Shed worth

New Delhi, Oct. 26: The global financial crisis has severely eroded the valuations of the six new telecom operators who had obtained a pan-India licence in January.

Facing a severe funds crunch, foreign operators are no longer hankering for stakes in them.

Merchant bankers estimate the collective worth of the six firms to have fallen 20 per cent to Rs 54,000 crore in October from Rs 67,500 crore just a month ago.

For the new firms, the situation has been made worse by a lack of clarity in regulations.

“For new players the market is not as good as it was a month ago,” said Mahesh Uppal, director, Com First (India), a telecom consultancy firm. “Moreover, many regulatory issues are yet to be resolved. This has also impacted the valuations of companies.”

Real estate developer Unitech, which was in talks with Norwegian telecom group Telenor to sell around 45 per cent equity stake in its telecom venture, was looking to raise over Rs 6,750 crore.

Sources said Unitech had made a new offer at Rs 5,400 crore for the same stake, but the European firm had refused to take the bait.

Analysts said Telenor had lowered the valuation to below Rs 12,000 crore from Rs 14,400 crore. Unitech was also in talks with Italy’s Telecom Italia, but there had been no progress because of differences over valuation.

Unitech managing director Sanjay Chandra, however, said the valuations had not been impacted by the current market situation. Datacom, Swan Telecom, Loop Telecom, Stel, Shyam Telelink and Unitech were given letters of intent in January.

These companies together paid around Rs 8,000 crore as licence fees to get 6.2MHz (megahertz) of spectrum each. With foreign players eager to acquire a foothold, their market valuations had gone up several fold.

A deal between Swan Telecom and UAE-based Etisalat had set the benchmark. Last month, Etisalat acquired a 45 per cent stake in Swan for Rs 4,050 crore, valuing the company at Rs 9,000 crore against its licence fee of Rs 1,650 crore. Swan has a licence to run mobile services in 13 circles.

Its valuation had jumped more than 5.4 times in just a few months, though it had no major investments in network rollout.

The market meltdown changed the situation and foreign telecom operators are no longer in a position to invest huge amounts. Moreover, frequent changes in telecom policies have made foreign players such as America’s AT&T, Germany’s Deutsche Telekom, France’s Orange and Japan’s NTT DoCoMo sceptical about the feasibility of a 3G rollout.