Telenor to fund Unitech deal through $1.2b loan

Telenor has abandoned plans for a rights issue to fund its new Indian venture and will instead fund startup Unitech Wireless through loans.

The company had intended to issue NKr12 billion ($1.77 billion) worth of new shares to fund the acquisition of a 60% stake in Unitech, but this proposal has drawn resistance from shareholders ever since the merger was announced in October.

Instead, the company has signed a $1.18 billion loan, and will pay the remainder of the estimated costs of the merger with its existing cashflow.

Due to the new loan, Telenor has proposed that shareholders will not receive dividends for either 2008 or 2009.

Telenor has agreed to pay $1.1 billion for the stake, but the start-up will need to spend at least $2 billion in rolling out a mobile network from scratch.

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