Business | Telecoms
etisalat expands reach with new investment in India's Swan Telecom
etisalat has signed an agreement to buy about 45 per cent stake in India's Swan Telecom for $900 million (Dh3.31 billion), according to a statement issued on Tuesday.
- By Nadia Saleem, Staff Reporter, and Ajay Jha, Chief Correspondent
- Published: 17:42 September 23, 2008
Dubai: etisalat has signed an agreement to buy about 45 per cent stake in India's Swan Telecom for $900 million (Dh3.31 billion), according to a statement issued on Tuesday.
The UAE telecom operator has subscribed to newly issues shares by the recently licenced Swan Telecom, which has a capital of up to $2 billion.
Speculation had been rife for the past few weeks that etisalat was interested in a 51 per cent stake in the Mumbai-based company. Telecom circles in India are saying that might still be possible once the Foreign Investment Promotion Board approves the mandatory tie-up.
The Indian real estate and hospitality business group Dynamix Balwas Group holds the controlling share in Swan. Several other entities also own shares, including the promoter of Swan Telecom.
Sources say that two well-known politicians of the country are also unofficially involved in the company. Mohammad Hassan Omran, chairman of etisalat, said their entry into India "marks an acceleration of our expansion strategy and brings to us an opportunity which matches the scale of our ambitions."
This move comes at a time when the operator faces stiffer competition in its home country since a second licence was given by the government last year to du telecom.
Mobile phone penetration in the UAE, which has a population of 4.5 million, exceeds 150 per cent.
The company has already created flutters in Indian telecom circles by announcing it would provide national roaming at the cost of 52 paise (4.3 fils) per minute, with the permission of the Department of Telecommunications (DoT).
The rates being offered for roaming facilities for Swan subscribers is even lower than other mobile service operators charge for making local mobile-to-mobile calls.
Swan Telecom holds universal access service lic-ences in 13 telecom service areas in India, and is in the process of acquiring the licence for two more.
In April, etisalat announced that it could spend up to $4 billion on an acquisition or a licence to enter India.
A telecom analyst said while this is a key move on etisalat's part given the high population and low penetration rates in India, the market is very competitive.
"The Indian market has a lot of potential. The penetration rate last year was about 20 per cent, so there is a massive scope to get new subscribers," said Irfan Ellam, telecom analyst at Al Mal Capital Research.
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