Telenor will continue to have a presence in the Indian market via a newly created subsidiary which will take over the operations of Uninor, the Indian joint venture between the Norwegian firm and Unitech.
The new firm, aptly named NewCo, is entirely controlled by Telenor and will assume responsibility for the whole of Uninor’s business. Telenor is planning to use NewCo to acquire spectrum in India’s imminent 2G auctions.
While Unitech has divested its holding for a “nominal” sum, it retains its current economic rights. All legal disputes between Unitech and Telenor will be dropped once NewCo has assumed responsibility for Uninor’s operations.
The firms have been embroiled in an argument since last year, when Unitech refused to back a US$1.65 billion rights issue proposed by Telenor, despite the Scandinavian operator threatening to replace its partner if it did not comply. Unitech responded by attempting to buy out Telenor’s 67.25% stake.
The matter was complicated further in February when India’s Supreme Court cancelled all of the 2G licences issued in 2008, of which Uninor held 22. This led to Telenor registering an impairment loss of US$712 million in Q4 2011 and then suing Unitech, claiming that the firm’s failure to procure licences that were legal and valid amounted to a breach of the “fundamental term[s] of the share subscription agreement between Telenor Group and Unitech”.
