Etisalat takes $827m charge against Indian ops
Dubai, February 9, 2012
Emirates Telecommunication Corp (Etisalat) wrote off the value of its Indian operations on Thursday, booking an $827 million impairment charge, after India ordered 122 telecoms licences to be cancelled amid a corruption probe.
The move by Etisalat, the Gulf's No 1 telecom operator by market value, follows a similar step by Norway's Telenor which last week wrote down $721 million in licences and goodwill in India.
Meanwhile, Bahrain Telecommunications on Wednesday said it was selling its 43-percent stake in its Indian affiliate, in the first exit by a foreign operator after the February 2 ruling which revoked 2G licences held by eight operators.
Etisalat owns about 45 percent of Etisalat DB, a joint venture between India's DB Group and Etisalat. The Indian firm had 1.7 million customers as of December and is ranked 14th in a market of 15 operators.
Abu Dhabi-based Etisalat paid $900 million for the stake in the firm, then called Swan, after the licence had been applied for and granted. It has said it invested more than $1 billion in the venture.
The operator said it had booked an impairment charge of 3.04 billion dirhams ($827 million), before federal royalties, against the full carrying value of goodwill for its Indian operations, including licences.
The operator said it was still mulling its strategic options in India and there may be more financial impact.
Separately, Etisalat said its 2011 net profit fell 23.4 percent to 5.84 billion dirhams from 7.63 billion dirhams in the year-ago period due to the impairment charge, it said in a bourse statement.
Etisalat made a fourth quarter net profit of 710 million dirhams, according to Reuters calculations, compared with a profit of 2.02 billion dirhams in the same period a year ago.
Etisalat shares ended flat on the Abu Dhabi bourse prior to the announcement. - Reuters