Norway?s Telenor seems to be distancing itself from Unitech, its junior partner in the telecom venture Unitech Wireless. The rift between the partners ? which opened up over a rights issue proposal last month ? has widened over the unfolding developments in the spectrum scam. Telenor holds 67.25% in Unitech Wireless while Unitech holds the rest.
After the arrest of Unitech Wireless chairman Sanjay Chandra on Wednesday ? also managing director of Unitech ? Telenor issued a statement requesting him to step down. The statement also disclosed that Telenor had written to Chandra earlier this month to step down. Chandra didn’t pay heed, perhaps the reason why Telenor went public with its demand.
As of Thursday ? a day after the arrest and the Telenor demand ? Chandra had still not stepped down. When asked whether he plans to quit, a Unitech spokesperson said: ?We cannot comment further since it is sub judice. However, we would like to reiterate that Unitech continues to be a long-term and committed investor in Uninor.?
A Unitech Wireless spokesperson when questioned on his company?s plan if Chandra does not quit, said: ?It is for Unitech to respond to the question?.
When asked if Telenor is distancing from Unitech, whether there?s discord and on the company’s recourse in case Chandra doesn’t step down, Glenn Mandelid, director of communications for Telenor group in Asia said: ?Telenor group has a professional working relationship with Unitech. We experience that both shareholders are committed to the continued development of Unitech Wireless.?
?However, there are matters where the shareholders are in disagreement with each other. Both companies are taking steps to arrive at a common understanding on these issues. As a responsible shareholder, Telenor is only taking steps that we believe are in the best interest of Unitech Wireless, the company in which it holds majority stake.
Telenor group had earlier this month sent a letter to Unitech requesting them to appoint a substitute for Sanjay Chandra on the Unitech Wireless board till such time that this trial is ongoing. Any comment on our future recourse would be speculative at this time. We believe that as a responsible shareholder, with Unitech Wireless? best interest in mind, Unitech Ltd should appoint a replacement for Chandra as soon as possible until the 2G trial is concluded,? he said. Last month, Telenor and Unitech differed over a rights issue to raise funds for expanding domestic operations. Unitech which was not keen on the issue got a stay from a Gurgaon court. Telenor, which has invested R6,135 crore in Unitech Wireless, wanted to infuse more capital and had got an approval from the board of Unitech Wireless for a rights issue. Telenor is petitioning the court to vacate the stay so the board decision could be implemented and Unitech Wireless gets the funds it needs. ?We trust that both shareholders will be committed to the success of Uninor and we believe the stay order will be lifted soon so that Uninor can proceed with the rights offer process and continue its strong development in India,? the company had said on its decision to seek legal recourse over the stay order. A Unitech spokesperson told FE: ?Unitech had obtained a stay order on certain actions which Telenor was proposing to take, which Unitech believes are not in the best interests of shareholders. The court has recognised the merits in the viewpoint of Unitech. We will continue to engage in constructive discussions with Telenor while protecting our legal rights in the matter.?
Telenor acquired a controlling stake in Unitech Wireless in September 2008, when the company was under a cloud over the manner in which licences and spectrum were granted by former telecom minister A Raja. With the investigations proceeding in the 2G scam, Telenor issued a statement saying, ?Telenor has zero tolerance for corruption. If any malpractice has occurred, those responsible must be brought to book?.
The company has maintained that the issue of how the licence was allotted and if it were acquired by unfair or illegal means, is for its minority partner, realty firm Unitech to answer as Telenor acquired its controlling stake of 67.25% after Unitech obtained the telecom licences for 22 circles. Telenor?s concerns seem valid. It is the only operator among the new ones granted licences to roll out services in maximum number of circles and has the highest number of subscribers among the lot. It has licences for 22 circles and rolled out services in 13 circles, with 21 million customers.