Mobile operator Uninor, in which Norwegian operator Telenor has a majority stake, has approached the Foreign Investment Promotion Board (FIPB) seeking permission for its rights issue to raise R8,250 crore. The FIPB will consider the proposal on Tuesday.
Uninor is moving ahead with the rights issue after the Punjab and Haryana High Court lifted a stay order procured by Telenor’s junior partner in the JV company ? real estate major Unitech ? from a lower court in Gurgaon.
While Telenor has maintained that if Unitech does not participate in the rights issue, it will look for a new Indian partner, Unitech has moved the Company Law Board against Telenor alleging that it has mismanaged the company, thus reducing its valuation.
Telenor has stated that in order to achieve its rollout obligations under the licence and to expand business, it has an immediate funding requirement of R8,250 crore.
In its application to the FIPB, the company has stated that if Unitech group subscribes only to a part (and not full) of their pro-rata portion of the rights issuance or does not subscribe at all to their rights issuance by the company, the balance unsubscribed portion would be subscribed by Telenor and other resident shareholders, keeping the FDI well within the cap of 74%.
Telenor holds 67.25% stake in Uninor, while Unitech holds 32.75% through its associate companies.
Uninor is among nine companies that were awarded licences by former telecom minister A Raja in January 2008, which is now being investigated by the CBI in what is known as the 2G spectrum scam.
The company has licences for 22 circles but has rolled out services in only 13 circles so far and has a subscriber base of around 27 million.
Telenor has so far invested more than R11,000 crore in the company. It acquired 67.25% stake in October 2008 for around R6,120 crore and later invested another R5,000 crore for expansion and rollout of networks.
The company?s peak funding stands at R15,000 crore and Telenor has stood guarantor for the debt Uninor has raised. However, it no longer wants to raise debt but fund growth through equity.
Opposing the rights issue, Unitech moved the CLB. ?Having failed to obtain project finance, Telenor and its executives are seeking to cause the company to make a rights issue in direct violation of the hierarchy of funding incorporated in its articles of association. Pertinent to note here is that the memorandum of articles of Uninor provides that the company should exhaust all others modes of available funding prior to undertaking the rights offer process,? Unitech said in its petition.