Telenor, the Norway based telecom service provider that owns 67.25% in Indian Telco JV, Uninor, has informed that it’s Indian JV has initiated a rights issue of Rs 8200 crore ($1.65 billion) to get long term funding, reports Reuters (via The Economic Times). In a statement to Reuters, a Telenor spokesman said that the company is hopeful that JV partner Unitech will also subscribe to the rights issue, and that Telenor was not looking to make any changes to the ownership structure of Uninor.
The company intends to raise money through the rights issue since it’s not in a position to get bank loans, owing to the 2G scam and the arrest of Unitech Wireless MD, Sanjay Chandra.
Telenor or VS Unitech
Uninor had earlier proposed a rights issue of Rs 6,500 crore, which was challenged by its JV partner Unitech in the District Court of Gurgaon. The court had put a stay. Although, Telenor had challenged the stay in the Punjab and Haryana High Court, the Court decided to continue with the stay till Telenor approached the Supreme Court, which directed the High Court to review the case. The High Court recently lifted the stay on the rights issue.
The media report also cites a source with knowledge of the developments, who informs that Unitech’s representatives on the joint venture’s board had raised objections on the proposed pricing of the rights issue.
An earlier report had also indicated that Telenor may induct a second Indian partner if Unitech does not participate in the rights issue, since owing to FDI norms, it can only increase its equity holding upto 74%.
According to Telenor, it had allocated Rs 15,500 crore as peak funding(accumulated operating cash flow upto break-even) for Uninor, out of which it has accumulated operating cash flow losses of Rs 7,900 crore as of Q4 2010.The company estimates that its capital expenditure for the year 2011 would be in the range of NOK 1 billion (around Rs 845.42 crore).