UAE-based Etisalat marks its entry into the Indian telecom market


UAE-based telecom operator Etisalat has purchased a 9.8% stake in Vodafone Group Plc, the parent company and a promoter of Vodafone Idea, for a sum of $4.4 billion as the company aims to diversify its operations globally.

Etisalat, or Emirates Telecommunication Group Company PJSC, is one of the world's leading telecom (ranked 18th globally) established in 1976 in Abu Dhabi as UAE's first telecommunications service provider. Today, the company has around 155.4 million subscribers with operations spanning the Middle East, Africa, and Asia, and is one of the strongest brands according to Brand Finance.

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This stake purchase makes Etisalat the largest shareholder of the UK-based Telecom operator, moving ahead of large companies like BlackRock, Vanguard Group & HSBC. Moreover, since Vodafone Group Plc holds a 47% stake in Vodafone Idea, the acquisition gives Etisalat an indirect stake of 4.67% in the debt-ridden Indian teleco, marking its entry into the Indian telecom game.

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This is not the first time that Etisalat has entered the Indian market. It had entered India earlier in 2008 but its business was cut short in February 2012. It shut its operations after the Supreme Court had canceled 122 telecom licenses in the 2G spectrum allocation scam. The move affected 16.7 lakh users as the company decided to operate in the country when there was “clarity in the spectrum auction process”.

“Our investment represents a unique opportunity to acquire a significant stake in one of the leading global telecom brands and a company that we know well. We are looking forward to building a mutually beneficial strategic partnership with Vodafone with the goal of driving value creation for both our businesses, exploring opportunities in the developing global telecom market and supporting the adoption of next-generation technologies.” said Etisalat group CEO Hatem Dowidar.

It is uncertain whether the company will directly invest in Vodafone Idea. The debt-ridden Indian teleco has been looking for investors to raise funds and compete with larger players like Jio and Airtel.

The news seemed to have renewed interest in the stressed teleco as it broke free from its spell of a continuous downtrend as the stock finally jumped up. It saw a full gap up opening and surged 12.6% to close at Rs 9.40 per share, a price the share hadn't seen for a week. Today the stock opened higher at Rs 9.45 per share but has seen some decline as it currently trades around Rs 9.40 per share.

Article by Aman Agarwal.

This news piece is brought to you in association with jobaaj.com

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