Abu Dhabi-based Etisalat on Wednesday decided to shutter its India operations after the Supreme Court on February 2 cancelled 15 licences held by its joint venture Etisalat DB, as part of an investigation into the grant of 2G licences.
The Etisalat board's decision, which was unanimous, will affect about 1.67 million subscribers that Etisalat DB has, mostly in northern India; they will get 30 days to transfer to a different service provider. In addition, all of Etisalat DB employees will be laid off.
The pullout will also impact about Rs2,500 crore in bank loans to the company will also be hit.
In a statement issued late on Wednesday, the company said it was pulling out "to avoid incurring further costs at this time of rapid change and continued uncertainty in the Indian telecommunications sector".
The company added in its statement that it would make a decision on whether to reenter the Indian market “when there is clarity on the auction process and telecommunications policy and greater legal and regulatory certainty and stability”.
Etisalat, which operated in India through a joint venture with real estate major DB Group, earlier this month booked an impairment charge of $827 million on its Indan operations, leading to a 24 per cent drop in its net profit.
Etisalat will also seek a refund from the Department of Telecom. In 2008, Etisalat bought a 45% stake in Swan Telecom for $ 900 million. At the time, Swan was promoted by DB Realty. Etisalat said in its statement that "The factors behind the Supreme Court judgment are based on actions that took place long before Etisalat entered the Indian market and considered investing in Swan Telecom."
The Etisalat board has nominated new members to oversee the closure of its Indian operations, which is expected to be completed by June 2, 2012. .