India JV initiates $1.65 bn rights issue: Telenor
New Delhi: Telenor said on Monday its Indian mobile phone joint venture Unitech Wireless has initiated a rights issue of 82 billion rupees (USD 1.65 billion) to secure long-term funding, a move the Norwegian firm's Indian partner has opposed.
Indian telecom sector has been hit by a multi-billion dollar alleged telecom licensing scam and companies face the risk of losing licences as a probe into the scandal continues. Unitech Wireless is among those charged by the federal police.
The scandal, coupled with a slow down in earnings of mobile carriers, has curtailed bank loans to the sector, which needs huge investments to expand networks to the nook and corners of a vast geography and to pay vendors for existing infrastructure.
Telenor said the rights issue in Unitech Wireless was aimed at securing "long term funding in the absence of loans from Indian banks".
"We hope this will be subscribed to by both owners of the company to give Unitech Wireless the funds it needs to continue its strong development in the Indian market," a Telenor spokesman said in a statement to Reuters.
The spokesman said Telenor was not looking to make any changes to the ownership structure of Unitech Wireless.
Telenor owns 67.25 percent of the joint venture, which trades under the Uninor brand name. Indian real estate firm Unitech owns the remainder. Both partners need to subscribe to the rights issue to keep their shareholding unchanged.
Unitech Wireless had earlier decided to launch the rights issue, but the process was halted after Unitech obtained a court's "stay order". Telenor said this month another Indian court had cleared the way for the planned issue.
Unitech declined to comment. The company has previously said "certain actions" of Telenor were not in the best interests of the shareholders.
A source with knowledge of developments said Unitech's representatives on the joint venture's board had raised objections on the proposed pricing of the rights issue.
Police have also charged and arrested 14 people in the alleged telecoms scam, including Unitech's managing director Sanjay Chandra. All accused have denied any wrongdoing.
Telenor has said the events described in the police charges predate its investments in India.