Telenor takes 33.5 per cent in Unitech Wireless for Rs1,250 crore
20 March 2009
Norwegian telecom group Telenor has completed the Unitech Wireless transaction and made its first investment of Rs1,250 crore (about $250 million), to acquire 33.5 per cent ownership in Unitech Wireless, the telecom arm of real estate major Unitech.
Telenor will invest a total of Rs6,120 crore (about $1.2 billion) in new equity of Unitech Wireless, which will push its shareholding to 67.25 per cent (subject to regulatory approval), the company said in a release. (See: Telenor to get 67.25 per cent stake in Unitech Wireless)
Telenor plans to complete the remaining investment of Rs4,870 crore (about $970 million) in three tranches during the current year.
"This marks the formal entry of Telenor into the world's fastest growing mobile market and we are now embarking on an operational phase and the preparations for the launch of our services," said Telenor Group president and CEO Jon Fredrik Baksaas.
The total number of mobile connections in India increased by more than 100 million last year and Telenor said it will focus on a cost-efficient, swift and flexible network roll-out to take part in continued growth and to optimise profitability.
Unitech Wireless has recently entered into tower sharing agreements with Wireless-TT Info Service Limited (Tata Teleservices' tower company) and Quippo Telecom Infrastructure Limited, ensuring access to thousands of antenna sites at a reduced cost.
"We are looking forward to take a key role in developing a new Indian mobile operator, leveraging on our track record from providing mobile services to people in emerging and fast-growing markets," said Baksaas.
Telenor unveiled the deal to buy a majority stake in Unitech Wireless from in October. Since then, the market has been under pressure because of the economic developments in India following the global financial market crisis.
Although the Indian telecom market was still growing at an accelerated pace, analysts and shareholders were critical of Telenor's decision to enter an already crowded market.
Scepticism over the deal also forced Telenor to abandon plans for a share issue and instead to look to own funds, new debt and retained dividends.
Telenor, however, closed the deal with an additional 7.25 per cent stake in Unitech Wireless for the same price it offered for a 60 per cent stake planned earlier.