NEW DELHI: Norwegian telecom company Telenor has served a divorce notice to Unitech, seeking compensation from the Indian firm for damages caused to their mobile venture, Uninor, from a recent Supreme Court judgement, and said it was looking for a new partner in India.
Europe's third-biggest telecom company said it no longer believed that its strategic partnership with Unitech had a future and would start the process of looking for a new Indian partner. A source familiar with Telenor's plans said it had tapped London-listed metals group Vedanta Resources' Indian arm, Sterlite Industries Ltd, and Kolkata-based Srei Infrastructure, which runs mobile tower company Viom Networks, to be its new partner. These companies could not be reached for comment.
Uninor was one of the worst affected by the Supreme Court's decision earlier this month to cancel 122 mobile licences issued under a scandal-tainted 2008 sale. The company, 67.25% owned by Telenor, held 22 of these licences.
Late on Wednesday, Telenor said it had bought into the company well after licences had been issued and it had no role in the controversial sale. In 2009, the Norwegian firm paid 6,100 crore to buy into Uninor, then called Unitech Wireless. It subsequently invested another 8,000 crore into the business, which has close to 40 million users.
"Telenor holds Unitech liable for the breach of warranties related to the cancellation of the licences, seeking compensation for all investment, guarantees and damages caused by the Supreme Court order," it said in a strongly worded statement.
Unitech responded with an equally strong statement and warned it would take Telenor to court. "We reserve our right to take appropriate legal action against Telenor for damages caused to Unitech Group from breach of the confidentiality obligation by Telenor," it said.
The developments mark a sharp deterioration in an already tense relationship between the two partners.
A BITTER PARTNERSHIP
The relationship went downhill after Unitech refused to participate in Uninor's 8,200-crore rights issue in 2011. By the middle of 2011, the two were embroiled in court battles, culminating in an arbitration in Singapore. In April last year, Telenor asked Unitech boss Sanjay Chandra to step down as chairman of Uninor after he was arrested in the 2G scam case.
Last October, Unitech dragged Telenor to the Company Law Board citing 'gross mismanagement' of their joint venture by the Norwegian firm. On Wednesday, Telenor said the "legality and validity of the licences was a fundamental term of the share subscription agreement" between it and Unitech and the Supreme Court's cancellation of the licences was a "breach of Unitech's warranties".
"The fact is that Uninor as a consequence of the judgement will no longer hold any UASL. Telenor will, therefore, exercise its entitled right under the share subscription agreement to hold Unitech Ltd liable to indemnify and compensate Telenor Group for its investment in India," Group General Counsel Pal Wien Espen said in the statement.
Unitech said in its response that Telenor could at best claim damages from the government under the investment bilateral treaty. A top Unitech executive accused Telenor of "completely illegitimate" behaviour and arm-twisting. "The ulterior motive is to buy out the company at cheap valuation and bid for licences through a new partner," the executive told ET.
Last month, Telenor valued its Indian operations at about Rs 600 crore, escalating its spat with Unitech, which termed the assessment as 'bizarre' and said the mobile phone company must be valued at Rs 11,000-12,000 crore. Unitech also offered to buy out Telenor's 67.25% stake under this valuation.
(Source- http://economictimes.indiatimes.com/)
Europe's third-biggest telecom company said it no longer believed that its strategic partnership with Unitech had a future and would start the process of looking for a new Indian partner. A source familiar with Telenor's plans said it had tapped London-listed metals group Vedanta Resources' Indian arm, Sterlite Industries Ltd, and Kolkata-based Srei Infrastructure, which runs mobile tower company Viom Networks, to be its new partner. These companies could not be reached for comment.
Uninor was one of the worst affected by the Supreme Court's decision earlier this month to cancel 122 mobile licences issued under a scandal-tainted 2008 sale. The company, 67.25% owned by Telenor, held 22 of these licences.
Late on Wednesday, Telenor said it had bought into the company well after licences had been issued and it had no role in the controversial sale. In 2009, the Norwegian firm paid 6,100 crore to buy into Uninor, then called Unitech Wireless. It subsequently invested another 8,000 crore into the business, which has close to 40 million users.
"Telenor holds Unitech liable for the breach of warranties related to the cancellation of the licences, seeking compensation for all investment, guarantees and damages caused by the Supreme Court order," it said in a strongly worded statement.
Unitech responded with an equally strong statement and warned it would take Telenor to court. "We reserve our right to take appropriate legal action against Telenor for damages caused to Unitech Group from breach of the confidentiality obligation by Telenor," it said.
The developments mark a sharp deterioration in an already tense relationship between the two partners.
A BITTER PARTNERSHIP
The relationship went downhill after Unitech refused to participate in Uninor's 8,200-crore rights issue in 2011. By the middle of 2011, the two were embroiled in court battles, culminating in an arbitration in Singapore. In April last year, Telenor asked Unitech boss Sanjay Chandra to step down as chairman of Uninor after he was arrested in the 2G scam case.
Last October, Unitech dragged Telenor to the Company Law Board citing 'gross mismanagement' of their joint venture by the Norwegian firm. On Wednesday, Telenor said the "legality and validity of the licences was a fundamental term of the share subscription agreement" between it and Unitech and the Supreme Court's cancellation of the licences was a "breach of Unitech's warranties".
"The fact is that Uninor as a consequence of the judgement will no longer hold any UASL. Telenor will, therefore, exercise its entitled right under the share subscription agreement to hold Unitech Ltd liable to indemnify and compensate Telenor Group for its investment in India," Group General Counsel Pal Wien Espen said in the statement.
Unitech said in its response that Telenor could at best claim damages from the government under the investment bilateral treaty. A top Unitech executive accused Telenor of "completely illegitimate" behaviour and arm-twisting. "The ulterior motive is to buy out the company at cheap valuation and bid for licences through a new partner," the executive told ET.
Last month, Telenor valued its Indian operations at about Rs 600 crore, escalating its spat with Unitech, which termed the assessment as 'bizarre' and said the mobile phone company must be valued at Rs 11,000-12,000 crore. Unitech also offered to buy out Telenor's 67.25% stake under this valuation.
(Source- http://economictimes.indiatimes.com/)
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