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Security wheels in Telenor deal?

Videocon-controlled Datacom’s loss is gain for Unitech, which has become the suitor for Norway’s Telenor in the telephony game. For Telenor, it is a dream deal because valuations have fallen drastically by over 25 per cent in just one month.

business Updated: Oct 29, 2008 21:08 IST
Manoj Gairola

The landscape can change fast in world of turmoil.

Videocon-controlled Datacom’s loss is gain for Unitech, which has become the suitor for Norway’s Telenor in the telephony game. For Telenor, it is a dream deal because valuations have fallen drastically by over 25 per cent in just one month.

Datacom, with a 400-strong team and 21 licences covering all zones but Punjab, was the frontrunner to partner Telenor. With 64 per cent from the Dhoots-led Videocon and the remainder from Jumbo, a firm by HFCL’s Mahendra Nahata , Datacom ran into a bind when the promoters started a public tussle.

Nahata alleged irregularities in corporate governance, jeopardising the $1.5 billion valuation deal involving a 51 per cent stake sale. But that was in September. Nahata did not budge to oblige the Dhoots. To make things murky, there were rumours that CEO Ravi Sharma would quit. In short, Datacom ran into a mess that spoilt its plans.

On the other hand, Unitech Wireless had named Rohit Chandra, former executive director of Aircel as its CEO. Chandra
quickly built up a 250-strong team.

But the tide of time that helped management turned against Unitech in the valuation game because of the global crisis and it had to settle for a stake price that is modest when compared with the Swan deal in which a 13-licence company shed 45
per cent for $900 million, even without a team in place.

Unitech is selling 60 per cent for about $1.2 billion, for a 22-licence franchise and also letting go of management control.

Now, the biggest challenge for Unitech is to get regulatory approval to bring in Telenor — which in fact has an operation in Pakistan. Only two years ago, Egypt-based Orascom, which also has operations in Pakistan, faced objections from National Security Adviser M.K. Narayanan. Orascom bought 19.3 per cent stakes in Hutch International. This gave it an indirect shareholding of 10 per cent in the Indian entity. Now, how will security agencies view the Telenor deal? It remains to be seen.