Telenor in Videocon takeover talks

7 May 2015

Norwegian telecoms group Telenor, the parent company of Indian cellco Uninor, is involved in talks to buy a majority stake in Videocon Telecom, the Economic Times writes citing sources familiar with the matter. According to the unnamed sources, however, a number of issues are holding up the process, not least of which is an outstanding payment of INR5 billion (USD78.55 million) sought by the Department of Telecommunications (DoT) from Videocon for the use of spectrum following the cancellation of its licences in February 2012, and the issue of new concessions a year later. Videocon is reportedly seeking an enterprise valuation of around INR100 billion, including the debt on the company’s books. The lack of clarity regarding merger and acquisition rules is not expected to be an issue, as both providers are small enough to avoid anti-trust measures; according to TeleGeography’s GlobalComms Database, of the twelve active cellcos in the Indian market, Uninor and Videocon were ranked eighth and eleventh respectively in terms of subscribers, with market shares of 4.6% and 0.7% and a combined subscriber base of just over 50 million at end-2014.

As previously reported by CommsUpdate, Videocon Group revealed in January this year that it was willing to part with a 49% stake and management control of the mobile provider, with two unnamed companies – a Mexican firm and an Indian telco – expressing an interest in such a deal. Whilst Telenor did not comment on the rumour, Uninor’s CEO Vivek Sood was quoted as saying that Videocon was ‘a viable option’ for a takeover, adding: ‘There is an obvious compatibility since both of us have got liberalised spectrum.’

Commenting on the decision to cede control of the operator, Videocon Telecom’s CEO Arvind Bali said that the company ‘sees more opportunity in non-spectrum telecom businesses like smart cities, fibre-to-the-home (FTTH) services, carrier-grade Wi-Fi services, broadband using unlicensed spectrum and B2B (business-to-business) and B2C (business-to-consumer) services including mobile wallet and e-commerce.’

India, Telenor Group, Telenor India, Videocon Telecommunications Limited (VTL)