United Arab Emirates telecom giant Etisalat's Indian subsidiary could be in jeopardy after getting caught up in 2G telecommunications scandal, a news report said in Dubai. The scandal has surfaced at a time when Etisalat is making efforts to raise $8 billion (29.38 billion dirhams) to fund its international expansion plans, the National Newspaper report said.
Etisalat DB India operates in 15 Indian districts and has more than 40,000 subscribers under the Cheers Mobile brand since services were launched last April.
It was among companies mentioned in the report of government auditor Comptroller and Auditor General after a firm it purchased came under a cloud.
Etisalat acquired a 45 per cent stake in Swan Telecom for $900 million in March last year in a deal that included management control.
The remaining 55 percent is held by two Indian companies, Dynamix Balwas Group and Genex Exim, the report said.
In a swift action against new telecom players who were given licences in 2008, Indian telecom regulator Telecom Regulatory Authority of India on Thursday asked the government to cancel 62 licences given to five companies including Etisalat (Swan), Uninor and Videocon.
The recommendation for this strong action was made to the Telecom Ministry owing to the companies' non-compliance or irregular roll-out of network, as laid down in the contract.
The action comes amid the CAG slamming the Telecom Ministry for irregularity and impropriety in giving licences to new players in 2008, causing a loss of a whopping Rs 1.76 lakh crore (Rs 1.76 trillion)
to the exchequer.
Facing allegations, the minister of communications and information technology, A Raja resigned on Sunday following the release of the report.
Reports here suggest the Indian telecoms regulator could force Etisalat to pay a penalty or relinquish some or all of its licences to operate in the country.
Meanwhile, Etisalat has revealed more than $1.44 billion (5.3 billion dirhams) of existing debt in advance of the company's issuance of $8 billion in bonds to help it acquire the Kuwaiti telecoms operator Zain.
The operator revealed its total debt figures in a bond prospectus filed to the London Stock Exchange last week, along with key figures previously unavailable in the company's financial statements.
Etisalat has begun the due diligence process to acquire a 51 per cent stake in Zain in a deal worth about $11 billion at 1.7 Kuwaiti dinars per share.
The deal is expected to close in the first quarter of next year and would make Etisalat one of the largest telecoms operators in the world.
