Etisalat admits AED1.02bn loss from Indian unit
Indian 2G fiasco wipes AED1.02bn from Etisalat's profits
UAE telco Etisalat has reduced its 2011 consolidated net profit by AED1.02 billion ($277.7m) after accepting losses relating to its Indian operation, Etisalat DB.
Etisalat said that the decision by India's Federal Court to revoke all 122 of the 2G licences awarded in 2008 led to a total "impairment charge" of AED3,044 million before Federal Royalty.
The net impact of this charge on consolidated net profit after Federal Royalty amounted to AED 1,020 million, Etisalat said in a statement.
"In accordance with International Financial Reporting Standards (IFRS), Etisalat's management has decided to recognize an impairment charge in its 2011 consolidated financial statements amounting to an aggregate of AED 3,044 million before Federal Royalty against the full carrying value of goodwill; amounting to AED 1,227 million; and the net assets including licenses of its Indian operations. The net impact of this charge on our consolidated net profit after Federal Royalty amounts to AED 1,020 million," the telco said.
The impairment contributed to a 23% decline in Etisalat's net profit for the full year 2011 to AED5.84 billion, down from AED7.63 billion in 2010.
India's Federal Court announced earlier this week that it had revoked all of the 2G licences that the telecom regulator issued in 2008, owing to corruption in the way the licences were awarded.
Etisalat was not the only Middle East telco to be affected. Bahrain's Batelco Group also lost out, with its Indian joint venture, STel, being stripped of its licence. Batelco has since announced the sale of its stake in STel.
Etisalat entered the Indian telecom market in September 2008 when it acquired a 45% stake in Swan Telecom for $900 million.