Etisalat DB, the Indian subsidiary of UAE-based telco Etisalat, may be imposed a US$1.6bn fine for alleged breach of foreign direct investment (FDI) rules, according to reports.
Balesh Kumar, India’s Enforcement Directorate special director, was quoted…
Etisalat DB, the Indian subsidiary of UAE-based telco Etisalat, may be imposed a US$1.6bn fine for alleged breach of foreign direct investment (FDI) rules, according to reports.
Balesh Kumar, India’s Enforcement Directorate special director, was quoted telling the Financial Times that Etisalat increased its stake in Etisalat DB to above 49% in 2009 without seeking approval from the Foreign Investment Promotion Board (FIPB).
Under India’s FDI regulations, a foreign company is not allowed to own more than 49% of an Indian telco without obtaining FIPB approval first.
In 2008, Etisalat acquired a 45% stake in Swan Telecom (the company was renamed Etisalat DB in June 2009) for about US$900m. In December 2009, it reportedly bought an extra 5% from Genex Exim Ventures, a venture capital firm.
Etisalat is already under fire in India amid the 2G scam.
In March, The Department of Telecommunications (DoT) reportedly sent notices to eight cellcos, including Etisalat DB, asking them to justify why their licences should not be cancelled after they failed to meet rollout obligations back in 2008, wrote local reports. These obligations include covering at least 10% of the district headquarters within 12 months of receiving licences.
That same month, Etisalat DB’s vice chairman Shahid Balwa resigned after being arrested and questioned on allegations of wrongdoing in the scandal back in 2008.
