Both Telenor and Unitech want growth: spat is over funding method
29 Mar 2011
The tiff between Norwegian telecom company Telenor and Unitech, its Indian partner in the in mobile phone operator Uninor, is essentially a fight over how to fund the expansion of the company's business.
While Telenor wants to raise funds through a rights issue, Unitech is in favour of funding the expansion through debt.
Telenor owns 67.3 per cent equity in the venture, and the rest is held by Unitech – essentially a realty company.
Since Telenor has the majority stake, it got the resolution for the issuance of rights equity share passed by the company's board in February 2010 despite opposition from Unitech.
The latter moved a Gurgaon district court and got the resolution stayed on 1 March. A disgruntled Telenor has vowed to take the matter to a higher court. In fact, reports suggest that Telenor has already approached the Delhi high court to get the stay lifted. (See: Unitech gets stay on Uninor rights issue; Telenor to appeal)
A Unitech spokesperson said last Friday, "Unitech has obtained a stay order on certain actions which Telenor was proposing to take, which Unitech believes are not in the best interests of the shareholders. The court has recognised the merits in the viewpoint of Unitech."
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