India's Videocon may sell wireless unit stake

Mumbai: Billionaire Venugopal Dhoot's Videocon group may sell a controlling stake in its wireless unit to an overseas partner to help fund expansion of the business.

"We need a partner that's globally focused on telecom to help us carry this forward," Suresh Hegde, a director at the group, said in an interview in Mumbai yesterday.

Videocon may sell as much as a majority stake in Videocon Telecommunications after investing Rs50 billion (Dh4 billion) in the network and spectrum for the mobile-phone company, he said.

Any bidder would compete with Vodafone Group and Bharti Airtel in India, where Videocon had a 0.3 per cent share of the world's second-largest wireless market by subscribers. A sale may also allow Videocon to inject funds into the group's other businesses, which include consumer electronics, home appliances, and crude oil and natural gas.

"Any new company that wants to enter India will face a very tough road ahead," said Naveen Kulkarni, an analyst at MF Global in Mumbai.

Videocon is in early talks with potential overseas bidders, Hegde said, declining to identify any companies.

A price war that's slashed India's mobile-phone tariffs to as low as a penny a minute eroded earnings at Bharti Airtel, the nation's largest carrier, and nearest rival Reliance Communications.

The entry of international carriers into the market such as Norway's Telenor ASA and Japan's NTT DoCoMo has also intensified competition.

The investor would gain access to a company that has licences and spectrum in all of India's 22 telecommunications zones.

"Today, spectrum is the most valuable asset," said Hegde. Videocon's second-generation global system for mobile communications airwaves should be valued at prices discovered through the 3G spectrum auction "because that's the price an operator would have to pay today to acquire spectrum," he said.

Reliance and eight mobile-phone companies competed in an auction in May for 3G airwaves to ease congested networks.