In To fund its telecom operations in India, Telenor is planning to raise up to $1.62 billion through a rights issue. The company has stated that if its partner in Uninor, Unitech, does not participate in the rights issue, Telenor might start looking for another Indian partner. This has been declared by Fredrik Baksaas, the CEO of the Norwegian mobile phone company.
According to the report published in The Economic Times, Baksaas said that Unitech was bound to meet its part of the obligations in the financing for their Indian operations, which offers mobile services under the Uninor brand. Telenor has a majority stake of 67.25% in the JV while Unitech owns the rest. "If Uninor does not participate, then the partnership comes into focus. They have an obligation and they have to do it. If not, we can bring in other partners," he said.
The stay on the rights issue has recently been lifted by the Punjab and Haryana High Court. Before this Unitech had obtained a stay in the Gurgaon district court.
Sigve Brekke, the Managing Director of Uninor, has revealed that Uninor was facing a cash crunch. The company had been forced to take short-term loans to the tune of Rs5,000 crore, that was guaranteed by the parent company Telenor, to meet its day-to-day operations and fund its ongoing expansion into more cities and towns in the 13 regions it operates in India.
The Economic Times report says that when Sigve Brekke was specifically asked about the reasons behind the breakdown of relations between both partners in India within a short span of their joint venture launching mobile services, he said 'the question needs to be addressed by Unitech'. "The contribution from Unitech in the early stages was very important. We respect that. But now they have to meet their obligations," he added.
It was in 2009 that Telenor entered India when it bought a controlling stake in Unitech Wireless, the telecom arm of realty firm Unitech Wireless. However, the venture ran into rough weather once Unitech Wireless was charge-sheeted by the CBI in the 2G spectrum scam. On its part Telenor has always maintained that they had only invested in a company, which they thought had all the necessary permits from the government.
Currently Uninor is following a strategy of targeting low-end customers by concentrating on basic voice services. The company believes that there remains a huge untapped market for voice services as mobile penetration is still hovering around 50 percent.
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