Real estate developer Unitech, Telenor’s partner in Indian mobile network operator Uninor, has announced that it has filed a petition before India’s Company Law Board in India in which it alleges mismanagement of the venture by the Norwegian firm and its key executives, Reuters reported yesterday. The development represents a new low in relations between the two shareholders, which have been at odds over a planned USD1.7 billion rights issue. Telenor has claimed that the rights issue will secure long-term funding for the venture, citing the fact that alternative funding sources such as bank loans have recently become harder to obtain due to scandals in the Indian telecoms sector. Unitech meanwhile has claimed that Telenor in fact refused a long-term debt of INR90 billion (USD1.7 billion) from the State Bank of India last November and was now seeking to ‘enforce’ a rights issue, while it has argued that the JV does not currently need funds. Further, Unitech has also said that its agreement with Telenor categorically states a rights issue would only be considered if all other funding options had been exhausted.
It has subsequently emerged meanwhile that, prior to the lodging of the petition with the Company Law Board, Unitech has offered to buy Telenor’s 67.25% stake in Uninor INR2.69 billion. The Times of India noted that Telenor had valued the Indian venture at around INR4 billion on 4 October, down from a value of around INR91 billion back in 2009, and such figures were cited by Unitech in its petition as proof that Uninor had been mismanaged. ‘At this valuation, the inescapable conclusion would be that Telenor has mismanaged the company so badly as to reduce its value to less than 5% of what it has been in March 2009,’ Unitech noted. Further, the Indian JV partner added that if Telenor truly believed this to be the value of the cellco then it was ‘willing to buy out the Norwegian company’s shares at this price’, although a Unitech executive said that such an offer did not include the debt of more than INR5 billion that Uninor had on its books.
Commenting on the latest developments in the matter a statement by Telenor said: ‘The simple case here is that the Uninor board, having followed prescribed processes, has asked its owners to invest more in the company in the absence of bank loans. We continue to urge Unitech Ltd to join us in meeting this shared responsibility towards the company.’