Realty major Unitech has announced a landmark deal in which it sold a majority 60 per cent stake in its telecom venture Unitech wireless 6, 120 crores to Norway based Tenenor.
Telenor ASA is the largest Nordic phone company with mobile operations in 12 countries and over 150 million wireless subscribers. Outside the Nordic region, Telenor owns units in Ukraine, Russia, Hungary, Serbia, Montenegro, Pakistan, Malaysia, Bangladesh and Thailand.
The Norwegian government is Telenor's biggest owner, with a 54 per cent stake in the company. Goldman Sachs advised Telenor on the transaction while Unitech was advised by UBS AG and Mumbai-based IDFCSSKI Group.
This is the second major deal to be closed by a club of new GSM licensees. Earlier, Swan Telecom, which has telecom licenses in 13 circles, sold 45 per cent stake to UAE-based Etisalat for $900 million.
Unitech was awarded pan-India mobile telecom licences for Rs 1,651 crore early this year and has been allocated GSM spectrum in 13 circles so far.
The company plans to launch services in the first half of 2009. According to Unitech, the alliance will benefit from Telenor's experience in both high growth and mature telecom markets and Unitech's reputation as one of India's most respected business groups.
Unitech Wireless says it will be investing over $3 billion over the next three years to become a successful pan-India operator. The company says it has recruited over 250 employees and established offices across several cities.
Incidentally, Telenor holds $2 bn equity in Pakistan's second largest mobile operator Telenor Pakistan. This is the largest FDI from Europe in any sector in Pakistan and represents a significant commitment by the company.
Telenor Pakistan, which launched services in March 2005, currently serves over 18 million subscribers through a country-wide network. Telenor Pakistan employs 2,500 people directly and 25,000 indirectly, 99.9 per cent of which are local Pakistani nationals.
It is expected that the Indian government will take a good hard look at this massive cross investment by Telenor in Pakistan given that telecom is a sensitve area and foreign investments usually invite scrutiny by security agencies in addition to FIPB clearances.
“India enjoys a forward looking telecom regulation and an investment-friendly climate. By combining Unitech's strong presence as a trusted corporation in the Indian market with Telenor's successful experience at building and managing best in class mobile operations in Asia, we will together contribute to growing the industry and developing the mobile market in India," said Jon Fredrik Baksaas, Telenor Group President & CEO.
“We believe Unitech Group's local position and strengths coupled with Telenor's technical, operational and marketing expertise will form a winning team. Telenor's experiences from growth markets in Asia are also a great benefit for the partnership,” said Sanjay Chandra, chairman, Unitech Wireless and MD, Unitech Ltd.
Chairman Chandra said approval for sale of 49 per cent stake has already been received and the company would be approaching the FIPB (Foreign Investment Promotion Board) for approval for the remaining 11 per cent equity sale.