Deadline for Unitech decision set for Monday

The future of Indian joint venture Uninor hangs in balance as one of the partners has been ordered to make a decision regarding its involvement by March 19th. The Indian Company Law Board (CLB), a major legal body, has imposed the deadline on local operator Unitech Wireless. The Indian company must now decide whether to sell its stake in Uninor or buy out its partner, Norwegian firm Telenor.

The deadline is an attempt by the CLB to achieve a swift resolution to a dispute between the two partners resulting from last month’s cancellation of the 22 regional licences held by Uninor. The joint venture is in good company: 121 other firms have also had their licences annulled by the country’s Supreme Court, and all of them must cease operations within three months.

The dispute has arisen due to Telenor declaring to the CLB that it wishes to incorporate its existing Indian assets into a new unit which will then be used to bid for a licence. Unitech has begun a legal attempt to block Telenor from assuming control over its stake in Uninor.

Telenor said in a statement: "Given that Uninor's licenses have a limited validity of only three more months, we hope there will be no further delays and a clear position will be stated on Monday [19th March]."

The cancellation of Uninor’s licences has prompted Telenor to press Unitech for compensation. The Indian firm obtained the now-void licences prior to the formation of the joint venture; Telenor claims that its understanding that the licences were legitimate was “fundamental” to their agreement.

Unitech however claims that under the terms of their agreement this does not warrant compensation; in addition, the firm maintains that a clause contained in the agreement prevents the two partners from entering into competition. A new Telenor entity would therefore infringe upon this.

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