New Delhi: Norway’s incumbent operator Telenor on Wednesday said it is evaluating alternative channels to a planned rights issue for funding its 1.1 billion investment in India for which it has hired Deutsche Bank.
The company which had entered India by acquiring 60% stake in the real estate major Unitech’s telecom arm for 1.1 billion dollar said in a statement, “On 29 Oct, Telenor announced its intention to fund its investment in India through a rights issue of 12 billion Norwegian kroner ($1.1 billion).
It has decided to evaluate alternative ways of funding the investment, including the previously announced rights issue”.
But, the company maintains that the previously announced rights issue is still part of the funding plan. The rights issue has not been scrapped.
According to the analysts incase of the fall-out of this decision there could be delay in the deal completion process in India. In the absence of a viable funding plan of this size, it becomes a bit uncertain on the next course of action.
Telenor shares crashed by 20% to a five-year low of 36.1 kroner on news of its investment in Unitech Wireless. Its Q3 profit has fallen 33% to 3 billion kroner.
Telenor CFO Trond Westlie said last week the company will probably decide on the fate of the rights issue by mid-January, adding that investors signalled they would rather see a cut in dividend than a dilutive share issue or asset sales.
However, it is not clear whether Telenor is ready to take on more debt to fund the deal but analysts said the current financial turmoil could be one of the reasons for looking at other options of funding. Norway Government is the owner of Telenor.
Telenor had plans to finance the acquisition by selling approximately Norwegian kroner $12 billion or $1.8 billion worth of its shares in a rights issues in the first quarter of 2009. The Norwegian government planned to buy some of the shares under certain conditions, Telenor had said.