Etisalat becomes the latest investor to bid a hasty retreat from India

Etisalat has confirmed its exit from the Indian mobile market; three weeks after the India’s Supreme Court cancelled its licence, and is taking legal action against its local Indian partner Swan Telecom.

"The decision of the Supreme Court… has removed [our] ability to operate [in India]," Etisalat said in a statement yesterday. "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.”

Etisalat’s 15 Indian licences were among the 122 permits revoked earlier this month after being issued four years earlier under controversial circumstances. The licences were originally acquired by Etisalat’s Indian partner Swan Telecom. Etisalat then paid US$900 million in 2008 for its stake in the operator, renaming it Etisalat DB.

Two weeks ago, the UAE telco booked an impairment charge on its 2011 financial statements of AED3.04 billion (US$827 million) relating to its Indian assets – and laid blame at its local partner’s feet. “The Supreme Court decision relates to events that occurred in January 2008, well before December 2008 when Etisalat invested in Swan. Etisalat has no knowledge of what occurred in the licence application process for Swan, far less did it have any involvement.” Etisalat confirmed today it was suing Swan Telecom “for fraud and misrepresentation.”

Etisalat did not rule out bidding for the cancelled licences again, but said it would decide on any future activity in India "when there is clarity on the auction process and telecommunications policy and greater legal and regulatory certainty and stability."

Etisalat DB had 1.7 million mobile subscribers at year-end 2011.

Among the other foreign investors affected by the licence cancellations, Bahrain’s Batelco has announced it is looking to sell its stake in S Tel, while Norway’s Telenor is in dispute with its local partner (Unitech) and is reportedly looking to set up a new Indian subsidiary.