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Telenor to set up new company for India business

BS Reporter  |  New Delhi 

In a yet another salvo against its embittered Indian partner, the Unitech Group, Norway-headquartered on Tuesday announced it is setting up a new company for its telecom business in India with a 74 per cent stake, which will participate in the upcoming It also plans to go to the Foreign Investment Promotion Board for necessary permissions.

It also issued a notice to the for voidance of the current shareholders’ pact with Unitech on account of fraud and misrepresentation on their part as established by the Supreme Court judgment, the company said in a statement. It said this voidance will take place with a prospective affect and all rights that have accrued in the past shall consequently stand preserved. had signed a JV with Unitech in 2009 and currently holds 67.25 per cent stake and offer services under brand in 13 circles. It had licences to offer pan-India services.

“In order to ensure a smooth transition for Uninor’s employees, customers and stakeholders, we expect that the Board would, with prior consent from the Indian authorities, transfer Uninor’s business into this new company at a fair market value,” it added. Till then, operations will continue as before.

However, responding to Telenor's challenge on the JV, Unitech in a statement said, “The shareholders’ agreement cannot be terminated by any party unilaterally. has again erroneously taken a plea of the order passed by the SC for terminating the shareholders’ agreement. In our view, this action of is nothing but an attempt to circumvent the non-compete provisions of the agreement, pointed out earlier.”

Unitech added it is shocking that intends to transfer the entire business to a new affiliated entity owned by itself. It said it not only shows complete disregard and oppression of the minority shareholder by Telenor, but is also against all principles of related party transactions.

"cannot transfer any assets of without the consent of Unitech because we have veto right in the shareholders’ agreement as well as in the articles of association for such matters," the statement added.

Unitech added it will use all legal rights under the shareholders agreement and the Indian laws.

Sources close to the development say any dispute has to be first resolved through arbitration, which according to the agreement between the two JV partners will be in Singapore. Under the terms, both sides will appoint an arbitrator of their choice and the third referee will be appointed through mutual agreement. Sources say the issue could be resolved if Unitech waives the "non compete clause" in the agreement.

First Published: Wed, February 22 2012. 00:38 IST