Telenor-Unitech deal hinges on tower-sharing arrangement

21 Nov 2008

A Telenor executive has revealed that the company's planned acquisition of a 60% stake in Indian start-up Unitech Wireless hinges on a vital tower-sharing negotiation.

The company is in negotiations to arrange to share 30,000-50,000 mobile phone towers, Telenor CFO Trond Westlie told Reuters, adding that if arrangements cannot be made, Telenor would reconsider going through with the purchase.

If the deal falls apart because of an inability to secure a tower-sharing agreement, Telenor will not be forced to pay a break fee.

Westlie also admitted that shareholders have been very clear in their opposition to fund the sale through a $1.7 billion rights issue, citing concerns it would dilute the value of Telenor stock too greatly.

But Telenor will wait until mid-January to decide whether to proceed with a rights issue regardless. The company is nevertheless seeking alternative arrangements, with a temporary cut in shareholder dividends being the most likely scenario.

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