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Kamal Narang

Norway call: Mr Sanjay Chandra, Chairman, Unitech Wireless and Managing Director, Unitech Ltd, and Mr Sigve Brekke, Executive Vice-President & Head of Telenor, at a press conference in the Capital on Wednesday. —

Our Bureau

New Delhi, Oct. 29 Telenor of Norway has entered the Indian telecom market. It has signed an agreement to acquire 60 per cent stake in Unitech Ltd’s telecom venture, Unitech Wireless, for Rs 6,120 crore.

Unitech had acquired the telecom licence for Rs 1,650 crore, in February this year. The latest transaction pegs the enterprise value of Unitech Wireless at Rs 11,620 crore. The company has a pan-India telecom licence and spectrum in 13 circles.

Telenor is the world’s seventh largest telecom operator with over 159 million subscribers across 12 markets. It also provides mobile services in Pakistan, Thailand, Bangladesh and Malaysia.

Post the deal, the Norwegian firm would pick-up the majority stake in Unitech Wireless in several tranches, by subscribing to fresh shares. Starting with the first tranche of 20 per cent, Telenor expects to acquire the entire 60 per cent stake by September 2009, subject to regulatory approvals.

Telenor — where Norway’s Ministry of Industry and Trade holds 54 per cent equity — would fund the deal through a rights issue of about 12 billion Norwegian Kroner (about $1.7 billion).

Unitech Wireless would pump-in $3 billion (about Rs 14,700 crore) investment over the next three years to roll-out operations. The proceeds of the stake sale to Telenor would be utilised entirely for telecom operations, and the company would launch the services in the first half of 2009.

“India is one of the largest and fastest growing mobile markets in the world. While the telecom market here is crowded, we feel that there is room for a new entrant,” Mr Sigve Brekke, Executive Vice-President and Head of the Telenor Asia operations, said.

Telenor, which runs 3G operations in Norway, Denmark, Sweden and Hungary, is closely watching the 3G space in India. “We have put together a team to evaluate the 3G opportunities in India. We will finalise our plans in the coming weeks,” he said.

The board of Unitech Wireless would be restructured with four members from Telenor and three from Unitech. Unitech Ltd Managing Director, Mr Sanjay Chandra, would be the Chairman of the telecom business, and Telenor would appoint the new Managing Director.

Mr Chandra said he had no plans to exit the telecom business. Responding to queries on whether the company would dilute further stake to Telenor, he said, “At present, the stake sale is up to 60 per cent ... I haven’t thought that far ahead.” Indian regulations allow 74 per cent FDI in telecom services.

The deal would also see the debt of Rs 2,000 crore being transferred from Unitech to Unitech Wireless balance sheet. Going forward, the telecom company would raise up to Rs 6,000 crore debt for funding its expansion plans.

While Unitech Ltd scrip on Wednesday rose 1.63 per cent on BSE to end at Rs 49.90, Telenor slumped as much as 20 per cent to 36.1 Kroner in Oslo trading.

More Stories on : Telecommunications | Mergers & Acquisitions | Unitech Ltd

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