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

* 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 partner of Norwegian telecommunications group Telenor ASA , has agreed to sell its share of their mobile phone joint venture, the Indian company said, in what it termed as an amicable settlement 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 joint venture's assets to a new entity controlled by the Norwegian company.

Shares in Unitech rose 4.7 percent in early trading after the news of the settlement. Telenor officials were not immediately available for a comment.

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

Telenor will have to bid for spectrum in a state auction scheduled to start next month if it is to continue its operations in the world's second-biggest mobile phone market. Telenor will have to sign a new local partner as Indian rules allow a maximum 74 percent shareholding by foreign companies in telecom carriers.

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

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

Unitech said on Thursday it would withdraw all its nominee directors on Uninor board and all its shareholder rights would be suspended.

"Subsequent to a successful business transfer and spectrum auction, all disputes and claims between the parties shall stand withdrawn/concluded," Unitech said.

(Reporting by Devidutta Tripathy; Editing by Matt Driskill)

((devidutta.tripathy@thomsonreuters.com)(+91 98187 86430)(Reuters Messaging: devidutta.tripathy.thomsonreuters.com@reuters.net))

Keywords: UNITECH/