The Hindu Business Line : Etisalat close to buying 51% stake in Swan Tele

New Delhi, Sept 10 UAE’s telecom giant Emirates Telecommunications Corp (Etisalat) is close to picking up a majority stake in Mumbai- based Swan Telecom.

Etisalat has been scouting for an Indian partner for more than 6 months and was earlier in talks with other players including Spice Communication and Videocon-backed Datacom. Swan is among the few operators which had recently bagged licences to offer telecom services in the country.

According to industry sources, talks between Etisalat and promoters of Swan are moving towards the latter picking up around 51 per cent stake in the Indian company.

Shareholders

At present Mauritius-based Delphi Investments Ltd holds 9.9 per cent stake in Swan. This share was earlier held by Reliance Communications. 90.1 per cent stake in Swan Telecom is owned by Tiger Trustees Pvt. Ltd, which in turn is 99.8 per cent owned by Dynamix Balwas Ltd. The remaining 0.2 per cent of Tiger Trustees is in the name of Parrot Consultants Pvt. Ltd and Zebra Consultants Pvt. Ltd.

Etisalat is the largest telecom operator in the UAE and provides telecommunications services in 14 countries in Africa, Asia and Africa including Pakistan, Egypt and Kingdom of Saudi Arabia.

The Etisalat Chairman, Mr Mohammad Omran, had earlier said that India was a very attractive market and the company was studying different market entry strategies to determine the most appropriate fit.

Security concerns

However, security-related issues could be one of the concerns raised if Etisalat approaches the Indian authorities for approval once a deal is worked out. According to the Foreign Direct Investment rules, the Foreign Investment Promotion Board can refuse approval in the case of investments coming from companies operating in unfriendly countries.

Earlier when Egyptian company Orascom had expressed interest to acquire stake in Hutchison Essar, Indian security agencies had raised concerns on the grounds that the company had operations in unfriendly countries. Etisalat has operations in Pakistan which could become an issue at a later stage, though sources dismissed it as a non-issue.

With the Government opening up the fast-growing mobile segment to unlimited number of players, international operators such as AT&T, NTT DoCoMo and Telenor are eyeing an entry into the market.

Scouting for partners

Some of the other new licence holders such as Videocon and Unitech are also scouting for international partners, which makes them a possible entry point for the international giants.

According to analysts, India may see a spate of M&A deals in the next two months before the 3G auction takes place. They said that new Indian players will prefer to have a foreign partner, both for financial support and technological experience in rolling out third generation mobile services.

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