x Abu Dhabi, UAEFriday 28 July 2017

Etisalat chief meets Indian minister over 2G problems

Indian subsidiary of UAE's biggest telecommunications company faces regulatory challenges in expanding its coverage in India's booming telecoms market.

MUMBAI // Mohammed Omran, the chairman of Etisalat, met India's telecommunications minister, Kapil Sibal, on Tuesday in what analysts described as a last attempt to get over a number of bureaucratic hurdles as it tries to.

The Indian subsidiary of the UAE's biggest telecommunications company faces regulatory challenges in expanding its coverage in India's booming telecoms market.

Mr Omran, however, cast the meeting as a simple "courtesy call" to reaffirm the group's commitment to delivering its "best services" to Indian consumers.

Etisalat DB Telecom paid India's telecoms department a penalty of 99 million rupees (Dh8m) last month for missing its deadline to launch second-generation (2G) mobile services in four circles, or zones.

On Monday, its troubles grew as India's supreme court slapped the company and 10 other private operators with notices on a petition seeking the cancellation of their 2G licences.

The permits were allotted at what has been alleged to have been under-valued prices by the previous telecoms minister, Andimuthu Raja, resulting in an alleged revenue loss of US$39 billion (Dh143.24bn) for the Indian government.

Kamlesh Bhatia, an analyst in Mumbai for the global research firm Gartner, said the 2G spectrum was a "big hurdle" in Etisalat DB's path that could significantly hamper its investment in the country.

India, the world's second-fastest growing telecoms market after China, is seen as a perfect fit with Etisalat's growth strategy in emerging markets, but analysts say the company faces myriad obstacles.

Even if Etisalat DB's 2G licence is not revoked, its profit margin could be significantly dented because of increased competition and price wars with other private operators in India's crowded telecoms market. The company currently has operations in 14 of 15 circles for which it has received licences but so far has not captured a significant market share, observers say.

Mr Bhatia estimates there are 14 operators on average in every circle, which makes operations "unsustainable" for the companies involved unless there is significant consolidation.

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