Datacom-HFCL legal battle may spoil party before it starts

Videocon-promoted telecom venture Datacoms roll-out plans envisaging an investment of up to Rs 15,000 crore may get upset with its minority shareholder HFCL preparing to fight a legal battle for alleged violation of shareholders agreement between the two. HFCL-backed Jumbo Techno Services, which sold majority shareholding of 64 per cent in Datacom Solutions to Videocon's Dhoots, is understood to have raised serious issues relating to corporate governance and has said that major decisions have been taken by the company without consulting the minority partner. When contacted HFCL promoter Mahendr Nahata declined to give details of the fight but said, "We are going to fight for our legal rights." Fearing legal action by Nahata, Videocon has filed a caveat in Delhi High Court against any judicial order prior to hearing. The company was recently given pan-India licence for offering telecom services and has also received spectrum (radio frequency) in some of the circles. Datacom, which is also scouting for a foreign partner, may require about Rs 15,000 crore to roll out network at all- India level. With a legal battle looming in the backdrop, finances from both Indian banks and institutions as well as foreign equity may become difficult, sources said. The new players are already under huge pressure as most of the market has been captured by the existing cellular operators and any legal battle on top of it may affect the valuation of Datacom adversely, they said. By Ms.Bobby Aanand, Metropolitan Jury.

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