Telenor wants Chandra out of board too

Signalling further tensions in relations, Telenor is pushing Unitech’s Sanjay Chandra to quit the board of Unitech Wireless. Chandra, arrested in the 2G scam, has already resigned as the chairman.

“We have asked him to resign from the board, which is a natural thing to do when investigations are on,” said Unitech Wireless Managing Director Sigve Brekke.

Unitech Wireless, which has operations in 13 circles, is a joint venture between Norway’s Telenor (67.25 per cent stake) and Unitech.

The partners are already fighting over a rights issue proposed by Telenor.

Questioning Unitech’s claim that it was being forced by Telenor to go for a rights issue instead of raising debt, Brekke said equity was the only option as Indian banks had refused to lend the company money for expansion.

The company, Brekke said, had been forced to raise short-term debt from foreign banks at high interest rates with a guarantee from Telenor.

“It is not true that we are against raising debt. We have no problem with that. But since October-November last year, domestic banks have not been willing to lend us even a paisa. We are financing plans through short-term debt from foreign banks. That is why we had no option but to go for a rights issue,” said Brekke.

On Unitech’s insistence on raising debt, Brekke said, “What matters is whether you can execute it and get a loan from domestic banks”. He said the two companies were in discussions. He added Telenor was not averse to launching the issue in stages, which would reduce the cash Unitech would have to pay upfront.

Unitech says the company should raise debt as it has a low debt to equity ratio.

Telenor had proposed to raise Rs 6,000-7,000 through a rights issue. Unitech moved court against this and got a stay. Telenor’s appeal against the stay has been rejected. The two may now go for arbitration in Singapore.

Asked if Telenor did not do proper due diligence on Unitech’s licences before buying equity, Brekke said, “That is not true. We got into the company one year after the licences were issued. There was no way we could have questioned the government’s policy on licences.”

Asked if the company had a contingency plan if the investigation into the 2G scam found wrongdoing and its licences were cancelled or a strict penalty imposed, Brekke said: “We may sound bold, but we are not preparing for a worst-case scenario. We have invested over Rs 6,100 crore and fulfilled all obligations. We believe in the legal system. How can we be punished?”