Uninor proposes asset auction, Unitech opposes

Uninor, a joint venture between Telenor and Indian real estate major Unitech, is among eight carriers set to lose a total 122 zonal permits in September, after a Supreme Court order to revoke all licences granted in a scandal-tainted 2008 sale.

"We will not be able to carry on our business in India after September 7, 2012," a Uninor spokesperson told CNBC-TV18. Uninor expects to be subject to liquidation after that date. A majority of Uninor board had taken this decision on July 30. 

The Unitech nominees on the board have opposed the auction. Sources say Unitech is likely to mount a legal challenge and may move to the Company Law Board (CLB) to seek a stay on the proposed auction. Unitech says the auction implies a write-off of Rs 10,000 crore on investments so far.

The total investment of Rs 14,000 crore has been made on the joint venture. Sources say the auction implies no payment to Unitech for its 33% stake in the JV. Also, Unitech feels due-diligence period of only two days is too short for serious bidders. It argues that the auction tantamounts to fraud on shareholders.  

Meanwhile, sources say Uninor plans to auction all movable, immovable assets and liabilities. However, these liabilities will not include long and short-term debt.

It will also auction domestic and international long distance services.

The transfer of assets will require State Bank of India's nod, which is one of its prime lenders.

Telenor, which threatened to exit India after it lost its licenses in an industry-wide corruption probe, planned to reallocate resources to more profitable regions in India and brought forward by a year and a half the break-even point for a unit that has never turned a profit.

The business's fair market value is pegged at Rs 4,190 crore and the reserve price for Uninor auction is set at Rs 4,000 crore.