Indian licence fallout continues as Telenor seeks restitution

Telenor Group has issued a notice to its Indian partner Unitech, that it will seek indemnity and compensation following the cancellation of Uninor’s 22 licences by the Supreme Court of India.

Earlier this month, India’s Supreme Court passed an order to revoke 122 licences issued to all operators on and from January 10, 2008. This included all licences issued to Uninor. The Supreme Court decision refers to actions that happened prior to Telenor Group’s entrance into India.

Telenor Group holds Unitech liable for the breach of warranties related to the cancellation of the licences – seeking compensation for all investment, guarantees and damages caused by the Supreme Court Order. Telenor Group also made an indemnity claim against Unitech for the failure to obtain spectrum in the strategically critical Delhi circle.

"The legality and validity of the licences was a fundamental term of the share subscription agreement between Telenor Group and Unitech Limited. We believe that the Supreme Court’s cancellation of the Unified Access Service Licences (UASL) conclusively demonstrates a clear breach of Unitech’s warranties," said Pål Wien Espen, group general counsel, Telenor Group.

In the share subscription agreement between the partners, Unitech had agreed to indemnify and hold harmless the Telenor Group from all damages which may be suffered as a result of breach of any of the agreed warranties.

"The fact is that Uninor as a consequence of the judgment will no longer hold any UASLs. Telenor will therefore exercise its entitled right under the share subscription agreement to hold Unitech Ltd. liable to indemnify and compensate Telenor Group for its investment in India," Espen said.

Telenor Group also said that it will consider every option available to secure the continued successful development of its mobile services in the country and the telco will start the process of looking for a new Indian partner.

Telenor Group invested INR 61 billion (US$1.54 billion) for 67.25 per cent ownership in Uninor, and additionally is also fully guaranteeing for INR 80 billion (US$1.4 billion) of short-term debt.