Telenor, the Norwegian telecoms group, unveiled its latest move to rescue its struggling Indian operations, by announcing plans to enter an auction to bid for the assets of its joint venture partner.
This year, India’s supreme court cancelled 122 mobile phone licences on grounds of improper original allocation, including all of those owned by Uninor, the lossmaking tie-up between Telenor and Unitech, an Indian real estate developer.
Since then the two companies have fought a series of legal cases while trading bad-tempered public statements, as the Norwegian group tries to extricate itself from the partnership in time to set up a new joint venture and bid in forthcoming government telecoms auctions to win back its licences.
Uninor is 67 per cent owned by Telenor, which has said that it saw “no future” in the partnership with Unitech, and would seek to transfer Uninor assets to a new company. Unitech, which owns the remaining 33 per cent, is opposed the idea.
Uninor on Wednesday announced plans to offer its business assets for auction, shortly after which Telenor said in a statement that it plans to participate in the auction.
Sigve Brekke, Uninor’s managing director, said his group had set a reserve price of Rs40bn ($721m) for the assets, following “an independent valuation process” by consultants Deloitte and KPMG.
Unitech reacted angrily, saying in a statement that “the proposed auction of Uninor assets is nothing but a circuitous way for Telenor to transfer these assets to another one of its own entities”, while also threatening further legal action if the move goes ahead.
Uninor set a deadline of August 6 for expressions of interest from other parties. If Telenor remains the sole bidder by that date, the assets would be sold to the Norwegian group for the reserve price.
The move is the latest sign that Telenor is gearing up to enter the forthcoming licence re-auction process being finalised by India’s government, despite repeatedly warning that an excessively high auction price may force it to end its Indian operations.
“Ever since the licenses have been cancelled we have said that our ambition has been that we want to continue our operations in India,” a spokesman for Telenor said. “This is why we have clearly stated that we intend to participate in the sale of the assets of Uninor.”
Further signs that the Norwegian group is planning to persevere in India came last month, when it announced plans to scale down operations in certain parts of the country, saying it planned in future to concentrate resources on more profitable areas.
Telenor says it will make a final decision on its future in the country following the publication of the rules governing the government’s re-auction process, including the minimum price businesses must pay to take part, which are expected to be decided in the coming weeks by India’s cabinet.