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Bahrain's Batelco sells minority stake in Indian mobile operator S Tel following court ruling
DUBAI, United Arab Emirates - Bahraini telecommunications company Batelco Group said Wednesday it is selling its stake in Indian mobile operator S Tel for $174.5 million, just days after India's top court nullified more than 100 mobile phone licenses.
Batelco amassed its 42.7 per cent stake in S Tel less than three years ago. It said it hopes to complete the sale to India's Sky City Foundation Ltd. by the end of October.
India's top court last week ordered the government to cancel 122 licenses granted to companies during a scandal-tainted 2008 sale of the second-generation, or 2G, cellphone spectrum. The licenses were offered at discount prices on an unorthodox first-come, first-serve basis, netting the treasury a fraction of what auditors say it might have otherwise received.
The court has called for a new license auction to be held in the next four months.
Batelco said it has been considering offloading the S Tel stake since April, and reached the agreement to sell it during the last part of 2011.
It wasn't clear why it waited until now to announce the deal, but the company noted that the decision was part of an earlier agreement with Sky City to exit "given the circumstances surrounding the 2G probe."
Batelco nonetheless remains interested in other opportunities in the Indian telecom market, according to the company's chief executive.
"We are actively exploring all options in this respectover the coming months," said Batelco CEO Sheik Mohammed bin Isa Al Khalifa.
Batelco is selling the stake for the same amount it says it originally paid in two transactions in May and June 2009.
Besides India, Batelco has operations in Bahrain, Kuwait, Saudi Arabia, Jordan, Yemen and Egypt.
Another Gulf telecom, Abu Dhabi-based Etisalat, is also affected by last week's Indian court ruling through its 45 per cent stake in Swan Telecom. It said last week it will study the court ruling, but had no knowledge or involvement in the sale of Swan's license.
Matthew Reed, a Dubai-based analyst at research firm Informa Telecoms & Media, said that although Batelco's exit had been under consideration for some time, it may not be the last foreign investor to pull out of the Indian market following the high court ruling.
"This must have been a frustrating and disappointing experience," he said of the remaining foreign telecoms such as Etisalat. "They must be wondering ... if there's a case for cutting their losses."
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