New Delhi: India’s second largest listed developer, Unitech Ltd, said it is in talks with two leading mobile service providers from the US and Europe to partner its diversification into the business even as India’s real estate market gets more competitive and starts to slow down.
Unitech recently received a telecom licence to offer mobile services in all the 22 telecom circles in India, and has held talks with US-based telecom giant AT&T Inc. among others, a person close to the development said. The person declined to be identified because a deal is contingent on Unitech being awarded the spectrum, or radio waves which are needed to offer telecom services.
The department of telecommunications will award the spectrum on a first-come-first-serve basis in coming weeks. Unitech is likely to finalise a telecom partner in a month’s time, the same person said. “The partner will bring in the technical expertise and the financial investment required,” the person added. Unitech is likely to hold a minority stake in the joint venture,which could be as low as 40%.
Executives at AT&T could not be reached for comment.
Unitech needs $2 billion (Rs7,880 crore) in investment to roll out its telecom business. “We need $1 billion of equity and $1 billion of debt. The telecom partner could even bring in as much as 70% of the equity required,” the person said. The firm expects to start offering mobile services in six months if it is allocated spectrum.
Meanwhile, Unitech posted a slower growth of 39.15% in net profit at Rs525.78 crore for the third quarter ended December compared with Rs377.84 crore during the year-ago quarter. Unitech had previously cautioned that excessive profit growth of the past would slow down.
The growth in net profit during the December quarter pales compared with the year-on-year growth in net profit in the previous quarter at 300%. “That kind of growth can’t happen every year,” said Sanjay Chandra, managing director of Unitech Ltd. “We started with a low base earlier which is why the relative increase in profit during the previous quarter was higher.”
The revenue of the company during the quarter was Rs1,165.11 crore compared with Rs976.47 crore during the same period in the previous fiscal, showing an increase of 19%, the company said in a statement. “The growth is because of higher sales from the National Capital Region (Delhi’s suburbs) and strong project execution,” Chandra said. “We are yet to see sales from newer regions,” he said. Unitech does not account for revenue from projects until the project is 30% completed. “Our projects have started in other regions as well. We are getting cash flows but we can’t account for it in revenue,” he added.
Interest costs during the quarter more than doubled to Rs97.98 crore compared with Rs45.81crore during the corresponding year-ago quarter because the firm borrowed more in a high-interest-rate environment, Chandra said. Unitech’s total debt was Rs7,044.16 crore as of 31 December.
Unitech also expects to list its office properties in Singapore in about three months.