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Perspectives on building technology businesses and AcceleratorIndia from Cartezia

Telenor buys into India

Saturday, November 1, 2008

Telenor is paying over $1bn dollars to buy a majority stake in Indian mobile operator Unitech Wireless in spite of reservations from some of its shareholders. This puts Nordic region's largest telecom operator in competition with Vodafone in the growing Indian marketplace.

Telenor will pay approximately $1.07bn for a 60% stake in Unitech Wireless, to secure a foothold in a market growing by 8m new subscribers a month. Oslo-based Telenor said entering India is a unique opportunity that it has to seize in spite of the turbulent global environment.

 

India has become one of the most important emerging markets for mobile operators. It now has more subscribers than the US and is second only to China in terms of subscriber numbers. With 315m users, mobile phone penetration in India is still only 26% of the population, with large future potential growth.

Telenor already has operations in Pakistan and Bangladesh and is the second-largest foreign operator in Asia after Vodafone. The deal brings Telenor into direct competition with Vodafone, which last year paid $11bn for 67% of the country’s third-largest operator, Hutchison Essar, which was re-named Vodafone Essar.

Although some shareholders have criticised the price Telenor is paying for Unitech Wireless, The Norwegian government, which owns 54% of Telenor, appears to be supportive of the deal.