Norway's Telenor on Tuesday dumped its Indian telecoms partner which it accused of "fraud and misrepresentation" and said it would migrate its Indian business into a fresh venture to seek new operating licences.
The latest twist in the mobile phone licensing scandal came only weeks after Telenor said it might abandon India.
The Supreme Court on February 2 revoked 22 mobile licences held by Telenor's Uninor joint venture in an anti-corruption ruling against everal operators.
"The new company will be the platform to approach the fresh licence auctions with," Telenor said, adding that the new venture would take over Uninor's customers and employees.
Indian venture partner Unitech (UNTE.NS) said Telenor's move was "shocking" and illegal.
Unitech said in a statement the move "not only shows complete disregard and oppression of the minority shareholder by Telenor, but is also against all principles of related party transactions."
"Telenor cannot transfer any assets of Uninor without the consent of Unitech because we have veto right in the shareholders' agreement as well as in the articles of association for such matters," it added.
Telenor said "fraud and misrepresentation" on Unitech's part voids the shareholder agreement, allowing Telenor to transfer Uninor's business into a new company at a fair market value.
Telenor said it would seek approval to own 74 percent of the new company but a spokesman declined to discuss who the new partner may be.
The Uninor joint venture has been among the most aggressive of India's newer telecoms companies. It has close to 40 million customers, or more than 4 percent of the market.
The Supreme Court gave companies that had their licences revoked permission to operate for four months, during which time regulators were to come up with new market rules.
Last week Telenor said it would seek indemnity and compensation from Unitech following the licence cancellations. It also said it will write down 4.2 billion crowns related to its Indian operations.
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