Unitech, a prominent player in the real estate sector, is gearing up to merge all eight of its telecom subsidiaries in a strategic move designed to streamline and enhance the management of its telecom operations. This consolidation is notable as each subsidiary possesses licenses spanning three to four circles, collectively providing coverage across all 22 telecom circles in India.
Sanjay Chandra, the Managing Director of Unitech, remarked, "We do not intend to form a holding company for our telecom venture, but will instead merge all telecom subsidiaries.” He further indicated that this merger is anticipated to transpire only after the launch of telecom services, which Unitech is aiming to roll out by mid-2009. Presently, the company has secured spectrum for 16 circles, setting the stage for its entry into the telecom market.
Two months prior, Unitech executed a significant agreement with Norway’s Telenor, agreeing to offload a 60% stake in its telecom division for a staggering Rs 6,120 crore. Under the terms of this deal, Telenor is set to acquire a 60% stake in each of the eight subsidiaries. However, with the impending merger, Telenor's stake will translate into a 60% ownership of the newly consolidated entity.
Unfortunately, the execution of this pivotal stake sale has encountered delays, primarily due to Telenor's inability to secure the necessary funding for the transaction up to this point. Furthermore, Unitech has yet to meet two critical conditions outlined in its agreement with the Norwegian telecom giant. The first installment of funding, which was expected to arrive by December, is now likely to be received only in January, adding to the uncertainty surrounding the deal.
Completion of the merger is contingent on the establishment of tower-sharing agreements with other service providers and the transformation of all eight subsidiaries into private limited companies. Chandra disclosed, "Five have already been converted, while three will turn into private limited companies soon.” He also mentioned that the agreements necessary for tower sharing are nearing finalization.
In a bid to minimize capital expenditures, Unitech has opted not to construct any of its own towers; instead, it plans to utilize existing infrastructure through rentals. The anticipated average rental fee is around Rs 25,000 per tower, further emphasizing Unitech’s strategic approach to this telecom merger.