Norwegian telecom group Telenor has signed a partnership agreement with Sudhir Valia-controlled entity for a fresh joint venture that would seek to bid for a new license for operating telecom services in India. This follows a bitter corporate divorce between Telenor and its previous local partner Unitech Group in their venture, which operated under the brand Uninor.
Telenor, through its wholly owned Indian entity Telewings Communications Pvt. Ltd (Telewings), has signed the deal with Lakshdeep Investments & Finance Pvt Ltd to come in as an Indian partner in the venture. The maximum FDI allowed in the telecom sector is 74 per cent and so Telenor needs to bring a new partner to own as much as 26 per cent of the venture to confirm to sectoral investment norms.
“Lakshdeep will contribute an agreed amount of equity into Telewings. Upon successful participation in the upcoming spectrum auctions and post all required government approvals, Telenor Group will eventually own 74 per cent of the joint venture. Telenor Group will maintain operational control and upon necessary approvals all assets of Unitech Wireless (Uninor) will be transferred to this company for seamless continuity of operations,” it said in a statement issued on Friday.
The company added that Telewings has already applied for prequalification to participate in the upcoming spectrum auction. A final decision on whether to participate or not will be made before the auction starts.
Lakshdeep is a privately held entity controlled by Sudhir Valia, executive director at Sun Pharma, who also happens to be the brother-in-law of Dilip Shanghvi, the founder and promoter of the country’s top pharmaceutical firm by market capitalization.
A fellow member of Institute of Chartered Accountants of India, Valia carries more than two decades of taxation and finance experience. He joined Sun Pharma in 1994, prior to which he was in private taxation practice.
Early this year, Valia was also reportedly in talks to buy a stake in brokerage firm Fortune Financial Services, a two decade old firm which operates over two dozen branches and close to 100 franchisees across the country.
Valia personally holds 0.74 per cent equity stake in Sun Pharma, which is worth Rs 524 crore or just short of $100 million currently. It is not known if he also owns direct or indirect stake in the company through any other promoter group investment entity.
This would mark yet another deal where a firm or person related to pharma business have invested in the telecom business. Earlier, Piramal Enterprises (formerly Piramal Healthcare) had picked around 11 per cent stake Vodafone India Ltd (earlier Vodafone Essar), the second largest telecom firm in the country by revenues, by investing around Rs 5,863 crore ($1.1 billion).
For Telenor, this shows it is serious in seeing its India business back on track after a forgettable experience with its previous partner. Telenor’s Indian venture Uninor was the most aggressive player among the new generation of telecom service firms that entered India after the government rolled out fresh auction for 2G few years ago. However, the auction got embroiled in a controversy over alleged kickbacks and the Supreme Court early this year scrapped all 122 licences of firms that bagged it in the auction.
Uninor was among the worst hit after a fast rollout of services and at one point was adding the most number of new mobile subscribers in the country in a month, even ahead of legacy players.
Other international telecom firms such as Etisalat and Batelco, which entered India in the second leg of airwaves auction, exited their operations in India after their licences were cancelled by the Apex court.