UAE-based Etisalat has written off $827 million (3.04 billion dirhams) on account of the uncertain future of its India operations. Etisalat, which owns 45 per cent stake in the mobile company Etisalat DB, is one of the foreign investors hit by the Supreme Court's ruling on cancelling licences awarded in 2008.
Etisalat said on Thursday that it has decided to recognise an impairment charge in its 2011 consolidated financial statements aggregating 3.04 billion Arabian Dirhams (AED) before Federal Royalty. “The net impact of this charge on our consolidated net profit after Federal Royalty amounts to AED1,020 million,” the company said in a statement.
Just solution
Etisalat said it expects the Government of India to bring about a rapid and just solution and to fairly compensate investors fairly. “Etisalat is also continuing to assess the legal consequences of the Supreme Court's decision and Etisalat's strategic options in India,” the company said.
Etisalat had paid $900 million in 2008 for a 45 per cent stake in Swan Telecom, after the licence had been granted.
The company said it invested more than $1 billion in the venture, now renamed Etisalat DB. Etisalat DB has licences for 15 circles and 1.7 million subscribers as of December.
“The Supreme Court's decision took the entire industry by surprise and significantly alters the competitive landscape in India's telecommunications market,” Etisalat said, adding that it invested in Swan telecom long after the 2G licences were awarded.
Exit option
Other foreign investors affected by the court's ruling include Norway's Telenor, Bahrain's Batelco and Russia's Sistema. On Wednesday, Batelco announced its decision to exit the Indian venture STel by selling its stake back to the Sivasankaran Group.
Telenor has written of $721 million (4.2 billion Kroner) worth value from its Indian venture Uninor. Telenor said that it may buy back spectrum through an auction if rules are conducive but it has kept the exit option open.