Telenor threatens to replace Unitech
Norway's Telenor is threatening to find a new partner for its Indian joint venture if existing ally Unitech does not live up to its funding obligations.
Telenor chief Jon Fredrik Baksaas says the firm is entitled to seek a new partner for Uninor if Unitech does not participate in a planned 82 billion rupee (€1.2 billion) rights issue. Unitech has gone to court in an attempt to block Telenor, which owns a controlling 67.2% stake in the joint venture, from conducting the transaction, the Economic Times reports.
Baksaas asserts Unitech has an “obligation” to take part in the rights issue as part of its agreement to provide their part of Uninor's financing.
Telenor first entered the Indian market in 2008, with the $1.07 billion (€795 million) purchase of a majority stake in Unitech Wireless from Unitech. The deal closed in 2009, and services launched later that year.
But relations between Telenor and Unitech have suffered since the dispute over the rights issue began.
Telenor is pursuing a low-cost approach in India in response to the intense competition and low margins in the market.