New Delhi: Norway-based Telenor ASA found a new Indian partner in a low-profile local businessman as part of its strategy to rescue and rebuild its business in the country from the ruins of its now-terminated joint venture with Unitech Ltd.
The Norwegian company has chosen Lakshdeep Investments and Finance Pvt. Ltd, the family held investment firm of Sun Pharmaceutical Industries Ltd executive director Sudhir Valia, to be its partner.
Not much is known about Valia except that he’s a chartered accountant and is also on the board of Fortune Wealth Management Co. India Pvt. Ltd, besides being the brother-in-law of Dilip Shanghvi, managing director of Sun Pharma. Valia’s family has other investments, including a 2,600MW power project in Andhra Pradesh.
Telenor’s Indian entity Telewings Communications Pvt. Ltd will have 26% of its equity held by Lakshdeep. The remaining 74% will be held by the Norwegian company, said an official with knowledge of the deal.
“This is a financial investment by Mr Valia in his personal capacity,” Telenor said in a release.
Telenor has applied to participate in the upcoming auction for second-generation (2G) telecom spectrum, expected to begin 12 November, through Telewings. The department of telecommunications will publish the list of pre-qualified bidders on Sunday.
The Uninor (Unitech Wireless Ltd) joint venture with Unitech had all 21 licences scrapped by the Supreme Court on 2 February owing to irregularities in the allocation of spectrum. Uninor’s licences were among the 122 belonging to nine companies that were cancelled by the Supreme Court at the time. The spectrum that was thus freed up is shortly coming up for the auction in which Telewings will participate.
Telenor and Unitech agreed to part ways after much acrimony, which left the Norwegian company needing a local partner if it wanted to stay in India as the rules limit overseas holdings in telecom companies to 74%.
To that extent, Valia will play the same role that Analjit Singh and Ajay Piramal play in the local venture of Vodafone Group Plc. as local partners.
“Telenor Group will maintain operational control and upon necessary approvals all assets of Unitech Wireless (Uninor) will be transferred to this company for seamless continuity of operations,” Telenor said.
“Lakshdeep will contribute an agreed amount of equity into Telewings. Upon successful participation in the upcoming spectrum auctions and post all required government approvals, Telenor Group will eventually own 74% of the joint venture,” the company said in a release.
Telenor, which has invested Rs.14,000 crore in India, held a 67% stake in Uninor, which has about 40 million subscribers.
The deal requires Lakshdeep to invest a nominal amount in the company in the current initial stage when there are no assets on its books.
“It’s a shell company as of now and when assets come to the company, there may be a larger payout, but that will go into the company,” said the executive cited above.
Unitech and Telenor announced a settlement of their dispute on 11 October. The partners had initially fought over the future funding of the venture with the Norwegians pushing for a rights offer. After the Supreme Court verdict, the fight escalated with both sides accusing each other of impropriety and filing suits and counter suits in various courts.
“They will most likely bid for the spectrum in the auction for 13 major circles. All the operators will pay for the spectrum using debt,” said a Mumbai-based analyst with a multinational brokerage firm requesting anonymity.