India: Unitech sells majority stake in Telecom

Wednesday, October 29, 2008

Reality is setting in and companies will have to get back to their core competencies if they are to survive and then thrive. Unitech is first to change its position and it is a good move.

Recall the following from my post: Global Financial Crisis: Effect on India
4. Every business house has created either an infrastructure subsidiary or a telecom subsidiary. If the money is already committed, it was done at the peak, and will be lost. If it is just an idea then they may reap huge rewards when the cycle turns in the next year or more.

In April 2008 Unitech was quoted as follows: MNCs dial Unitech telco

“We’ve started the process of evaluating various strategic partnership options and are hopeful of concluding this in the next three months,” said Unitech MD Sanjay Chandra.

Unitech is offering only a minority stake. Sources said Unitech may soon invite financial bids from Altimo, MTN, Zain, Etisalat and even AT&T

And now, a majority stake has been sold: Unitech said it will sell 60% of its telecom arm to Telenor. I am not concerned about the price. There is a clear headedness and recognition of reality before you can do such a deal. Now Unitech can get back to what it does best...everybody needs to do that.

Expect many such transactions before the bottom is reached in markets; this deal is a good first step in getting there.

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