Etisalat to exit India JV with DB promoters

Abu Dhabi-based Etisalat today said it will shut down its operations in India following Supreme Court cancelling its telecom license.

"As unanimously resolved by the Board this evening, Etisalat DB will be taking steps to reduce operating costs, including the suspension of its network and services, pursuant to the terms of its UAS licenses," the company said in an e-mailed statement.

The company said the decision of the Supreme Court to revoke all 122 UAS licenses issued by the Government of India in January 2008 "has removed EDB's ability to operate from June 2, 2012."

Etisalat is the second foreign company, after Bahrain Telecom, to exit India, following the apex court ruling of February 2.

"The decision has been taken in order to protect the interests of all stakeholders and to avoid incurring further costs at this time of rapid change and continued uncertainty in the Indian telecommunications sector," Etisalat said.

Etisalat had 1.67 million subscriber across 15 circles.

On February 9, Emirates Telecommunications Corp (Etisalat) had written off about USD 820 million worth value of its Indian operations by way of an impairment charge as an after effect of Supreme Court order.

Anil Ambani Group firm Reliance Infratel had sought Rs 1,200 crore from Etisalat DB in rental for telecom towers the company had used for its operations.

"Further information, including the official cessation date will be communicated shortly to EDB's customers through the appropriate channels," the statement added.

Etisalat owns about 45% stake in Etisalat DB, a joint venture between Indian player DB Group and Etisalat of UAE.

DB Group however did not offer any immediate comments.

The Supreme Court had ordered cancellation of 122 licences issued by the then telecom minister A Raja in 2008 on first-come-first-serve basis. It asked the government to issue fresh licenses through auction.

Etisalat said the Supreme Court's decision had removed EDB's ability to operate from June 2, 2012.

"Etisalat believes that this is a sensible and wholly appropriate action under the circumstances," it said.

On participating in the proposed auction, it said "Etisalat will make a decision on its future participation in the Indian market when there is clarity on the auction process and telecommunications policy and greater legal and regulatory certainty and stability," the statement said.

The factors behind the Supreme Court judgment are based on actions that took place long before Etisalat entered the Indian market and considered investing in Swan Telecom, it added.

The company had previously stated that its "management has decided to recognize an impairment charge in its 2011 consolidated financial statements amounting to an aggregate of AED 3,044 million (about USD 820 million)."

Yesterday, S Tel (a joint venture between Bahrain Telecom and Chennai-based Siva Group) said it is helping its subscribers move to other operators, an indication that it may be shutting shop.

Norwegian investor Telenor has however said it will continue its operations in the country, but with a different partner.

Also read: RITL moves TDSAT to recover Rs 1200cr from Etisalat DB