Home >Politics >News >Unitech Wireless to lease telecom towers, ink transmission deals

New Delhi: In a deal that will help it complete a stake sale to a foreign partner as well as roll out its mobile telephone services on schedule, Unitech Wireless, the telecom arm of real estate developer Unitech Ltd, on Wednesday agreedlease telecom towers from the tower arm of Tata Teleservices Ltd and Quippo Telecom Infrastructure Ltd.

Earlier in the day, Norwegian telecom company Telenor ASA, which will buy 60% equity in Unitech Wireless, said it expects to sign tower and transmission agreements shortly, and expects completion of the transaction by the first quarter of 2009.

The firm will lease tower infrastructure of Wireless-TT and Quippo Telecom across India. An agreement for the provision of transmission has also been entered into with Tata Teleservices. This agreement will allow Unitech Wireless to roll out GSM (global system for mobile communications) services as planned by the second half of 2009, Unitech said in an emailed statement. Tata Teleservices recently merged its tower arm, Wireless-TT, with Quippo Telecom, a pure-play tower company which will have about 22,000 towers by April. The agreement gives Unitech Wireless access to 40,000 sites.

“The deal marks an important milestone in the roll out, as it will considerably shorten the time to market for Unitech Wireless," Sanjay Chandra, chairman of Unitech Wireless and managing director of Unitech, said in the statement.

The infrastructure sharing agreement was a key component for completing the joint-venture deal between Unitech Wireless and Telenor. “The deal should come through now," said an analyst with a Mumbai-based domestic brokerage firm, who did not want to be identified.

In October, Telenor had invested Rs6,120 crore for 60% equity in Unitech Wireless in an all-cash, four-tranche deal. However, Unitech Wireless has still not received the first instalment of around Rs1,250 crore from Telenor. Once Unitech Wireless receives the first instalment, Unitech plans to transfer Rs900 crore of debt borrowed for the telecom business to Unitech Wireless’ books. This will reduce the debt burden for Unitech, which has an overall debt of Rs8,000 crore.

“We have decided that the investment in Unitech Wireless in India will be financed through a combination of cash generated from operations and additional debt," Jon Fredrik Baksaas, president and chief executive officer, Telenor, said after the company announced its fourth quarter results.

“Telenor has decided to propose no payment of dividend to shareholders for 2008. It is further the intention of the board that no dividend will be proposed for 2009. This underlines the need for strong focus on cash flow in operations," Baksaas said.

“Telenor’s fourth quarter results today did not look good," another analyst with an international brokerage firm, who did not want to be named, said. “I am not sure whether they will be able to finance the deal with Unitech."

Telenor expects its takeover of Unitech Wireless in India to add only marginally to organic revenues, while generating an Ebitda (earnings before interest, taxes, depreciation and amortization) loss of Norwegian Krona (NOK) 2-2.5 billion (Rs1,462-1,827 crore). The firm expects its total capital expenditure to remain at a high level, at an estimated 15-17% of sales this year, including NOK5.5-6.5 billion in India.

Unitech Wireless has pan-India Unified Access Service licences in all of India’s 22 telecom circles. The company has recruited at least 250 staff and is close to placing orders for equipment, the company said.

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