The effects of Indian 2G scam fiasco has disrupted the Indian Telecom sector and is driving companies to make swift exits from the country. Etisalat, the Middle Eastern Telecommunications major has reportedly dropped its Indian plans and is looking to exit the country soon. Etisalat owns 45 % stake in the entity Etisalat-DB. The Indian court cancelled all its licenses citing corruption as a reason.
Etisalat will now dump its stake in Etisalat-DB and write off as much as $827 million. Etisalat-DB had already amassed 1.7 million subscribers and were 14th in the market. The JV was also slow to launch its services in the country and was reprimanded by the Indian Government for this. Many of Etisalat-DB’s top executives are among the 19 people charged in the 2G scam case.
Etisalat gave this statement, “The decision of the Supreme Court has removed EDB’s ability to operate. As unanimously resolved by the (Etisalat) board this evening, Etisalat DB will be taking steps to reduce operating costs, including the suspension of its network and services. The decision has been taken in order to protect the interests of all stakeholders and to avoid incurring further costs at this time of rapid change and continued uncertainty in the Indian telecommunications sector.”
Another company to get negatively affected by these proceedings is Uninor. We wrote about how Telenor has decided to dump Unitech and search for a new Indian partner. There has been a lot of blame game in Uninor’s case leaving a lot of customers wondering what will happen. The Indian Government should clarify its stand on auctions and outline a simple and transparent way to allocate the spectrum to Telecom Companies.
What are your thoughts on the process of allocating spectrum to companies? Share them with us.