The Company Law Board (CLB) today asked real estate company Unitech to decide by Monday if it wanted to buy its joint venture partner Telenor’s 67 per cent stake in telecom company Uninor or sell its 33 per cent stake to the Norwegian firm.
Unitech and Telenor had moved the CLB separately against each other, to protect their investments and rights in their joint venture, Uninor, whose licences have been cancelled by the recent Supreme Court judgment.
“You (Unitech) are given priority, whether you want to buy or sell (stake); you have to decide," CLB chairman B R Deshmukh told Unitech, according to an agency report. Counsel representing Unitech sought time to discuss this with his client and suggested there could be other solutions, like a third party buying out both stakes.
To which, he was told, “I see no other solution... you have to decide whether you want to buy or sell out (stake).”
On March 1, CLB had returned the petitions of Telenor and Unitech on technical grounds, over certain deficiencies in the filing. Before doing so, Deshmukh had asked the warring partners to mediate for resolve their differences but neither opted to do so.
Sources close to the development said Unitech might ask for an independent valuation of the assets of Uninor before taking a call on whether to buy or sell the stake. It could ask for an valuer acceptable to both sides.
Earlier, BNP Paribas, appointed by Telenor, had valued the company at around Rs 800 crore, while Telenor had valued it at Rs 400 crore. Unitech, on the other hand, valued the firm at Rs 11,000-12,000 crore.
Unitech had earlier offered, at the CLB, to buy out the stake of Telenor on the basis of the Rs 400 crore valuation.
Telenor said, after today’s hearing, “We now await Unitech’s response to CLB. Given that Uninor’s licences have a limited validity of only three more months, we hope there will be no further delays and a clear position will be stated on Monday. It is Telenor Group’s intent to ensure that the four crore customers, 17,500 workforce and business partners who today rely on Uninor’s operations can seamlessly migrate to a new company that may then continue operations as a credible competitor in India.”
Telenor had moved the CLB on February 24 to prevent any wrongful obstruction of its effort to secure its investments. The company recently announced setting up of a new company for its telecom business in India, following its decision to part ways with Unitech, and has applied to the Foreign Investment Promotion Board. It has said it wants to transfer the assets to the new company.
Unitech also moved CLB on the same day, to enforce its rights under the articles of association of Uninor and to prevent Telenor from assuming full control over the business, including the assets.
Telenor had already said it would find a new Indian partner and set up a new company in India, with a 74 per cent stake, to then participate in the upcoming 2G spectrum auction. It has asked FIPB for the needed permissions.
Both companies have been at loggerheads since Telenor’s proposal of a rights issue to raise funds. Unitech, while opposing the proposal, had gone to court over this. Unitech is insisting on debt funding for raising funds. Unitech had also recently moved the CLB with a complaint against Telenor for mismanagement of operations. The companies are also facing arbitration in a Singapore court.
Relations soured further after the Supreme Court’s order of February 2 had cancelled all 122 telecom licences issued after January 2008. This had impacted Uninor, Sistema Shyam, Videocon, Idea Cellular, Tata Teleservices, Loop, Etisalat DB and others. The vacated spectrum is to be auctioned by the government, as directed by the SC, within four months.
Telenor had signed a joint venture with Unitech in 2009 and currently holds 67.25 per cent stake, offering services under the Uninor brand in 13 of the 22 telecom circles. It had licences to offer pan-India services. Telenor has invested Rs 6,135 crore through equity and a little over Rs 8,000 crore in debt.