Unitech mops up Rs 1,200 crore for telecom venture

NEW DELHI : Unitech has raised Rs 1,200 crore for its telecom venture from a syndicate of public sector banks led by Punjab National Bank and Canara Bank. Meanwhile, Norway’s telecom firm Telenor is learnt to have emerged the frontrunner in the race to acquire stake in Unitech Wireless, group’s telecom arm. Unitech is likely to finalise a telecom partner in two weeks.

Unitech MD Sanjay Chandra confirmed that the group has raised debt worth Rs 1,200 crore, but declined a comment on telecom partner. SBI Capital Markets organised the loan from the syndicate, which included Bank of India, Oriental Bank of Commerce, Central Bank of India and Vijaya Bank. PNB and Canara Bank contributed the major chunk of the loan.

Unitech Wireless plans to use the funds to buy telecom equipment for the first phase of its rollout. Unitech Wireless has already initiated the process to procure equipment from global telecom equipment majors ZTE, Huawei, Alcatel-Lucent, Nokia and Ericsson. The company is also looking at sharing infrastructure of the existing telecom players in the country.

Unitech plans to raise a major chunk of initial funds through stake sale. The company is in the process of finalising a European telecom player as its partner. Norway’s Telenor is said to be ahead of its competitors, according to sources close to the development.

Unitech has held talks with a number of international telcos since it began its search for a partner earlier this year. The company shortlisted three players, including Telenor, Telecom Italia and an Asian telco two months ago, and is now veering towards Telenor.

Sources say talks with Telecom Italia fell through after the two parties failed to bridge the gap over valuation. Unitech is expecting a valuation of $3 billion for its start-up, while Telecom Italia was ready for just a billion dollar.

Sources say Unitech is yet to take a final call on Telenor as the two sides are still working on valuation. Another crucial issue, sources say, is the amount of stake being offered to the foreign player.

Unitech has all along insisted that it planned to sell no more than 26% stake in its telecom venture, but potential foreign partners have been asking for a majority stake. A source claimed that Unitech may look at selling even 51% stake, but Unitech denied it.

Unitech, which has pan-India GSM licence and received spectrum to operate in six service areas, had earlier said that it expected to invest Rs 20,000 crore, including debt and equity, in its telecom business over the next three years.

Source : Economic Times