Telenor in talks to buy majority stake in Videocon Telecom

Telenor has reached advanced stages with the Videocon Group to look at buying out their telecom business i.e. their mobile services business.

However there was one hurdle of Rs 500 crore plus liability that the Videocon Group owed the government via its telecom arm. Videocon Telecom was expected to pay around Rs 500 crore plus to the Department of Telecom. This was a worry for Telenor given that they already have debt in its Indian arm Uninor. However, now Videocon Group has agreed to take over the liability and therefore the deal will exclude any liability that Videocon Telecom has. However, it will include the entire debt portfolio.

So from a valuation point of view, the overall enterprise value inclusive of debt is coming up to around Rs 10,000 crore. However, there are always multiple caveats as far as telecom M&A deals are concerned given that there have been multiple players talking to multiple players.

Presently, Telenor has refused to comment on this deal but on previous occasions the CEO had given statements saying that Videocon Telecom will be an interesting target if at all Uninor was to look at it some point.