Telenor gets nod to hike stake in Unitech Wireless

The Cabinet Committee on Economic Affairs (CCEA) on Monday approved Norway-based Telenor’s proposal to hike stake in Unitech Wireless, its telecom venture with realtor Unitech, to 74%.

The proposal, which has been pending government clearance for a long time, was delayed over security concerns at the Foreign Investment Promotion Board, after which it was sent to the Cabinet for approval.

“CCEA has given its approval to Unitech Wireless (Tamilnadu) Pvt Ltd to enhance foreign shareholding by Telenor Asia Pte Ltd, Singapore, such that it may have direct and indirect foreign shareholding up to 74% (initially to 67.25%) with a foreign direct investment up to Rs3,740.00 crore in each of the licensee companies,” commerce minister Anand Sharma told reporters after the Cabinet meeting on Monday.

Telenor has already invested Rs2,620 crore through new shares in the JV with current ownership at 49%. The company, now with the CCEA approval, intends to hike its stake to 67.25% with an additional investment of up to Rs3,740 crore.

Unitech Wireless has a pan-India licence to offer mobile services in 22 circles, and has received spectrum to roll out services in 21 of the 22 circles. Recently, the company was re-branded as Uninor.

Telenor is not currently looking to hike its stake from the proposed 67.25% to 74%, which is a maximum permissible foreign investment limit in the telecom sector, a Uninor spokesperson said, adding “The earlier investment in the JV would come in two more trenches by end of the current fiscal.”

FIPB had deferred a decision several times on the Telenor proposal, and subsequently approved the same.

The FIPB delay in approving the Telenor application was mainly due to security concerns raised by the home ministry as the telco also has operations in Bangladesh and Pakistan.

In October 2008, Telenor had said that it would invest $1.2 billion (Rs 6,120 crore) in the telecom venture for a 60% stake. However, following a decline in the valuation of Unitech Wireless due to rupee depreciation versus the US dollar and the global business slowdown, the company said it would get a 67.25% stake for the same investment.

Uninor will start services in December in eight circles — four in the south, two in Uttar Pradesh and one each in Orissa and Bihar. The company does not plan to participate in
the auction for 3G spectrum.