The Department of Telecom (DoT) has asked the Foreign Investment Promotion Board (FIPB) to make a decision on Uninor’s rights issue only after taking into consideration the pending issues related to the company, reports TheHinduBusinessline. The report sites an internal DoT note, which the publication claims to have access, to confirm the move.
According to the report, the DoT has asked the FIPB to look into the legal notice issued by the Norwegian firm against the Indian Government under a bilateral investment treaty following cancellation of 2G licences by the Supreme court of India. Other pending issues include legal cases in the Supreme Court and issues such as Uninor’s request for amalgamation of its seven companies, non-fulfilment of eligibility conditions of unified access licence, arbitration, and others, in addition to the condition that the company meets FDI and security norms.
Telenor had informed that it’s Indian JV had initiated a rights issue of Rs 8200 crore ($1.65 billion) to get a long term funding. Telenor holds 67.25% stake in Uninor. To increase its stake, it needed to raise Rs 1200 crore through FDI, and had submitted a proposal to the FIPB. On 11 October 2011, Unitech had initiated a process before the special judicial body Company Law Board (CLB) by filing a petition against Uninor, the Telenor-appointed directors on the Uninor board, Telenor Asia Pte Ltd. and Telenor ASA, alleging that the respondents had oppressed the minority shareholders and mismanaged the business of Uninor. Unitech has since then told Telenor that it will not subscribe to the rights offer.
Unitech also writes to FIPB
Unitech Ltd, which holds 32.75% stake in the joint venture with Norwegian company Telenor, has also written to the FIPB against Telenor application to bring in foreign direct investment (FDI) worth Rs 1,200 crore for operational expenditure and loan repayment, reports Livemint. The real estate firm accused the Norwegian teleco of misrepresenting facts by claiming that its FDI application had the consent of Unitech. It also added that the Rs. 1,200 crore investment in Uninor by Telenor would breach India’s 74% FDI limit for the sector.
Both the companies have been at logger-heads since the Supreme Court of India cancelled 122 2G licences issued to nine telecom operators including Uninor by the UPA government in January 2008. Telenor had accused Unitech, holding it liable for the breach of warranties related to the cancellation of the licenses. Telenor also held Unitech responsible for for the failure to obtain spectrum in the strategically critical Delhi circle.