New Delhi, Oct. 11: The warring partners of Unitech Wireless — Norwegian telecom firm Telenor and Indian player Unitech — today decided to settle all disputes, with Unitech agreeing to sell its 33.75 per cent stake in the domestic telecom company for an undisclosed amount.
Unitech Wireless offers mobile services under the Uninor brand.
Telenor and Unitech have been feuding ever since the 2G scam broke out.
While Telenor blamed Unitech for the licence cancellation, Unitech accused Telenor of wishing to “scuttle and deprive” it of the opportunity to participate in the fresh licensing process.
Unitech had also earlier opposed Telenor’s plan to migrate its Indian business to a fresh venture to seek new operating licences and had said it had veto rights to block any such transfer.
The Norwegian company had also made an attempt to raise money through a Rs 1,200-crore rights issue, which was opposed by its partner.
“Telenor and Unitech are pleased to announce that on October 10, 2012, they have reached an agreement to amicably settle all disputes between the two parties,” the two firms said in separate but almost identical statements.
However, the statements didn’t elaborate the details of the deal, citing “confidentiality obligations”.
Telenor held 67 per cent of Unitech Wireless before this agreement. Shares of Unitech today closed at Rs 27.20 on the BSE, up 17.49 per cent from Wednesday’s close of Rs 23.15.
In its press statement today Unitech added, “Unitech will continue to retain economic rights associated with its current shareholding in Unitech Wireless which include any refunds that the company might get.”
The telecom EGoM has decided on a possible refund of Rs 1,658 crore that companies paid for a pan India 2G licence in 2008, provided there was no “criminal liability” against the company. Unitech’s share of the licence fee comes to about Rs 560 crore.
Analysts said Unitech might also get some tax refunds because of the transfer of its depreciated assets to Telenor’s new company, which will bid for the upcoming 2G auction.
Unitech has invested around Rs 650 crore in the joint venture that has over 41 million subscribers and operates under the brand name Uninor in 13 circles. Uninor had earlier also declared that it would prune its operations in nine circles.
Telenor also added in its statement that with immediate effect, Unitech nominees would withdraw from the Uninor board and all special shareholder rights should stand suspended.
“Subsequent to a successful business transfer and spectrum auction, all disputes and claims between the parties shall stand withdrawn,” Telenor said. Unitech had valued the company at Rs 12,000 crore before it lost its licence. However, Telenor had valued the company at only Rs 400 crore, which was not acceptable to its real estate partner.
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 up 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 a new entity, but will take a final decision on the issue at a later date,” said Telenor today.
Telenor, which entered India in 2009, had earlier stated that the new partner should not have any experience in the telecom industry. Industry sources named Sterlite Industries and Calcutta-based Srei Infrastructure as the two companies that Telenor could be in talks with for a potential relationship.
Part of Telenor’s entry strategy was to become cash flow positive by 2015 and achieve an 8 per cent market share by 2018. The Norwegian government holds 54 per cent in Telenor.
Unitech and Telenor today pleaded before the Delhi high court that the settlement agreement be kept in a sealed cover and the common public not allowed to have a look at it. The plea was allowed by the court.