Realty major Unitech today said it has reached an agreement with Norwegian firm Telenor on all outstanding disputes over their telecom joint venture Uninor, in which Telenor owns 67.25 per cent stake. Accordingly, Unitech will sell its share in Uninor to Telenor for "a nominal amount".
The two companies were engaged in a bitter legal struggle since Uninor lost all 22 licences it owned following the Supreme Court order issued in February 2012. Telenor has blamed Unitech for the licence cancellation and has said it will migrate its Indian business to a fresh venture to seek new operating licences. Unitech earlier opposed the plan and had said it had veto rights to block any such transfer. Last month, Unitech blocked a bid by Telenor to auction assets of the joint venture.
According to the settlement, all Uninor assets will be transferred to a new entity, which will be controlled by Telenor. While the financial details of the deal have not been disclosed, sources told NDTV that Unitech may get its share of the licence fee refund. Earlier this week, the Empowered Group of Ministers said that fees paid in 2008 by those telecom operators set to lose their permits after the court order will be adjusted against the price in the auction or be refunded. Uninor had paid Rs 1,650 crore in 2008 as licence fee.
The second major relief for Unitech may be the transfer of Uninor's debt to the new company headed by Telenor. Uninor has around Rs 10,000 crore debt on its books. Unitech is also likely to be absolved of all claims by Telenor for misrepresenting facts and damages arising out of the 2008 auction, sources said.
Shares in the company closed 17.2 per cent higher at Rs 27.20 on the NSE. The broader BSE realty index also got a boost and ended 4.6 per cent higher.
"...the parties agree to support the transfer of the business in Unitech Wireless (Uninor) to a new entity (NewCo) controlled by Telenor. Unitech has agreed to dispose of its shareholding in Uninor for a nominal amount and Unitech shall continue to retain its economic rights associated with its current shareholding in Unitech Wireless," Unitech said in a statement.
Telenor will have to bid for spectrum in the 2G auction scheduled to start in November if it is to continue its operations in India. It will have to sign a new local partner as Indian rules allow a maximum 74 per cent shareholding by foreign companies in telecom carriers.
"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 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. The minimum bid price has been fixed at Rs 14,000 crore for 5 megahertz of airwaves for all the country's 22 telecoms zones, which is more than seven times what carriers paid in earlier state sales.
"Subsequent to a successful business transfer and spectrum auction, all disputes and claims between the parties shall stand withdrawn/concluded," Unitech said.
(With inputs from Thomson Reuters)
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
