Unitech, Telenor call truce

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Unitech, Telenor call truce​

Realtor Unitech on Thursday announced a settlement with Norwegian telecom company Telenor, its partner in the joint venture Uninor, ending 18 months of bitter animosity and stalemate in terms of key decision-making.

“Telenor and Unitech have on 10 October 2012 reached an agreement to amicably settle all disputes between the two parties. The parties are bound by confidentiality obligations, and are therefore not able to provide any further comments on specific terms and conditions in the settlement. However, it can be confirmed that the parties agree to support the transfer of the business in Unitech Wireless (Uninor) to a new entity (NewCo) controlled by Telenor. 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 companies said in a joint statement.
Neither party disclosed the settlement amount, but sufficed to mention that Unitech had agreed to dispose of its shareholding in Uninor for a nominal amount.

Unitech also stated that its nominees will withdraw from the Uninor board and that all special shareholder rights stand suspended. It said, going forward, it would concentrate on its core business — real estate.

All legal cases have also been suspended temporarily, but not withdrawn.
Unitech said the termination of all cases would depend on Telenor’s success in the 2G auctions, as well as a ‘successful business transfer’. Until then, Unitech will continue to retain its economic rights associated with its current shareholding in Unitech Wireless.

The settlement comes barely a week before Telenor has to provide its application for participation in the 2G auctions. Telenor had earlier refused to pay Unitech its asking amount of `6,400 crore to dissolve the latter’s stake in the JV. However, it is now expected that the auction will decide the final consideration amount between the two parties.

Unitech currently holds a 32.75% stake in the JV, while Telenor holds 72.25%.
Under the rules, Telenor cannot hold more than a 74% stake in the new entity it intends to form after winning back spectrum in the auction. But it can participate in the auctions without a partner.
“The out-of-court settlement is positive from an Indian perspective, because legal recourse should always be the last choice. Due to the fast approaching auction date, the two parties may have decided to go in for an out-of-court settlement,” said K H Viswanathan, director, RSM Astute Consulting Group.

However, rumours suggest Telenor might also look at exiting the country, after selling out to an interested Indian partner, in case it wins in the auctions.

Sigve Brekke, MD, Uninor said earlier that the company is in talks with several potential new partners in India and has given itself an October 18 deadline to decide whether to participate in the upcoming auction, set to start on November 12. Brekke said it would not continue bidding beyond the `20,000 crore mark.

There is no clarity on whether Uninor’s asset auction — Unitech was opposed to it and the case is pending in the Delhi high court — will go through after the settlement.

The Telenor board is set to meet again on Friday to decide on the future course of action.
Unitech shares closed the day up more than 17% on news of the settlement.


Source :

www.dnaindia.com/money/report_unitech-telenor-call-truce_1751637