Unitech sells 60 per cent stake in telecom venture to Telenor

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Unitech sells 60 per cent stake in telecom venture to Telenor

November 15, 2008

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Unitech Limited has offloaded 60 per cent stake in its telecom venture for Rs 61.2 billion to Norwegian telecom firm Telenor.

Under the deal, Unitech's eight subsidiaries, which hold licences to operate in the 22 circles, will issue fresh equity to Telenor. The Rs 12 billion debt that Unitech had taken to buy the licences will, moreover, be transferred to the telecom venture. However, Telenor's operations in Pakistan and Bangladesh may pose a problem for its India entry as companies operating in these countries have faced security issues in India in the past. Meanwhile, both Unitech and Telenor may have to shell out additional funds to the government if the Department of Telecommunications (DoT) implements the new merger and acquisition guidelines 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 it sells over 50 per cent stake.