Norwegian telecom company Telenor has kept its option open to find a new Indian partner if Unitech did not subscribe to the Rs 8,200-crore rights issue.

The Nordic company owns a controlling 67.2 per cent stake in Unitech Wireless and wants to raise capital for expansion and repaying some of its debts. However Unitech is not keen on the rights issue and had even gone to court seeking a stay.

“Unitech needs to meet their part of the financing. They have a good partner in us but that also means that they have to fulfil obligations required for the growth of the joint venture,” Mr Jon Fredrik Baksaas, President and CEO of the Telenor, told Indian media on the sidelines of the company's capital markets day.

Rights issue

“We are going ahead with the rights issue. We are assuming that Unitech will take part. But the agreement allows us to look for a new partner in case they don't. We haven't started looking as yet because we believe that Unitech will take part,” Mr Sigve Brekke, head of Telenor's Asia operations said at the event sponsored by Telenor

Earlier, Unitech had obtained a stay order from a district court on the proposed move by Telenor on grounds that it was not in the best interests of the shareholders. But recently Telenor got the stay order vacated by a higher court paving the way for the Norwegian firm to push through with its plans.

When asked as to why the relationship between the two partners was going sour, Mr Baksaas said that the question should be answered by the Indian partner.

Raising funds

Telenor had first proposed a rights issue in January 2009. It wanted to raise $1.6-billion for buying Unitech Wireless' equity stake. The Norwegian company was forced to withdraw it and fund the acquisition through a combination of its own cash flow and by issuing additional debt.

“Short-term loan is not a long-term solution that's why we need to raise equity,” Mr Brekke said.

The company has a debt of around Rs 5,000 crore, a substantial part of which will be repaid through the rights issue. The Norwegian firm is investing Rs 15,500 crore in the Indian venture including the Rs 6,100-crore initial funding and Rs 5,000 crore for current roll-out.

The company expects to generate a four-fold growth in its revenue target to Rs 2,500 crore from its Indian arm for the fiscal 2011-12 as compared to Rs 600 crore registered in last fiscal. The company wants to slash its capital expenditure by Rs 400 crore in 2011-12 from Rs 1,200 crore posted in 2010-11 and plans to break-even on EBIDTA margins by the first half of 2013 in India.

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