Uninor to raise Rs 9,400-cr debt

Telecom operator Uninor, which offers its services in eight of the 22 circles in the country, will soon start the exercise of raising debt to the tune of Rs 9,400 crore.

The company expects to launch its services across India soon and that would require an investment of Rs 15,500 crore. The parent company, Norway-based Telenor, had already infused equity of Rs 6,100 crore and the rest will be raised as debt, the company says.

Telenor owns 67 per cent in Uninor and the rest of the equity belongs to the real estate major, Unitech, which sold equity to Telenor. Uninor is currently operating on a bridge loan of Rs 5,000 crore. “The lead banker of the bridge loan is State Bank of India and it leads a consortium of nine other banks. We will start raising long-term project financing soon and repay the bridge loan,” says Rajiv Bawa, Executive VP, Corporate Affairs.

He says they are looking at both foreign and Indian banks, both public and private sector, for project financing.

Uninor needs funds to roll out its services in all 22 circles. Its immediate plans are to launch in the Mumbai, Maharashtra, Gujarat and Goa circles, which the company hopes to achieve in the second quarter of the calendar year.

Uninor says it is not worried about launching at a time when a rate war is eating into telecom companies’ margins and prices seem to have hit new lows, with the latest entrant, MTS, offering a rate of half a paisa per second. “How much more can they (rates) fall? Beyond this, it can perhaps only be free,” observes Bawa. The company plans to target those customers who talk beyond a minute at a time. “People are not looking only at per-second billing; the average calls of a person are much beyond that. We will put together a package that meets all needs,” says Olav Sande, Executive VP, Western Hub, Uninor.

In the circles that Uninor has launched, they have rate plans where a user can switch between two schemes, depending on the usage of the day. “This mechanism is to encourage people to use the phone and not discourage,” says Bawa. The company has acquired 2.5 million subscribers since its launch in December last year. It has 250 distributors and hopes to launch across India by the end of the year. They do not have spectrum in circles like Delhi and major districts in four other circles and are working on procuring these.

Backed by the Telenor brand, the sixth largest telecom company in the world, the company says it is here for the long run, even as analysts and experts talk of consolidation in the industry. They are targeting eight per cent market share by 2018 and hope to become cash flow-positive in the next five years.