A day after Bahrain Telecommunications said it was exiting its Indian joint venture (JV), Emirates Telecommunications (Etisalat) announced today it was writing off Rs 4,048 crore ($827 million) as part-losses incurred from its India operations. This came in the wake of the recent Supreme Court order which cancelled 21 licences of its Indian JV.
This move by Etisalat, the leading telecom operator from the Gulf by market value, echoes a similar step by Norway’s Telenor, which last week wrote down $721 million in licences and goodwill in India after 21 of Uninor’s licences were cancelled. Uninor is a JV between Telenor and Unitech.
Etisalat owns 45 per cent of its Indian JV, Etisalat DB. It has 1.6 million subscribers and operations across 16 circles in India. Etisalat DB has a market share of 0.19 per cent. According to data with the Telecom Regulatory Authority of India, only a quarter, or 25.4 per cent, of its subscribers are active. Etisalat DB is ranked 14th in a market of 15 players.
“Etisalat’s management has decided to recognise an impairment charge in its 2011 consolidated financial statements amounting to an aggregate of Emirati Dirham (AED) 3,044 million (Rs 4,048 crore),” the company said in a statement. The net impact of this impairment charge on its consolidated net profit amounted to AED 1,020 million (Rs 1,356 crore), Etisalat said.
Abu Dhabi-based Etisalat paid $900 million for a 45 per cent stake in the firm, then called Swan, in 2008 after the licence had been applied for and granted. It had said it invested more than $1 billion in the venture.
Moreover, the company told its investors it was still exploring strategic options in India and there might be more financial impact, leaving many to believe it might seek an exit route.
Etisalat DB made a big bang announcement, when it signed Aamir Khan in a mega endorsement deal. The deal signed after the runaway hit of 3 Idiots was reportedly inked before the release of the film at Rs 30-35 crore for three years.