(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)
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