With no legal resolution in sight, telecom major Telenor is exploring an out-of-court settlement with its estranged partner Unitech before the much-awaited 2G auctions begin. Telenor, which holds a majority 67.25% stake in the joint venture, has been eagerly looking to rid itself of its minority JV partner Unitech, as it intends to find a new joint venture partner before the upcoming 2G spectrum auctions. But its plans have been delayed by Unitech’s opposition to the move.
?Each of the two sides is anxiously awaiting the decision of the empowered group of ministers over what the reserve price of the auctions will be. The legal tussle between the two is going on, but both are readying themselves for an out of court settlement,? a source close to the development told FE.
The two partners, who don’t see eye to eye, are fighting legal battles on three fronts. However, experts said as arbitration takes a long time and if Telenor wishes to bid in the upcoming auctions with a new partner, it doesn’t have the luxury to wait for the outcome of its legal battles. Also, the Supreme Court order mandates the government to conduct the 2G auctions before August 31.
Sources said, appointing a mutually acceptable third party to evaluate the assets of their joint venture and withdrawal of charges by Telenor against Uninor seeking indemnities from Unitech for breach of warranties are the two most critical issues being discussed in the respective boardrooms. So far, the partners have been fighting over valuation of the company with Telenor valuing it at just R400 crore, Telenor’s appointed third party BNP Paribas fixing it R870 crore and Unitech claiming a valuation of R12,000 crore.
While Telenor’s main priority is to rid itself of Unitech and transfer the assets of Uninor into another firm, Unitech is willing to exit provided Telenor takes on the entire debt of close to R8,000 crore on its books and withdraws the case it slapped on Unitech seeking indemnities from the company for damages caused by the Supreme Court order which revoked its 21 licences across the country.
The two are now involved in an international arbitration at Singapore. The company law board which was hearing the cross-petitions of the two companies accepted Unitech’s plea for international arbitration citing the shareholders agreement.