Dubai: Etisalat DB Telecom, a subsidiary of UAE's etisalat, could face protracted negotiations if its spectrum licences for 2G are cancelled in India as part of an investigation into an alleged scam that cost the government $31 billion (Dh113.86 billion) in lost revenues.
After dismissal of Indian telecom minister Andimuthu Raja for selling licences too cheaply to some companies that were not even eligible, the government is considering a parliamentary probe into the operators given the licences. These include eight given to firms under Telenor, two to etisalat's Indian joint venture called Etisalat DB Telecom, and 10 of Russian operator Sistema. A total of 38 licences are recommended for cancellation, and another 31 are to be investigated for meeting only minimal requirements.
The telecom ministry will have a final say on the matter. "Etisalat DB will probably go into tough negotiations with the regulator. Later we might see that it has met with the requirements and it can re-negotiate for new licences," said Lindsey McDonald, a tele-communications consultant at Frost & Sullivan.
Etisalat DB was given 15 2G spectrum licences after its acquisition of Swan Telecom two years ago. A possible investigation could look into and result in the cancellation of licences bought too cheaply or easily. The operator was also criticised for its slow roll-out of services.
Etisalat DB got its phone licence in 2008 and started mobile services this year under the Cheers Mobile brand.
"When an operator enters a new market, it needs to ensure coverage as quickly as possible. If the 2G licences are withdrawn, it will have a major impact on Etisalat DB because all 3G services are added on to it," McDonald said.
All licences under the probe are those sold in 2007 and 2008. India is a market that with a full rollout would have been etisalat's largest with access to about a billion people.
Etisalat had said earlier that it was ready to spend $4 billion to obtain licences and roll out services in India. While its acquisition of a 50 per cent stake cost it about $1 billion, an information technology contract with Tech Mahindra cost $408 million. It also announced a $2.2 billion infrastructure share agreement with India's second largest telecom company Reliance Communications.
The Abu Dhabi-based operator's entry into India that began with a slow roll out hit a few road bumps and now seems to be slowing down even further.
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