Unitech Telenor deal: An analysis

Unitech said it will sell 60% in its telecom arm, Unitech Wireless, to Telenor for Rs 6,120 crore via a fresh issue. Unitech Wireless will invest USD 3 billion over the next three years.

When contacted, Telenor said Unitech telecom arm deal will be completed in four tranches by September-end. The initial equity injection in the Unitech arm will be done by Telenor Asia.

Here is a verbatim transcript of Nayantara Rai’s comments on CNBC-TV18.

The deal is a little below than what market analysts were expecting. At one time, analysts as well as Unitech were expecting that the deal would value Unitech Wireless at around USD 3-4 billion. But, finally the enterprise value has come to USD 2.3 billion. The company has a debt of about Rs 1,200 crore, which is raised from a consortium of six banks. Unitech has also given a debt of around Rs 750 crore to Unitech Wireless. So with this equity infusion that debt will be reduced.

Sanjay Chandra, MD, Unitech, told CNBC-TV18 earlier this week that there was a little strain in the balance sheet because of this high debt. "But that is expected to now come down because of the deal. They are going to start operations in June. The deal has been done with Norwegian entity, Telenor and the enterprise value is about USD 2.3 billion."

Source: Moneycontrol