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UPDATE 1-Telenor's Indian partner Unitech agrees to exit JV

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* Telenor still needs local partner for new business

* Spectrum auction set for November for new licences

* Unitech-Telenor JV caught in controversial court case

(Adds details)

Oct 11 (Reuters) - Unitech Ltd , the Indian partnerof Norwegian telecommunications group Telenor ASA , hasagreed to sell its share of their mobile phone joint venture,the Indian company said, in what it termed as an amicablesettlement after months of dispute.

Unitech has agreed to sell its stake in the joint venture,which operates under the "Uninor" brand, for "a nominal amount",it said in a statement to Indian stock exchanges on Thursday.The company declined to comment on terms and conditions.

It said the two companies had agreed to transfer the jointventure's assets to a new entity controlled by the Norwegiancompany.

Shares in Unitech rose 4.7 percent in early trading afterthe news of the settlement. Telenor officials were notimmediately available for a comment.

Unitech, a real estate company, owns about a third inTelenor's Indian mobile phone joint venture, which is among thecompanies whose cellular permits are to be revoked after acontroversial court order in February.

Telenor will have to bid for spectrum in a state auctionscheduled to start next month if it is to continue itsoperations in the world's second-biggest mobile phone market.Telenor will have to sign a new local partner as Indian rulesallow a maximum 74 percent shareholding by foreign companies intelecom carriers.

Telenor has blamed Unitech for the licence cancellation andhas said it will migrate its Indian business to a fresh ventureto seek new operating licences. Unitech earlier opposed the planand had said it had veto rights to block any such transfer.

Last month, Unitech blocked a bid by Telenor to auctionassets of the joint venture.

Unitech said on Thursday it would withdraw all its nomineedirectors on Uninor board and all its shareholder rights wouldbe suspended.

"Subsequent to a successful business transfer and spectrumauction, all disputes and claims between the parties shall standwithdrawn/concluded," Unitech said.

(Reporting by Devidutta Tripathy; Editing by Matt Driskill)

((devidutta.tripathy@thomsonreuters.com)(+91 9818786430)(Reuters Messaging:devidutta.tripathy.thomsonreuters.com@reuters.net))

Keywords: UNITECH/

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