Indian real-estate developer Unitech Ltd on Friday sought the Company Law Board’s approval to resolve through arbitration a dispute with Telenor ASA over their telecom joint venture, but the Norwegian company is set to oppose the move.
Unitech applied to the board–a quasi-judicial body–seeking arbitration after the two companies failed to make any headway in resolving their dispute over who will control the joint venture Unitech Wireless Ltd. The board said it will hear Unitech’s application on Monday.
The dispute between the two parties, which had been simmering for some time, boiled over after India’s Supreme Court on Feb. 2 ordered the scrapping of 122 mobile-phone licenses–including 22 of Unitech Wireless–issued without auction since January 2008 to several companies, saying the allocations were rigged and under-priced.
Late Wednesday, a person with knowledge of the matter had said that Unitech was open to selling its 32.7% stake in Unitech Wireless to Telenor but only if the valuation was right. The person said that while Unitech valued the joint venture at 100 billion rupees ($1.96 billion) to 120 billion rupees, Telenor valued it at 4.00 billion rupees-8.00 billion rupees.
Telenor holds Unitech liable for breach of warranties related to the license cancellation and has said that it will seek compensation for all investments, guarantees and damages caused by the court’s decision.
Unitech has denied Telenor’s claims. Both companies have since approached the Company Law Board. Telenor wants its partnership to be voided and Unitech to be prevented from obstructing its attempt to run its Indian operations from a new venture in which it could hold 74%. But Unitech is trying to prevent Telenor from assuming full control over the business, including its assets. Unitech Wireless offers mobile-phone services under the Uninor brand and has about 40 million subscribers.
