Telenor rings in new Indian partner

Just a fortnight after a bitter divorce with Unitech, Norwegian telecom group Telenor has found a new Indian partner - Sudhir Valia, brother-in-law and confidante of Sun Pharmaceuticals Founder Dilip Shanghvi.

Telenor has signed a partnership agreement with Lakshdeep Investments & Finance, a privately held entity controlled by Valia, who is also executive director of Sun Pharma. The joint venture will allow Telenor to participate in the forthcoming mobile licence auctions. Telenor has signed the deal through its wholly owned Indian entity, Telewings Communications

The terms of the deal have been kept under wraps and a Telenor spokesperson only said Lakshdeep would eventually pick up 26 per cent ownership in the new company.

The man at the centre of it all is clearly uncomfortable with all the media attention. Sitting in his office (decorated with Ganpati idols of all shapes and sizes) in a nondescript building at Mumbai's Dadar East, Valia, a chartered accountant, says the partnership is "not such a big deal".

The man, who hates business suits even on formal occasions, gives nothing away, except saying Telenor is a very old player and an important one even in India and that he is open to bringing in other partners (under the sectoral foreign direct investment rules, Telenor cannot hold more than 74 per cent stake).

Valia, 56, whose sister is married to Shanghvi, holds 0.74 per cent in Sun Pharma, while his wife, Raksha, holds 1.68 per cent. Valia, earlier Sun Pharma's chief financial officer, is also on the boards of Taro and SPARC. This is not the first time he has bought stake in third companies. A couple of months ago, he had picked up stake in a Mumbai-based brokerage firm.

In a statement issued on Friday, Telenor said Lakshdeep would infuse an agreed amount of equity into Telewings. "Upon successful participation in the spectrum auctions and after required government approvals, Telenor will eventually own 74 per cent in the joint venture. Telenor will maintain operational control and, upon necessary approvals, all assets of Unitech Wireless (Uninor) will be transferred to this company for seamless operational continuity."

The company added Telewings had already applied for pre-qualification to participate in the upcoming spectrum auction. A final decision on whether or not to participate would be taken before the auction starts.

Unitech, which had a little over 33 per cent stake in its joint venture with Telenor, is estimated to have invested around Rs 650 crore (rs 6.5 billion) in the JV, which operates in 13 circles and has over 40 million subscribers. Apart from the stake-sale money, Unitech could also get another Rs 560 crore (Rs 5.6 billion) as its share of the refund of licence fee, if cleared by the Cabinet, and also tax refunds on transfer of depreciated assets.

Unitech had valued the firm at Rs 12,000 crore (Rs 120 billion) before it lost its licence. However, Telenor had valued the company at only Rs 4,000 crore (Rs 40 billion), which was not acceptable to its partner.

Earlier in February, another Indian drug maker, Piramal Healthcare, had agreed to buy an additional stake in Vodafone's India unit from Essar Group, after making an initial investment of $640 million six months earlier.

In August 2011, Piramal chairman Ajay Piramal said the company expected a return of as much as 20 per cent from the investment. Piramal now owns 11 per cent in the unit.