The Hindu Business Line : Etisalat buys 45% in Swan Tele for $900 m

New Delhi, Sept. 23 Emirates Telecommunications Corporation (Etisalat) has signed a definitive agreement to acquire approximately 45 per cent of Swan Telecom Private Ltd, one of the companies which had recently got the licence for offering mobile services. Etisalat will pay $900 million for the stake, implying an enterprise value of $2 billion.

Swan Telecom holds Universal Access Service Licences in 13 telecom service areas in India, and is in the process of acquiring licences in an additional two telecom service areas.

Together these licences enable the company to provide a full spectrum of telecom services, including GSM services, covering a population of over 900 million across the country.

Remaining stake

The remaining 55 per cent of the shares in Swan Telecom are held by several entities, including Dynamix Balwas Group, a Mumbai-based real estate and hospitality business group.

Commenting on the transaction, Mr Mohammad Hassan Omran, Chairman of Etisalat, said “Our entry in India, one of the largest and fastest growing mobile markets in the world today, marks an acceleration of our expansion strategy and brings to us an opportunity which matches the scale of our ambitions. We are truly excited by the partnership with the DB Group and the prospect of building Swan Telecom into a leading telecom operator, emulating the successes we have achieved in similar situations elsewhere.”

Mr Vinod Goenka, Chairman and Mr Shahid Balwa, Managing Director of the DB Group, said, “We are delighted to be partnering with Etisalat, a leading operator in international telecommunications. We believe that with Etisalat’s operational and commercial expertise and with our knowledge of the Indian market, Swan Telecom has the potential to become a leading force in Indian telecommunications.”

Citigroup Global Markets Ltd is advising Etisalat on this transaction. Deutsche Bank is advising Swan Telecom.

Etisalat is the largest telecom operator in the UAE and provides telecommunication services in 16 countries in Africa, Asia and Africa, including Pakistan, Egypt and Kingdom of Saudi Arabia.

It has around 64 million subscribers. For 2007, Etisalat reported annual net revenues of $5,815 million and net profit of $1,831million.

More operators keen

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.

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.

Spate of M&As

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 3G generation mobile services.

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