New Delhi: Etisalat DB Telecom India Pvt. Ltd, the Indian unit of the United Arab Emirates (UAE)-controlled phone company, said it will fight any government move to cancel licences. Majed Ahmed Al-Musalli, chief project officer of Etisalat DB, said in an interview that the threat of cancellation of licences has nothing to do with the so-called roll-out obligations, but with the process of the award of the licence. He said it was the government’s duty to check whether a company that has been awarded a licence meets the eligibility criteria. Edited excerpts:
Give us an overall view of the India business as it stands right now?
Right now, there is a lot of drama and nobody can really say where it’s going. As an overseas investor, one has to assess the situation. There are a lot of things going on that makes it difficult to take a decisive direction. Things like a constant change in regulation, a threat of licence getting cancelled etc., are not favourable to the business or the consumer or the investor.
To attract an investor, you have to create the environment and secure it. Especially, when the investor comes in good faith and puts in all the investment promised and fulfilled all the obligations and commitments, and met the regulatory conditions including promised service quality requirements.
So you have met all the regulatory conditions and obligations? On what grounds are you being sent cancellation notices?
The ones which are part of the licence have been met. We had an issue with one or two, but we have met the conditions. The problems we are facing on cancelling of the licences has nothing to with roll-out obligations, but with the process of the award of the licence, which is something that happened as far back as 2001—before we came in.
We, as a company that had an interest to come to India, saw that the licence was awarded to a certain company and based on that Etisalat decided to come.
We have been sent notices for Mumbai and Delhi. In Mumbai, we have almost 200,000 customers and over 500,000 in Delhi. In Mumbai, we have around 2,000 base stations and Delhi we are planning to have around 1,800 sites—we have completed 70%. In Mumbai, we are acquiring almost 8-9% of the subscribers additions—making us the about the mid-high range.
Etisalat DB’s original plan was to roll out in 15 circles till the end of 2009. Then the market dynamics totally changed (referring to the tariff war). They took a U-turn. The market that we were looking at in 2008 had totally changed. So after 2009, we took a call to approach the Indian market cautiously and in 2010 we put a plan to roll out in specific circles in specific parts as a start to overall coverage.
Then the whole award (of licences) process came into question and again impacted our roll-out in terms of execution, but not our commitment. But you cannot proceed with a plan if your licence is going to be cancelled—and on what grounds are they going to be cancelled—it was not our process, but the government’s process.
The companies were licensed and certified by the government. As a telecom operator, they looked for an investor. We were looking to invest in India and we selected one. Now, we stand to lose our licences on eligibility criteria.
Now they have put a stop sign on the roll-out because the process for award of the licence was wrong. We have paid the penalties for delayed roll-out so why is there a threat to cancel the licences due to roll-out obligations.
So what happens if the licences are cancelled?
We will have to fight it out. We cannot take it as they come and we surrender. We have invested a significant amount of money on the ground. Our plan is to continue in India. We have to fight it. Who will handle all the losses for the investment that has been put on the ground. We injected the money from day one and have signed contracts for towers and equipment worth billions of dollars, ranging from seven to 10 years. We have signed a $400 million IT deal, $500 million worth of capex (capital expenditure) goes to three major vendors. We even have Aamir Khan as a brand ambassador. We have put all this investment.
So you think the government has treated you unfairly?
Beyond the penalty, we have not received anything. The eligibility criteria should have been part of the government’s due diligence during the licence award. When they award the licence to a company, they should have done all the due diligence required.
There were already questions being asked about Swan Telecom before you came in, yet you decided on them. Why? Did you look at any of the other licence holders?
Who knew of the allegations against Swan? Those allegations go back to the eligibility, which should have been answered by the government’s due diligence. If they knew there was anything fishy about the company, they should have said or done something about it. Why did they award the licences and not stop Etisalat from going forward. Etisalat is also 60% government owned. If somebody knew about it, why didn’t they say anything until we put all this money in. Nobody questioned this so why should we? The licence was awarded by the government and not anybody else
As an investor, we did our due diligence. We hired consultants like banks and auditors among others and based on the collected information, a decision was made. During the same period, many others also made offers to the licence holders. Maybe the offer I gave was accepted, but one made by another was not. It’s not a one-sided decision. It has to be mutually agreed.