Swan Telecom, which has received licences to operate mobile phone services in 13 out of the 22 telecom circles in India, is in talks with foreign companies for diluting 26 per cent of its equity for around $470 million.
“Arrangements are being worked out for selling a 26 per cent stake in the company,” said Shahid U Balwa, managing director, Swan Telecom. The talks are happening considering a total equity value of the company around $1.8 billion. Including debt, the company's enterprise value is pegged around $2.2 billion.
Meanwhile, real estate major Unitech's talks to sell 26 per cent stake in its mobile operations have picked up pace, with the company holding several rounds of talks with three international players for the deal this week.
The company holds the licences through several unlisted subsidiaries.
Senior Unitech executives said a potential partner would be shortlisted soon, with a final deal possible within weeks. With licences for 22 circles, the company is valued at $3 billion, said executives.
It has already hired close to 70 senior staffers, including chief executive Rohit Chandra, a former Ericsson India executive vice-president who has also worked with operator Aircel.
While Swan and Unitech's prospective international partners have not been named as yet, there is a growing buzz about cash-rich Emirates Telecommunication Company (Etisalat).
Known to be interested in entering India (the company operates in 16 countries including Pakistan where it holds a 26 per cent stake in PTCL), it had earlier initiated talks with B K Modi-promoted Spice Communications, which was later acquired by Mumbai-based Idea Cellular. Sources said Etisalat has also spoken to Unitech, but the negotiations did not mature on valuation differences.
There has also been talk of Etisalat having entered into exclusive talks with Swan Telecom. However Balwa denies that. Calls and messages to Etisalat International executives and the press office remained unanswered till the time of going to press.
“We are in talks with a European and two West Asian telecom players,” said Balwa. “There will be clarity on the talks by August-end,” he added.
Swan has the GSM mobile spectrum licence in four circles and has also applied for dual-use spectrum.
The company is majority owned by the Mumbai-based Dynamix Balwas group of companies, which owns the property on which the Le Royal Meridien hotel has come up in Mumbai. Reliance Communications, which owned a 9.9 per cent stake in Swan, later sold its stake to a Mauritius-registered infrastructure fund.
Regulations allow 74 per cent equity in an Indian telecom services company to be divested to a foreign company. Of this, 49 per cent can be done through the automatic route, while 25 per cent can only be sold with prior FIPB approval.
The talks highlight the efforts of India's recently licensed mobile companies to divest equity in a bid to partner large international players who are seeking a toehold in the fastest growing mobile services market in the world.
Source: Business Standard