Unitech gets stay over Uninor rights issue

There is a disconnect between Norway’s Telenor and India’s Unitech Group on the rights issue of Uninor, a joint venture of the two groups. Unitech on Friday got a stay from the high court on Telenor’s decision to go for a rights issue to meet expansion plans of the venture.

Confirming the development in an email, Telenor said, “The Board of Directors of Uninor had decided to initiate the process of a rights offer to meet the funding requirements. There is, however, now a stay order which halts the process. Telenor Group is petitioning the court to vacate the stay order, which would enable it to implement the decision of the company’s board and Uninor gets the funds it needs.”

Telenor has 67.25 per cent in the venture, while Unitech holds the rest. Unitech did not respond as to how much was the size of the proposed rights issue and the timing. Telenor said the company expects the stay order will be lifted soon and the company can continue with its expansion in India.

“We trust that both shareholders will be committed to the future success of Uninor,” the Norway giant said. The venture offers mobile services under the Uninor brand name and has licence to offer services in all telcom circles.

In 2009, Telenor had withdrawn its plan to raise $1.8 billion through a rights offer and decided to fund the purchase of stake in Uninor with debt and cash reserves instead.

The Comptroller and Audit General in its report on the 2G spectrum scam last year, had said, as many as 85 licences, including Unitech, were not eligible as the companies’ suppressed facts and provided incomplete information.

Subsequently, the department of telecommunications had issued showcause notices to all the 85 mentioned in the report for cancellation, including Uninor and asked them to reply within 60 days. DoT Secretary R Chandrasekhar on Friday said the department will decide on in a month.