Telenor reconsidering Unitech funding options

5 Nov 2008

According to the Financial Times, Norwegian telecoms group Telenor is reconsidering its options for the funding of its recent acquisition of a 60% stake in Indian cellco Unitech Wireless. It is understood that, following investor opposition, Telenor may abandon plans to launch a NOK12 billion (USD1.79 billion) rights issue that it had hoped would fund much of the Indian expansion. Jon Fredrik Baksaas, CEO of Telenor, commented, ‘There is consistent feedback from minority shareholders that in the present circumstances of the financial markets and the low valuation of Telenor, a rights issue at this point in time hurts.’ Alternative funding options under consideration are thought to include cutting dividends, selling assets or a reduction in capital expenditure.

Telenor announced plans to acquire the 60% stake in Unitech Wireless at the end of October 2008 for USD1.1 billion. The Indian cellco has a pan-India universal access service licence (UASL) and is expected to launch service by the end of 1H 2009. Estimated costs for the rollout of the mobile network are USD2 billion over three years, and Telenor does not expect the Indian operator to break even at the level of earnings before interest, tax, depreciation and amortisation (EBITDA) until 2012.

Norway, Telenor Group