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Tue 23 Nov 2010 05:35 PM

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Etisalat’s Indian unit may have mobile licence revoked

Indian authorities claim licences awarded in 2008 were issued too cheaply and may be cancelled

Etisalat’s Indian unit may have mobile licence revoked
Indias market of nearly 700m subscribers, the second largest, is served by 15 operators. (Getty Images)

Etisalat’s Indian subsidiary may lose its mobile phone licence as India looks set to cancel up to 38 licences issued in 2008, which it said were issued too cheaply.

India's booming but crowded telecoms sector has been embroiled in controversy over a set of licences, given mostly in 2008, that a government audit said were issued too cheaply and deprived New Delhi of $31bn and resulted in the sacking of the telecoms minister.

Last week, a source with direct knowledge of the matter said India’s Telecom Regulatory Authority of India recommended to the government that it cancel 38 telecoms licences because the operators did not meet rollout requirements.

Two of the licences under review for possible cancellation were issued to Swan Telecom, which the UAE’s Etisalat later acquired a 45 percent share in worth $900m.

India's market of nearly 700m subscribers, the second largest, is served by 15 operators offering some of the cheapest service in the world. Competition intensified when new operators were granted licences in 2008.

Besides the two held by Etisalat’s subsidiary, licences recommended for cancellation include eight held by the joint venture between Norway's Telenor and Unitech and 10 held by the India arm of Russia's Sistema.

The regulator recommended that another 31 licences be examined for just meeting rollout minimums, the source added. India has 22 telecoms zones. Licences are allocated by zone.

"We will consider it", India's newly-appointed Telecoms Minister Kapil Sibal told reporters, referring to the regulator's recommendations. He did not elaborate.

Recommendations by the regulator are not binding, and the telecoms ministry has final say on licences.

(Additional reporting by Reuters)

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