Days after a proposed rights issue was blocked by minority owner Unitech, local news outlets report that the management of Uninor has issued a statement announcing its intention to auction the Indian cellco, including its assets. The announcement states that the auction will allow the company to ‘generate the maximum possible returns…and also secure the future of Uninor’s customers, employees and business partners.’
Majority owner in the joint venture, Norway’s Telenor, has sought to extricate itself from its partnership with Unitech since the cancellation of Uninor’s operating licences in February this year and currently has a case regarding Unitech’s possible exit from the JV awaiting arbitration in Singapore. With a potential partner apparently waiting in the wings, Telenor submitted a request to the Foreign Investment Promotion Board (FIPB) in April, seeking permission to float a new JV with another local company. The request was dismissed, however, the FIPB calling the measure ‘premature’. For its part, Unitech has fought against Telenor’s efforts, fearing that the Norwegian company would transfer the JV’s assets to a third party, forcibly removing Unitech. Most recently, the Norwegian giant has sought to introduce a new partner in the cellco through a rights issue but this too was blocked by the FIPB over concerns that Unitech had not consented to the plans and that Uninor would exceed the 74% foreign ownership cap.
In its most recent effort, Uninor pressed that an auction was the only viable option, adding an ultimatum: if the cellco does not go to auction, the company would have ‘no option’ but to be liquidated after 7 September, when its concessions become invalid. Already lining up to take part in the auction, Uninor said that Telenor Group was willing to procure Uninor through an Indian affiliate entity. Telenor argued that an open auction would remove any dispute over the real valuation of Uninor and would ensure the preservation of the value of Uninor’s business. Pre-empting protests from its partner, Telenor added: ‘As regards Unitech’s veto rights, we believe these are automatically forfeited once it is established that the shareholders’ agreement and all rights enshrined in it, was based on fraud. We are willing to establish this in court, should the need arise.’