Indian 2G scandal claims Batelco
Batelco has become the first international operator to consider leaving the Indian market in the wake of the country’s 2G licence scandal.
The Bahraini company said that it had an earlier understanding with its Indian Partner, Sky City Foundation, to exit the market given the circumstances surrounding the 2G probe in India over the past 12 months.
Batelco holds a 42.7% equity stake in operator STel India through its Indian subsidiary, BMIC Limited. The company has agreed to sell its stake to Sky City Foundation for $174.5million with the transaction expected to be completed by the end of October 2012.
The telco’s exit follows the announcement by the Indian Supreme Court last week that it was revoking 122 2G licences awarded in 2008 by India’s now jailed telecoms minister, Andimuthu Raja. The Telecoms Regulatory Authority of India (TRAI) is expected to re-auction the licences within four months.
The developing 2G scandal has further damaged the reputation of the Indian telecoms market, which has become known for its complex legislation and strict M&A laws. Last year Raja’s replacement, Kapil Sibal, sought to overhaul the country’s entire regulatory framework through changes to its telecoms act.
Batelco claims that it had decided as early as April 2011 to pursue a sale of its STel stake.
Batelco’s Group CEO, Shaikh Mohamed bin Isa Al Khalifa, said that the company would still remain interested in future investment opportunities in the Indian telecoms market:
“As Batelco continues to grow and diversify its operations, we remain interested in other investment opportunities for the Batelco Group that will enable us to participate in the Indian telecom market. We are actively exploring all options in this respect over the coming months.”
BMIC acquired 42.7% equity in STel via two transactions in May 2009 and June 2009 for a total of $174.5 million. The company’s other main stakeholder is Siva Group with a 51% holding. STel has a limited mobile market share of 0.4% with 3,543,000 subscribers in December 2011.
Another international telco being watched closely since last week’s announcement is Telenor, which owns a controlling stake in Indian operator, Uninor.