Telenor Group seeks indemnities from Unitech

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Telenor Group seeks indemnities from Unitech

Telenor Group is seeking indemnities from Unitech and a new local partner, reports CNBC-TV18's Siddharth Zarabi.

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Excerpts from India Business Hour on CNBC-TV18 Watch the full show » ALSO READ See latest News about Unitech See previous management interviews See what other Experts & Brokerages are saying about Unitech Unitech BSE | NSE 31/05/12 Are Mutual Funds betting on Unitech?

Telenor Group is seeking indemnities from Unitech and a new local partner, reports CNBC-TV18's Siddharth Zarabi.

There is no mention of the warranty claims or the amount that is sought as compensation. The press release talks about the share purchase agreement, share subscription agreement, at the time, when Telenor invested in this company. That, therefore, must definitely have a lot to say on that matter. Telenor is not the only foreign party, which came in post the issuance of these licenses.

If you look at the content of the press release, two things are very clear. One, the joint venture between the Chandra's Unitech and Telenor is completely beyond repair, as far as legal position is concerned.

Two, the statement goes on to say that the Telenor Group is going to look for a new partner. While it remains committed to India, because it does not feel that is a future with Unitech, it will therefore look at all options.

Given the amount of holding, almost 68% that Telenor has, its style of management, it's clear there won't be any other strategic partner. That, therefore, could imply that you could see non-strategic partners coming in, more than one coming in. There could be a recourse that has been taken by other companies which want to run their operations without having some legacy strategic partner.

Third, this is also the beginning of a protracted exercise, as far as Telenor is concerned. Suppose the ultimate resolution to the Supreme Court cancellation order leaves them with no option, but to foreclose on what they have invested in India then as far as its shareholders are concerned, it has done what is legally provided for in terms of seeking damages and claims.

There is one very interesting thing, the indemnity claim is failure to obtain spectrum in Delhi. At that point of time, the company did not get it. The issue of the Delhi spectrum was alive post Telenor coming in

Meanwhile, Unitech is surprised to receive indemnity claim from Telenor. It says, "SC order can't be considered as our breach of warranties."
According to Unitech, Telenor has violated confidentiality covenants.