Clarifies that there is no question of the company getting out of Unitech Wireless or selling stake.
Unitech Ltd on Wednesdsay attacked Norwegian telecom giant Telenor for allegedly mismanaging their joint venture, Unitech Wireless, and bringing down its valuation, in a public lashing for the first time.
The joint venture offers services in 13 telecom circles and has a subscriber base of 35 million. While Telenor has a 67.25 per cent stake in Unitech Wireless, the rest is held by the Unitech group. The partners have been sparring for some time and Telenor had recently valued the JV at Rs 400 crore.
Nirjhar Goel, a nominee from Unitech on the board of Unitech Wireless, attacked this valuation. “Without any pressure or prejudice, Telenor had invested in the JV seeing the business potential and valued it at Rs 9,000 crore when they first made the investment. If we don’t spend even a single penny and keep the money in the bank account, the company would have been valued at Rs 7,000 crore just on the basis of interest…But after spending Rs 6,000 crore in the operations, acquiring customers and building the network, such a valuation of Rs 400 crore is utterly ridiculous,” Goel said.
| THE DISPUTE SO FAR |
| * Dispute over Telenor’s proposed rights issue worth Rs 8,200 crore |
| * Unitech insists on debt funding, says rights issue should be the last option |
| * Telenor values Unitech Wireless at Rs 400 crore; BNP Paribas, appointed by Telenor, values the JV at Rs 800 crore; Unitech values it at Rs 11,000-12,000 crore |
| * Unitech moved the Company Law Board against Telenor’s mismanagement of operations |
| * Both Telenor and Unitech face arbitration in a Singapore court |
Adding: “You put in all that cash and burn all that money and say we are just left with Rs 400 crore. That can result only from gross mismanagement.”
According to its own research, the valuation of the company is Rs 11,000-12,000 crore, an increase of 10-15 per cent year on year, says Goel. A consultant appointed by Telenor BNP Paribas recently valued the firm at around Rs 800 crore.
The battle between the two started with Telenor’s proposal of going for a rights issue to raise funds. Unitech, while opposing the proposal, had gone to the courts over this. Unitech is insisting on debt funding for raising funds. It had also recently moved the Company Law Board, complaining against Telenor for mismanagement of operations. The companies are also facing arbitration in a Singapore court.
According to the shareholders agreement, a rights issue should be the last option to be explored and the debt route should be the first choice to raise funds, Goel said. He said short-term and mid-term funding was still available in the market, though securing long-term funding was difficult.
He added that there was no question of Unitech getting out of the company or selling stake at all.
