Telenor ASA, the Norwegian phone company with more than 160 million wireless subscribers, will inject Rs 6,200 crore ($1.28 billion) of new equity in Unitech Wireless in 2009, more than initially planned.
Fornebu, Norway-based Telenor will spend an additional Rs 750 crore ($150 million) to maintain its 60 per cent stake when Unitech converts a loan to equity, the company said today in a presentation. When the purchase was announced in October, Telenor had planned to spend $1.07 billion.
Telenor fell 3.3 per cent to in Oslo on Friday. The acquisition will give Telenor access to a market of 1.2 billion people, where three of every four people don’t have a handset and about 10 million customers are added each month. Telenor scrapped a Rs 8,576 crore share sale last month following investor resistance, and signed an Rs 5,700-crore three-year loan.
Unitech will start services in the third quarter and targets about 8 per cent market share. The unit aims to break even based on the earnings before interest, taxes, depreciation and amortisation three years after starting services. Unitech should break even based on the operating cash flow in five years after spending a total of Rs 15,755 crore.
Telenor will also apply for a permit to increase its ownership in Unitech to as much as 74 per cent as required by Indian regulations.