Bahraini telecommunications company Batelco Group said Wednesday
it is selling its stake in Indian mobile operator S Tel for $174.5 million,
just days after India’s top court nullified more than 100 mobile phone
licenses.
Batelco amassed its 42.7 percent stake in S Tel less
than three years ago. It said it hopes to complete the sale to India’s Sky City
Foundation Ltd. by the end of October.
India’s top court last week ordered the government to cancel 122
licenses granted to companies during a scandal-tainted 2008 sale of the
second-generation, or 2G, cell phone spectrum. The licenses were offered at
discount prices on an unorthodox first-come, first-serve basis, netting the
treasury a fraction of what auditors say it might have otherwise received.
The court has called for a new license auction to be
held in the next four months.
Batelco said it has been considering offloading the S
Tel stake since April, and reached the agreement to sell it during the last
part of 2011.
It wasn’t clear why it waited until now to announce
the deal, but the company noted that the decision was part of an earlier
agreement with Sky City to exit “given the circumstances surrounding the 2G
probe.”
Batelco nonetheless remains interested in other
opportunities in the Indian telecom market, according to the company’s chief
executive.
“We are actively exploring all options in this
respect over the coming months,” said Batelco CEO Sheik Mohammed bin Isa
Al Khalifa.
Batelco is selling the stake for the same amount it
says it originally paid in two transactions in May and June 2009.
Besides India, Batelco has operations in Bahrain,
Kuwait, Saudi Arabia, Jordan, Yemen and Egypt.
Another Gulf telecom, Abu Dhabi-based Etisalat, is
also affected by last week’s Indian court ruling through its 45 percent stake
in Swan Telecom. It said last week it will study the court ruling, but had no
knowledge or involvement in the sale of Swan’s license.
Matthew Reed, a Dubai-based analyst at research firm
Informa Telecoms & Media, said that although Batelco’s exit had been under
consideration for some time, it may not be the last foreign investor to pull
out of the Indian market following the high court ruling.
“This must have been a frustrating and disappointing
experience,” he said of the remaining foreign telecoms such as Etisalat. “They
must be wondering ... if there’s a case for cutting their losses.”
