsequent to a successful business transfer and spectrum auction, all disputes and claims between the parties shall stand withdrawn/concluded," Unitech said. ($1 = 5.7367 Norwegian crowns) (Editing by David Holmes)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Earnings Season

Earnings Season

Reliance Q4 sales rise, refining margin narrows.  Read 

Innovative Solution

Innovative Solution

Turning smog into jewels - a Dutch designer's solution to Beijing's pollution.  Video 

Insider Trading

Insider Trading

Rajaratnam's brother loses bid to dismiss insider trading charges.  Full Article 

Literary Giant Dies

Literary Giant Dies

Mourning and memories in Gabriel Garcia Marquez's languid hometown.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage