DELHI-based realty firm Unitech has offloaded a 60% stake in its
telecom venture for Rs 6,120 crore to Norwegian telecom firm Telenor.
The proceeds will be used to fund the telecom operations and will not
go to the parent company, which has been in the news recently for the
crash in its share price and alleged payment defaults.
Unitech’s eight subsidiaries, which hold licences to operate in all the 22 circles in the country, will issue fresh equity to Telenor. The Rs 1,200-crore debt that Unitech had taken to buy the licences will now be transferred to the telecom venture.
Telenor’s shares crashed by 20% to a fiveyear low of 36.1 kroner on news of its investment in Unitech’s telecom project. In a related development, Telenor said its Q3 profits fell 33% to 3 billion kroner.
Both Unitech and Telenor may have to shell out additional funds to the government if the department of telecom implements the new M&A guidelines that it is finalising in consultation with the finance ministry. According to the draft framework, new telecom licensees will have to pay an acquisition fee equivalent to the market value of the entire company if they sell 50.1% stake or more. The Telenor-Unitech deal pegs the market value of the telecom venture at Rs 11,620 crore, which is more than the Rs 8,100-crore market cap of Unitech Ltd.
But Telenor’s operations in Pakistan and Bangladesh may pose a problem to its India entry as companies operating in these countries have faced security issues here. A DoT official said, “The home ministry is now the approving authority for all telecom proposals, and therefore, it is they who will take a call.” This may take some time.
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