UAE’s largest telecom operator Emirates Telecommunications Corporation (Etisalat) has picked 45 percent stake in Swan Telecom, for up to $900 million, reports FT. The deal thus values Swan at $2 Billion. So who’s exited? As per earlier reports, Mauritius-based Delphi Investments held 9.9 percent stake, while Dynamix Balwas, a Mumbai based property group, held 99.8 percent of the remaining stake, 0.2 percent with Parrot Consultants Pvt. Ltd and Zebra Consultants Pvt. Ltd.

Interestingly, the acquisition was let slip by Telecom Minister A. Raja, on the sidelines of a conference. He said – “Officially, I have not gotten any letter or any information. Unofficially, I have been told that one of the Indian companies, which got license and spectrum in some of the areas is going to align with Etisalat. The company is Swan. Informally, this is what I have been told.”

It’s likely that some of this $900 million will be used to finance bid for 3G spectrum – question is, how much of it? Some will be utilized for a rollout, but it’s likely that if a telco does get 3G spectrum, it’s valuations will increase, and a further round of fund-raising will follow, in order to finance a rollout. Similarly, Sistema is looking to invest further in Shyam Telelink.

Swam MD Shahid Balwa has told Reuters that they have spectrum for 10 circles, including Delhi, and licenses for 13 circles. They will be launching their operations in the first quarter of the next fiscal.

Etisalat already has a presence in India, via its data services subsidiary Technologia, which operates out of Bangalore. The next challenge for the deal will be getting an approval from India’s Foreign Investment Promotion Board: Etisalat has operations in Pakistan, Afghanistan and Indonesia. There may be security concerns raised around the Pakistan investment. Note that another telco scouting acquisitions in India – Telenor has investments in Pakistan and Bangladesh.