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Telenor gets obscure white knight for second innings

Saturday, 27 October 2012 - 8:06am IST | Place: Mumbai | Agency: dna

After months of search, Telenor SA, the Norwegian telecom major, announced on Friday it had found a new Indian partner to start its second innings.

After months of search, Telenor SA, the Norwegian telecom major, announced on Friday it had found a new Indian partner to start its second innings.

The partner happens to be Sudhir Valia, whose antecedents are unknown other than that he is the brother-in-law of Dilip Shangvi, the promoter of Sun Pharmaceutical Industries, and a chartered accountant.

Valia holds a 0.74% stake in Sun and is an executive director in the company.

That makes him the second pharma person to invest in an Indian telco after Ajay Piramal bought an 11% stake in Vodafone in February.

Bhavin Shah, pharma analyst with Dolat Capital, said there may be no particular strategy there.

“It seems a coincidence that both Piramal and Valia decided to invest in telecom firms. Sure there will be something in it for Valia. He was in the news sometime back for his interest in Future Financial Services. Alternatively, this may also be an opportunity to unlock the value of Telenor as a company and the telecom sector in future, depending on market conditions,” Shah said.

Industry experts do not rule out the possibility of some buyback understanding between Telenor and Valia, a la Piramal and Vodafone.
Others say Valia is taking a long-term view of the sector and diversifying, and testing the waters through this partnership. Once the government clears the M&A Bill, it may provide a good upside, as well, averred an analyst.

Valia’s company, Lakshdeep Investments & Finance, will be taking a 26% stake in a new un-named company, while Telenor, through wholly owned subsidiary Telewings Communications, will hold the rest.

Valia told DNA Money the new company will be formed only once all issues with Unitech are resolved. “So far we haven’t provided any financing – that will depend on the assets discovered post the auction,” he said.

Earlier this month, realty major Unitech, which holds a 32.75% in Uninor, said it will exit by selling its entire stake to Telenor.

So why is Valia planning to invest in a milieu where the telecom industry has a negative rating on the Street?

He says a level playing field is emerging in the sector and regulations will get better from here on “and thus things have to improve”.

“Telenor was looking for a partner and we were looking to invest. The telecom sector may be a risk, but by investing in it, I am de-risking my pharma investments,” Valia said.

Lakshdeep will contribute a pre-agreed amount of equity to Telewings.  The Telenor Group will maintain operational control and upon necessary approvals all assets of Unitech Wireless (Uninor) will be transferred to this company.

Telewings has already applied for pre-qualification to participate in the upcoming spectrum auction. A final decision on whether to participate or not will be made before the auction starts.


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