Telenor receives better value for Indian deal than Etisalat

Norwegian operator Telenor has acquired a 60 per cent stake in Unitech Wireless, an Indian GSM licensee with concessions to roll out its network to all 22 telecommunications circles in India. The cost of the stake was US$1.07 billion.

Telenor CEO Baksaas is confident the company can replicate the success it has enjoyed in Pakistan, in India. It became the second largest operator by market share within four years

Telenor is accused of paying too high a price for the stake and of bad timing given the global economic downturn. However, in comparison to the US$900 million Etisalat paid last month for a 45 per cent stake in Swan Telecom, which only has licences extending to 13 of India’s 22 circles, Telenor’s investment looks like shrewd business.

Telenor is the second largest foreign operator in Asia after Vodafone, and following the announcement to finance the deal through a rights issue, its shares tumbled 15.4 per cent. Shares in Unitech Ltd, the parent company of Unitech Wireless and India’s second-largest listed real estate firm, rose as much as 10 per cent in the day.

Telenor’s CEO Jon Fredrik Baksaas said that India Telenor could “replicate its experience” from Pakistan where it became second largest in terms of market share within four years.

Oslo-based Telenor is 54 per cent owned by the Norwegian government and has operations in Pakistan, Bangladesh, Thailand, Malaysia, Serbia, Russia, Ukraine, Hungary and Montenegro, as well as its home Nordic markets.