Investment in India | "Telenor moves FIPB for fresh Indian start"

By: Business Standard
Source: http://business-standard.com
Category:Investment in India 

Norwegian telecom company Telenor has applied to the Foreign Investment Promotion Board (FIPB) to be allowed to form a new entity for its operations in India.

This comes after the company’s announcing last month that it was snapping its partnership with the Unitech group in the country.


Telenor has said it wishes to hold 74 per stake in the new entity.

The pan-Indian mobile phone licences of Uninor, its joint venture with Unitech, have been impacted by the Supreme Court’s February 2 order on cancellation of all 122 licences issued in January 2008 by then telecom minister A Raja, who has been in judicial custody for more than a year in the alleged 2G spectrum allocation scam.

“Telenor Group’s intention is to form a new entity in India, with which its Indian operations will be taken forward. This new entity will serve as the platform to approach the upcoming auctions for fresh licences as mandated by the Supreme Court," the company said in reply to an email query. Adding, “As a part of this process, the new entity has applied for requisite approvals from the FIPB.”

Telenor said it had started the process of securing a partner, without giving details.


After the SC order, Telenor had said it was ending the JV with Unitech on account of the latter’s alleged “fraud and misrepresentation”. It had also at that point mentioned its intention of setting up a new company for its telecom business in India.

"Our primary concern is to secure a smooth process that ensures no adverse impact of the recent developments on Uninor's 40 million customers, 17,500 workforce or its distribution network with more than 400,000 points of sale," the company said.

Both partners had moved the Company Law Board to protect their investments and rights. Recently, the CLB returned their petitions on technical grounds and asked for rectification of errors by March 13. The Board also suggested the two companies try to find an amicable solution to the issue.

In fact, both were at loggerheads even earlier, since Telenor’s proposal of a rights issue to raise funds. Unitech was insisting on debt funding. The companies are also facing arbitration in a Singapore court.

Telenor had signed the JV with Unitech in 2009 and currently holds 67.25 per cent stake in it. It offers services under the Uninor brand in 13 of 22 telecom circles in the country. It had licences to offer pan-India services. Telenor has invested Rs 6,135 crore through equity and a little over Rs 8,000 crore in debt. It has also started a fresh valuation process for its business in India.

The other companies which got impacted by the apex court order include Sistema Shyam, Videocon, Idea Cellular, Tata Teleservices, Loop and Etisalat DB. The vacated spectrum is to be auctioned by the government, directed the SC, within four months. However, the government has filed a clarificatory petition in the SC, saying such an auction would take at least 400 days.

Source: http://business-standard.com/india/news/telenor-moves-fipb-for-fresh-indian-start/467129/