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2G Scam Verdict: Etisalat Writes Of $827 Million As Impairment Charge

Following the Supreme Court order cancelling 122 licenses of 22 operators, Etisalat, which owns about 45% stake in Indian telecom operator Etisalat DB, a joint venture between DB Realty and Etisalat UAE has written off 3.04 million dirhams ($827 million) in Indian operations for booking impairment charge, reports Reuters.

Etisalat holds licenses in 15 circles including Andhra Pradesh, Delhi, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Mumbai, and others. The telco is still pondering over strategic options in India and admits that the write-off has affected the net profit and there may be more financial impact.

Till December 2011, Etisalat had 1.67 million connections with about 425,000 active subscribers. The company said its net profit in 2011 came down by 23.4 percent to 5.84 billion dirhams from 7.63 billion dirhams due to impairment charges.

Etisalat had claimed that it had no knowledge of what occurred in the license application process for Swan and had said that the license applications were entirely conducted by the promoters and their associates who subsequently marketed the Swan investment opportunity to Etisalat through an international investment bank. The telco had invested $900 million in Swan Telecom, now Etisalat DB,  after the license had been issued and claims to have invested $1 billion in total.

After the 2G verdict, Bahrain Telecom made an exit from its joint venture with S-Tel after selling its shares at a price of $175 million back to STel. The company owned 42.7% stake in S-Tel. Telenor has already threatened to exit if the base price for spectrum is too high or incumbents are allowed to participate in fresh spectrum auction. The company had written off  $721 billion in Indian operations, after the ruling.

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Related:
– 2G Verdict Update: Telenor Pushes For Favorable Auctions; Tata Tele To File Review Petition
– 2G License Cancellation Verdict: What The Telcos Are Saying

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