Telenor’s Uninor investment comes under govt scanner

Telenor’s Uninor investment comes under govt scanner

New Delhi: The ministry of corporate affairs (MCA) has ordered a probe into Norway-based telecom services provider Telenor ASA’s investment in real estate firm Unitech Ltd’s telecom arm Unitech Wireless Ltd, which was later rebranded Uninor.

The MCA has ordered the probe primarily to determine whether there were any violations of the Companies Act when Unitech was given telecom licences and spectrum for Rs1,651 crore and then it sold around 67% of the telecom subsidiary for around Rs11,000 crore to Telenor.

“In this inquiry the regional director and RoC (Registrar of Companies) North has been asked to do a thorough investigation on whether Unitech disposed of (completely or partially) 2G licences, how were the licences acquired by Unitech, what are details of the share agreement between Telenor and the telecom subsidiary of Unitech," said a senior MCA official who spoke on condition of anonymity as he is not authorized to speak to the media. Mint couldn’t immediately ascertain the cause of the investigation.

In January 2008, the department of telecommunications (DoT) allotted spectrum and licences to operators including Loop Telecom Pvt. Ltd, DB Group-promoted Swan Telecom, S Tel Pvt. Ltd, Videocon Telecommunications Ltd and Unitech. Many of them sold fresh equity to foreign firms at a premium. They sold the equity as a way of getting around a clause stipulated by DoT that disallowed operators from selling promoter equity within three years of getting the licences.

The price of the licences was set at Rs1,651 crore. Swan Telecom, since rebranded Etisalat DB Telecom India Pvt. Ltd, sold 45% to the United Arab Emirates-based Etisalat for Rs4,500 crore while S Tel sold 49% to Bahrain Telecommunications Co. for $225 million (Rs1,035 crore). “With regard to scrutiny, since no such communication has been received by us, we cannot comment on speculations," a Uninor spokesperson said in an emailed statement. “However, on this subject itself, we have stated earlier, too, that the Telenor Group’s investment is in Unitech Wireless through new equity and not through any share sold by Unitech Ltd," the spokesperson said. “It is incorrect to state that Unitech Ltd has sold its stake in Unitech Wireless to Telenor Group. This investment is the working capital that we are using to run our operations in the country. Furthermore, both our shareholders continue to remain invested in the company."

The MCA official quoted above said the investigation was ordered to find out whether Unitech had manipulated the existing policy when it acquired the 2G licences and spectrum at a low cost and sold them to Telenor for a premium. “The MCA has also asked RoC to find (out) whether there are possibilities that the company spent Rs1,600 crore in buying the 2G spectrum licence and sold it for Rs11,600 crore through manipulation in company holding structure," added this official.

DoT’s 2G policy has become controversial in recent times. Accepting a plea on the issue, the Supreme Court this month asked communications minister A. Raja, among others, why the government was going slow on probing corruption allegations over spectrum allocation.