New Delhi, Sept. 23: UAEs Etisalat has bought a 45 per cent stake in Indias Swan Telecom, marking its entry in the countrys mobile phone market.
Swan will issue new shares for a cash consideration of up to $900 million to Etisalat, and the deal has got the green signal from the telecom ministry.
Earlier in the day, telecom minister A. Raja said, I am told unofficially that one of the companies which got spectrum in some of the areas is going to align with Etisalat. It is probably Swan.
Sources said after getting approval from the Foreign Investment Promotion Board, Etisalat would increase its holding to 51 per cent in Swan.
The deal puts the value of Mumbai-based Swan Telecom at around $2 billion. Etisalat had said it was keen on offering 3G services in India.
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, said Mohammad Hassan Omran, chairman of Etisalat.
Swans remaining shares are held by several entities. Its promoter is the Mumbai-based Dynamix Balwas group, which owns the property on which the Le Royal Meridien hotel has come up in the city.
Reliance Communications, which once owned a 9.9 per cent stake in Swan, had sold its stake to a Mauritius-registered infrastructure fund.
Swan holds universal access service licences for 13 of the 22 telecom circles in India. The company plans to launch its telecom operations during the April-June quarter of 2009. As of today, we have got spectrum in 10 circles. We will be launching our operation in the first quarter of next financial year, said Shahid Balwa, managing director of Swan.
In a joint statement, Swan chairman Vinod Goenka and managing director Shahid Balwa said Etisalats experience in the global telecom market would help the company.
We believe that with Etisalats operational and commercial expertise and with our knowledge of the Indian market, Swan Telecom has potential to become a leading force in Indian telecommunications, the statement said.
While Citigroup Global Markets advised Etisalat, Deutsche Bank was Swans consultant.
Set up in 1976, the Abu Dhabi-headquartered Etisalat has 64 million subscribers in 16 countries across Asia, West Asia and Africa.