Norway-based Telenor has announced it is forming a new company in India and plans to migrate its existing customers and employees into this new entity, according to a report in the Economic Times.
“This new entity will serve as the platform to approach the upcoming auctions for fresh licenses as mandated by the Supreme Court. As a part of this process, the new entity will also seek requisite approvals from the Foreign Investment Promotion Board (FIPB) to allow Telenor Group to take up 74% ownership,” the newspaper stated citing a statement from the company.
Telenor last week announced that its strategic partnership with Unitech Ltd. did not have a future, and it therefore would start the process of looking for a new Indian partner.
The move followed Unitech’s loss of spectrum licenses.
“The legality and validity of the licenses was a fundamental term of the share subscription agreement between Telenor Group and Unitech Ltd. We believe that the Supreme Court’s cancellation of the Unified Access Service Licenses conclusively demonstrates a clear breach of Unitech’s warranties,” Telenor’s Group General Counsel Pal Wien Espen had said.
Telenor in its pre-consultation submission on 2G spectrum auction of cancelled licenses to the Indian telecom regulator, had stated that it has been successful in broadening the player field in the Indian telecom sector. Its India venture has more than 37 million customers since services were launched in late 2009.
The Supreme Court of India on Feb. 2 had revoked 122 licenses issued to all telecom operators on and from Jan. 10, 2008. This included all licenses issued to Unitech.
Currently, Telenor operates in India through a 67.25% stake in Unitech. The remaining 32.75% stake is owned by Unitech, one of India’s leading real estate companies.
Telenor has said that it would seek approval for 74% ownership (maximum any foreign investor can hold in a telecom service as per Indian regulations) in the new company.