-- Unitech Wireless says majority of directors approved
auction
-- Telenor to participate in auction through Indian
affiliate
-- Unitech calls move indirect way to transfer assets to Telenor
unit
(Rewrites throughout with comments from Telenor, Unitech
Wireless and Unitech; context and background.)
By R. Jai Krishna
NEW DELHI--Telenor ASA (TEL.OS) Wednesday invited bids to
auction its troubled Indian telecommunications joint venture,
ignoring opposition from partner Unitech Ltd. (507878.BY) which
called it an unfair and indirect move by the Norwegian company to
transfer the assets to one of its units.
Telenor owns 67% of Unitech Wireless Ltd., the joint venture,
while Indian property developer Unitech holds the remaining.
Telenor wants Unitech to exit the venture but the partners are
divided over the valuation of the assets and a recent arbitration
has failed to throw up a solution.
Unitech Wireless is one of several companies affected by a
February Supreme Court order cancelling as many as 122 telecom
licenses issued in 2008, citing corruption in their allotment.
These companies can provide services until Sept. 7, but will need
to purchase spectrum through a government auction, which the court
said must be held by Aug. 31, to continue operations further.
Telenor, which bought its stake in Unitech Wireless in late
2008, blames the Indian partner for its troubles due to the license
cancellation. Unitech Managing Director Sanjay Chandra had been
arrested for his alleged involvement in the irregularities. He is
currently on bail and has previously denied any wrongdoing.
Telenor said an open auction will remove any dispute around the
valuation of the business. The auction plan has been approved by a
majority of Unitech Wireless' directors Monday, a newspaper notice
by Unitech Wireless Managing Director Sigve Brekke said
Wednesday.
The notice said Unitech Wireless has the right to fix the bid
price at a fair-market value of about 41.9 billion rupees ($754.27
million) in case there is only one bidder. Telenor Asia Pte Ltd., a
unit of the Norwegian company and the majority holder of Unitech
Wireless, will participate in the bid through an Indian affiliate,
it said, but didn't provide details.
Unitech's nominees on the board have "recorded their dissent" to
the plan, it added.
Unitech fears an auction will undervalue its stake and has
threatened to go to court. It said Telenor is pursuing the auction
route knowing fully that no new telecom company will value the
assets before it acquires spectrum.
Telenor will also require an Indian partner as local laws allow
only up to 74% foreign holding in telecom services.
The last date for the submission of bids is Aug. 6.
Unitech Wireless offers mobile services under the Uninor brand.
It has about 46 million subscribers and 17,000 employees in 13 of
India's 22 telecom service areas.
Due to the uncertainty, Telenor earlier this year booked a large
writedown on it Indian operations. The company also said it will
have to shut down operations in India if the price of spectrum at
the government auction is too high.
Write to R. Jai Krishna at krishna.jai@dowjones.com
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