CNBC-TV18 learns that the move will lead to significant layoffs from Etisalat's end and IT companies like Tech Mahindra too will feel the ripple effects of the move.
Mass layoffs will be one of the major impacts, reports Priyanka Ghosh. According to sources, DB Etisalat will be laying off about 2000 employees in the next two months. It operates through 14,000 towers and has 1.5 million subscribers who will now have to switch to competing networks.
As far as the financials are concerned, DB Group headed by Vinod Goenka and Shahid Balwa is set to exit the telecommunications venture altogether. They hold 45% stake currently in the company. This is not a surprise at all because since their initial investment, this has really brought them more pain than any gain at all. They have put in about Rs 1200 crore of investment and Rs 4000 crore had come from Etisalat.
Of course, Etisalat had the option to buy out their Rs 1200 crore for Rs 1600 crore. That now stands nullified and therefore this exit that Shahid Balwa and Vinod Goenka are planning will come at a significant cost since they will have no choice but to write off this amount.
Other than that, sources also say that DB Etisalat has no securitized liabilities with any Indian banks. Hence, on the debt front, they are pretty alright. Today, DB Realty closed down 5% even though there is no direct crossholding between DB Etisalat and DB Realty; it was just a ripple effect of what has transpired having common promoters.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
