Recession is clearly visible on the telecom sector, especially in telecom deals in India. A classical example is Unitech-Telenor deal. Today (March 17, 2009) Unitech announced that Telenor will now get 67.25% equity holding in Unitech Wireless for a previously agreed $1.2 billion investment in the company.

On 28 October 2008 Telenor executed an agreement to acquire a controlling interest in Unitech Wireless, through subscription for new shares. Then Unitech announced that it would sell 60 per cent for about $1.2 billion. It will let go management control to Telenor. The company has 22 licences.

Unitech is a real estate company. Real estate is badly affected in the current global downturn. Telenor is taking it as an opportunity to get a better deal. As part of the deal Rs 1,800 crore of the Unitech debt will be transferred to the Unitech Wireless. This would be a big relief for debt ridden Unitech.

In September, 2008, Telenor had nearly finalized a deal with Datacom for acquiring 51% in the company. Datacom was valued at $1.5 billion. The deal could not materialse due to differences between the two promoters of Datacom – Nahata and Dhoot.

Earlier, Swan, a 13-licence company, managed to sell 45 per cent equity holding to Etisalat for $900 million. However, by then recession had just started and things were not so bad.

“Telenor and Unitech Ltd have agreed to proceed with completion of the transaction with certain adjustments. While Telenor''s initial investment under the agreement will continue to be the previously agreed INR 61.2 billion (approx. USD 1.2 billion), it has been agreed that Telenor, after this investment, would be holding 67.25% in Unitech Wireless (subject to regulatory approval),” said a Unitech press release today.

“Upon completion of the first phase of the investment, Telenor's ownership percentage will be 33.5%. The subscription for new shares in Unitech Wireless will be completed in four phases. The transaction, and the first phase of Telenor's investment, will be completed shortly, as the closing formalities related thereto have been finalized,” added the press release.

Hope there is no more news on dilution of more Unitech equity to Telenor for the same amount.