Telenor's proposal to auction the assets of Uninor, its mobile phone joint venture with India company Unitech, has been approved by the board despite its partner's disapproval.
On Wednesday, Reuters reported the Norwegian company had gained majority approval from Uninor's board members to auction off the business. It is looking to migrate its India business to a new company in order to bid for fresh 2G licenses, as its original ones acquired via Uninor will end after Sep. 7, 2012, it added.
Potential bidders have to express their interest by Aug. 6 according to an auction notice published in the Financial Express newspaper, it added.
However, Unitech said Telenor does not have the right to auction the joint venture unilaterally. A company spokesperson said the Indian company has veto rights to the sale and it will take "legal action" against the auction.
In response, Telenor spokesperson Glenn Mandelid said in the report: "With regard to Unitech's veto rights, we believe these are automatically forfeited once it is established that the shareholders' agreement and all rights enshrined in it, was based on fraud."
The two companies had set up the joint venture in 2009, with Telenor taking 67.25 percent stake in the company while the rest are owned by Unitech.
Telenor had announced last week it willto bring down costs and scale back its operations in four regions to reallocate the resources to more profitable regions in the country. This was done to mitigate the .