Norwegian telecom operator Telenor has entered into an agreement with an Indian mobile services startup that will give it a 60 percent stake in the company.
Telenor said Wednesday that it has entered into a definitive agreement to subscribe to new shares in Unitech Wireless for the equivalent of more than US$1.07 billion. The investment will be made in four parts, with the full investment completed by September next year.
The move gives Telenor access to India's booming mobile services market, as Unitech Wireless holds valuable mobile licenses and spectrum, even though it is scheduled to launch its services only by the first half of next year.
Set up in 2007 by a company in the real estate business, Unitech Wireless has been allotted spectrum in 13 service circles in India, with the allotment for nine more circles expected over the next 12 months,
The deal still requires regulatory approvals, and is expected to close by the end of this year.
Telenor will have operational control of the Indian company, and will nominate four of seven members of the board of Unitech Wireless, Jon Fredrik Baksaas, president and CEO of Telenor, said during a media briefing that was also webcast.
India added 10.07 million mobile subscribers in September, taking the total number of subscribers at the end of September to 315.3 million, according to Telecom Regulatory Authority of India.
With a population of approximately 1.2 billion, and a mobile penetration currently at 26 percent, India still has significant untapped potential of additional subscribers, Telenor said.
A number of multinational technology and services companies are targeting India and China even as markets in Europe and the U.S. are softening. Some of them like Telenor may invest in companies in the country, as the valuations of Indian companies are also getting attractive because of a continuing slide in Indian stock markets, according to analysts.