Telenor to auction Indian biz; seeks to form new co

Norwegian telecom operator Telenor wants to auction off its Indian business, a joint venture with Unitech, while it is still a “going concern” and migrate the business to a new company to seek fresh operating licences.

The JV, Unitech Wireless (Tamil Nadu) has invited interests from potential bidders by 6 August, Managing Director Sigve Brekke said in the auction notice published on Wednesday in the Financial Express newspaper. Telenor controls the JV with a 67.25 percent ownership but Unitech is expected to take this battle to court.

A Reuters story this morning quoted the auction notice to say that Telenor is willing to participate in the auction through an Indian affiliate company, adding that in case there is just one bidder, it would have the right to fix the bid price at a “fair market value” of Rs 4190 crore ($753 million).

But Telenor’s Director of Communications Glenn Mandelid explained to Firstpost that the Court mandated cancellation of licence (Uninor’s licenses were cancelled this February by a Supreme Court order which found fault with then Communications Minister A Raja’s First Come, First Served license policy) will destroy any value in the Uninor business.

“We do not see why any shareholder should want this value destruction to happen when it is possible to conduct an open and transparent auction of Uninor’s business while Uninor is still a going concern. An open auction will also remove any dispute around the real valuation of the Uninor business,” he said in a statement.

Telenor Group has further stated that, despite adverse circumstances, it is willing to participate in the forthcoming auction and procure all of Uninor’s business.

This will ensure that the value of Uninor’s business is preserved, and not allowed to be destroyed.

“If Telenor is successful in the auction of Uninor’s business, it will also give us the ability to secure a future for Uninor’s customers, employees and partners as Uninor’s business will be transferred to a new company with which Telenor may approach the upcoming spectrum auctions,” he said.

Dismissing any veto rights of Unitech, Mandelid said “We believe these are automatically forfeited once it is established that the shareholders’ agreement and all rights enshrined in it, was based on fraud. We are willing to establish this in court, should the need arise.”