NEW DELHI: Abu Dhabi-based telecom firm Etisalat said Wednesday it was closing its Indian joint-venture mobile operations following a court ruling cancelling its licence amid corruption allegations.
The Indian Supreme Court's decision earlier this month revoking licences awarded by the government to a clutch of telecom firms "has removed Etisalat DB's ability to operate," the company said in a statement.
The 2008 licence sales are at the heart of one of India's biggest corruption scandals in which former telecom minister A. Raja is alleged to have mis-sold permits and favoured some firms, costing the treasury up to $39 billion.
Etisalat owns a 45 percent stake in Etisalat DB, a joint venture with Indian real estate player DB Group that has 1.7 million subscribers.
DB Group was among a number of Indian companies with no telecom experience that bid for mobile licences and then sold stakes in their cellular ventures to foreign investors, including Etisalat and Norway's Telenor, for hefty sums.
Raja, senior government officials and top executives of DB and other companies are among nearly 20 people facing charges over the scandal.
Etisalat wrote off $820 million in connection with its Indian venture following the court ruling.
It said Wednesday it wanted to avoid "incurring further costs at this time of rapid change and continued uncertainty in the Indian telecommunications sector.
The Supreme Court has ordered the government to issue fresh licences through an auction. But analysts have said some companies hit by the ruling might not have the desire or resources to bid again and defend businesses still in start-up mode.
Etisalat said it would decide on its "future participation in the Indian market when there is clarity on the auction process and telecommunications policy and greater legal and regulatory certainty and stability."
Etisalat paid $900 million for its stake in the Indian mobile operation, and said it invested a similar sum developing the venture.
Etisalat DB was the 14th largest out of 15 players.
Norwegian investor Telenor has said it wants to continue its operations in India, the world's second-largest mobile market after China, but has ditched its Indian partner, accusing it of fraud.
The reduction in the number of mobile players is seen by many analysts as a good development for the congested sector as cut-throat competition has slashed call costs and hit profits.
Comments
Comments are closed for this article.