Telecom Italia bags 49% Stake in Unitech Wireless
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Real estate major Unitech’s telecom arm, Unitech Wireless has just sold a 49% minority stake in the company to Telecom Italia, Italy’s largest telecom company.
Unitech Wireless has managed to win licenses to operate in all 22 circles in the country and were on the look out for partners. We’d reported about Norwegian telecom giant, Telenor, who was eyeing a 26% stake in the company for $500m. Today, ET reports that instead of Telenor, Telecom Italia has managed to grab a 49% stake in the company for $2bn. The two firms are close to reaching an agreement, whereby a new company will be formed for Unitech’s telecom business in which Telecom Italia will have a 49% stake while the rest will be held by Unitech.
Back in the earlier report, the MD of Unitech, Mr. Sanjay Chandra had denied that a partner was finalized by his firm and that they were still negotiating with various parties. The deal would only be closed only after they analyzed all opportunities. It was also reported that the firm was eyeing for an evaluation of atleast $3bn
As per Industry Sources, Unitech has been in talks with several foreign telcos for a partnership since the beginning of the year. While the firm has been valued currently at $2bn, the promoters are hoping for a valuation of at least $3bn and seeing that 49% was given away for $2bn, they pretty much hit the arrow on the target.
Unitech, will play the role of contributing its pan-india license and initial groundwork. The company has already acquired spectrum in six of the 22 circles and is expected to launch it’s operations by April next year. On the other hand, Telecom Italia’s funds will be used for rolling out the network and operations. The company is also planning to bid for the 3G spectrum. The company is preparing in full force for the roll out, and has already employed a force of 250 people. The firm also plans to invest Rs. 20,000 crores over the next three years.
Executives from both these firms are said to be in talks with equipment vendors, including Nokia and HP. It seems that the country is expected to see a party of launches next year, and Unitech is making sure it does not fall behind in the race.
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I beleive Telenor has bought a 60% stake in Unitech Wireless:
Norwegian carrier Telenor has paid US$ 1.1 billion for a 60 % stake in Unitech Wireless, a new licensee which is yet to roll-out its operations in India. Unitech has spectrum licenses for all 22 circles in India and plans to launch services by mid 2009. Buying a stake in new licensees has become a common route for foreign operators to enter the Indian market. The Indian mobile market has been growing at an enormous pace, adding more than 9 million subscribers every month with almost 700 million rural subscribers yet to be tapped. No doubt there is a huge opportunity for existing as well as for new players, but grabbing new subscribers and making a dent in existing operators’ market share will not be easy. New players, especially foreign operators, will find that the Indian market dynamics are very different from other emerging markets. Telenor will need to replicate its successful model from other Asian markets and most significantly line up a broad set of ultra low cost handset vendors.