Norwegian telco Telenor has reached an agreement to take a 60% stake valued at INR 61.2billion (US$1.2billion) in India’s start-up mobile operator, Unitech Wireless.

Better known for being a force in the India's construction business, Unitech decided last year to venture into the country’s fast growing telecommunications sector. In announcing its decision then, Unitech touched on the synergy of this new business being aligned with its existing interests in the telecom and transmission tower manufacturing.

Its telecom business under Unitech Wireless secured a GSM pan-India license this year for INR16.5billion(US$330 million). It has Universal Access Service Licence for 22 telecom circles and currently has 250 employees with operations expected to begin in the first half of 2009.

The deal with Telenor places the value of this Indian telco start-up at INR116 billion (US$2.3 billion) with the Norwegian partner subscribing to a rights issue. It is understood about INR20 billion (US$402 million) in expenses for the telecom business borne by Unitech will be transferred to Unitech Wirelesss.

Payment in four tranches
The equity injection in Unitech Wireless will be made by Telenor Asia Pte Ltd in four tranches to be completed before the end of September 2009. As part of the arrangements, Telenor, which is 54% owned by the Norwegian government, will have four members on Unitech Wireless’ board while its Indian partner will have three members.

With nearly 160 million subscribers in 12 markets, Telenor is the world’s seventh largest telecom operator and is the second-largest foreign operator in Asia after Vodafone. Executive vice-president and head of Telenor Asia, Sigve Brekke said: “India is one of the largest and fastest growing mobile markets in the world. While the telecom market here is crowded, we feel that there is room for a new entrant.”

The Indian market has a mobile penetration current at 26% and its population of 1.2 billion people presents an attractive opportunity to telecom operations, said Telenor in a statement. The country is witnessing significant increase of about eight million new subscribers each month during 2008, Telenor added. By end-September the Indian telecom sector has chalked up 313 million mobile subscribers which are expected to grow to 500 million by 2010.

3G auction postponed
Meanwhile, the auction for 3G service in India is being postponed from December 2008 to mid-January 2009 in view of requests from the telecom industry citing longer timeframes for credit arrangements with banks.

In August this year, the government said it may allow up to 10 operators to offer 3G services. State-controlled Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. were allotted spectrum then to offer the high-speed services, ahead of the planned auction. They will be required to pay market prices for the 3G license.

Earlier this year BSNL called for tenders to cater up to 93 million lines and is reportedly in the process of finalising bids, a quarter of which is for 3G services that it expects to offer from middle of 2009. Six companies have placed bids for the order worth US$8.5-$9 billion and a decision is reportedly likely early next year. The companies tendering for one of the biggest orders comprise Alcatel-Lucent, Ericsson, Huawei, Nokia Siemens, Nortel and ZTE with Motorola being a notable absentee.

Source:telecommagazine