Unitech offers to buy Telenor out of Uninor

Dylan Bushell-Embling
12 Oct 2011

In the midst of a squabble over the valuation of Indian telecom venture Uninor, minority partner Unitech has offered to buy out Norweigian partner Telenor.

Unitech said it will pay 2.69 billion rupees ($54.7 million) for Telenor's 67.25% stake in the Uninor joint venture, Economic Timesreported.

This would be a far lower price than the more than $1 billion Telenor paid when it bought into the venture in a deal announced in 2008.

But Unitech says the valuation is based on Telenor's own estimate of the market value of Uninor, which it puts at 4 billion rupees.

Unitech, primarily a real estate group, made the offer in a complaint filed before the Company Law Board. In the submission, Unitech argued that Telenor has mismanaged Uninor, as the valuation would mean the venture is now worth less than 5% of what it had been when Telenor bought in.

The uneasy partnership between Telenor and Unitech is being threatened by disputes over management and funding.

The two sides have been publicly sparring over whether to raise funds through a rights issue, which Telenor argues is necessary to pay for continued rollouts, but which Uninor opposes.

Telenor has already threatened to find a new partner for Uninor if Unitech does not live up to its funding obligations, but Unitech claims the partnership stipulates that the venture must exhaust all other funding avenues before conducting a rights issue.

While the takeover offer may be more of a strategic play than a serious bid in any event, at least one analyst finds it difficult to believe that Telenor would consider selling out of India at any price likely to be put on the table.

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