UAE-based Etisalat Telecom,a shareholder in telecom operator Etisalat DB,has written off 3.04 billion dirhams ($827 million) in its Indian operations after a Supreme Court judgment cancelled 122 2G licences.
The Abu Dhabi firm said it booked the impairment charge against the full carrying value of goodwill for its Indian operations including licences.
Etisalat paid $900 million in 2008 for a 45 per cent stake in the original Indian company,then called Swan Telecom,after the licence had been granted. Etisalat has said it invested more than $1 billion in the venture,since renamed Etisalat DB. Etisalat owns about 45 per cent stake in Etisalat DB,a joint venture between Indian player DB Realty and Etisalat of UAE.
The move comes a day after Bahrain Telecom (Batelco) decided to exit from Indian operations by selling its entire stake in new operator S-Tel in the aftermath of the Supreme Court order.
The net impact of this charge on our consolidated net profit after Federal Royalty amounts to AED 1,020 million (about $280 million), it said. Last week Norway-based Telenor,a majority shareholder in Uninor,had written off about $721 million from its Indian operations.
Etisalat DB has licences for 15 of India’s 22 telecom zones and its 1.7 million subscribers as of December ranked it 14th in a 15-operator market.
The Supreme Court had revoked 122 UAS licenses that were issued by the government in January 2008,Etisalat said,adding the ruling was against the process the Indian government adopted to issue licences and the pricing method adopted for awarding the spectrum. The Supreme Court’s decision took the entire industry by surprise and significantly alters the competitive landscape in India’s telecommunications market,it said. Etisalat said that it expects the government to bring about a rapid and just solution and to fairly compensate investors. Etisalat is also assessing the legal consequences of the Supreme Court’s decision and company’s strategic options in India.
Etisalat reiterated that its investment in Swan took place long after the 2G licenses were awarded. Etisalat is a prudent and mature investor that respects its shareholders and follows strategies in full compliance to local and international laws and best practice, the company statement said.