Etisalat writes off $820 million against Indian ops

After Telenor, United Arab Emirates-based Etisalat, a shareholder in new telecom operator Etisalat DB, said on Thursday that it has written off $827 million worth value of its Indian operations by way of an impairment charge as an after effect of Supreme Court order cancelling 122 2G licences.

"Etisalat's management has decided to recognise an impairment charge in its 2011 consolidated financial statements amounting to an aggregate of AED 3,044 million (about $820 million). . .," the company said.

Etisalat owns about 45 per cent stake in Etisalat DB, a joint venture between Indian player DB Realty and Etisalat of UAE.

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 worth value from its Indian operations.

The Supreme Court had revoked 122 UAS licenses that were issued by the government of India 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.

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Etisalat further said that it expects the government of India to bring about a rapid and just solution and to fairly compensate investors and Etisalat's senior management is fully engaged to safeguard its investment.

Etisalat is also continuing to assess the legal consequences of the Supreme Court's decision and company's strategic options in India.

The move comes a day after Bahrain Telecom decided to exit from Indian operations by selling its entire stake in new operator STel in the aftermath of the Supreme Court order.

Etisalat reiterated that its investment in Swan took place long after the 2G licenses were awarded and that Etisalat has always conducted itself according to the highest standards and according to the law.

"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.

This is the strategy that was followed in India throughout the legal process and because of this the Etisalat Group remains in a strong position to continue its global expansion strategy whenever and wherever opportunities arise with due regards to risk and international best practice.