2G : Unitech rings bells on Telenor's Pakistan connection

January 12 2012 :

NEW DELHI: The bitter feud between the partners of mobile phone company Unitech Wireless, that offers services under the 'Uninor' brand, has taken a fresh twist with the minority partner raking up Telenor's Pakistan connection and the underlying security concerns associated with it.

The Norwegian telecoms major has a majority stake of 67.25% in Unitech Wireless, while realty firm Unitech owns the rest. Unitech, has now raised concerns on Telenor's alleged failure to disclose the full extent of its operations in Pakistan. This issue has also been listed in the agenda of Unitech Wireless' next board meeting scheduled for January 12. ET reviewed the agenda note.

In November 2011, the foreign investment promotion board, the apex government body that approves all major investments from abroad, had cleared a proposal from Unitech Wireless' for a rights issue of Rs 8,250 crore. Both partners have been involved in an acrimonious spat over the last couple of months, as Unitech has opposed the rights issue. Telenor, in its proposal had also told the FIPB that plans to increase its holdings in Unitech Wireless to 74%, and induct other 'resident Indian shareholders' if its JV partner failed to subscribe to the rights issue.

The realty firm is now of the view that FIPB would not have cleared the proposal if Telenor had disclosed complete details on its Pakistan operations, executives aware of the developments told ET. In their defence, they also pointed out that the FIPB had cleared the deal despite the home ministry (MHA) had raising security concerns about Telenor's holding in Pakistan.

The Unitech spokesperson declined to comment. The Telenor spokesperson said that group was 'not surprised at both the nature and timing of such innuendos, coming as they do in the midst of a shareholders' dispute'.

"In India, we are governed by the Indian laws which Telenor Group off course complies to. Our investments in Uninor have been thoroughly and extensively tested by the authorities earlier through an elaborate FIPB process. We have now applied for permission to invest further in India. We would like to add that despite such diversions, the core issue remains that of securing Uninor's funding, where we believe both owners must discharge their obligations and put in their own funds in the absence of bank loans to secure Uninor's long term funding. We continue to persuade our partner to meet its obligation just as we are," Telenor said in a written reply to an ET query.

In 2009, the FIPB had first cleared Telenor's application to pick up a majority stake in Unitech Wireless on the condition that none of the staff who have worked inTelenor Pakistan -100% owned by the Telenor group - are employed here. This was because intelligence agencies such as IB and RAW were highly suspicious about the security implications of Telenor's presence in Pakistan through a 100%-owned subsidiary of the Norwegian parent company.

In September 2011, Telenor's group CEO Fredrik Baksaas had told ET that it would look at inducting another partner for its Indian operations if Unitech 'does not meet its obligations and participate in the rights issue'. After this, the Unitech group Telenor to the company law board (CLB) citing 'gross mismanagement' by the Norwegian telco, marking a new low in the deteriorating relations between both partners, who are also involved in an arbitration process in Singapore.

Unitech had also offered to buy out Telenor's 67.25% stake in their JV for Rs 269 crore, escalating hostilities between the two. The offer was made in their petition before the CLB which it accused Telenor and its executives of 'oppressive and mala-fide actions'.

Source : economictimes