The Emirates Telecommunications Group (Etisalat) will be getting an indirect 4.67% stake in Vodafone Idea (Vi). Etisalat is getting a 9.8% stake in the Vodafone Plc UK for $4.4 billion. Note that Vodafone Plc already owns around 47% stake in the Indian telco Vodafone Idea. Thus, Etisalat will also get an indirect 4.67% stake in Vodafone Idea.
Etisalat will be making an entry into the Indian telecom market yet again. But this time, it would be with Vodafone Idea’s stake, which the company will get on an indirect basis. It is unknown whether Vi will get a direct investment from Etisalat.
Etisalat Had Exited Indian Telecom Market in February 2012
The UAE (United Arab Emirates) based telecom major had made its entry into India back in 2008. But the company had to shut shop because the Supreme Court had cancelled around 122 telecom licenses owing to the 2G scam.
Thus, Etisalat stopped operations in India in February 2012. This had affected around 16.7 lakh Indian subscribers at the time. The company had said that its future participation in India would come again only when there are clear rules around the spectrum auctions.
But after a few years from 2012, India’s telecom sector wasn’t left as a very fertile ground for the investors as Jio’s entry had turned the market upside down. But right now, with investments allowed under the 100% FDI (foreign direct investment) route in the telecom sector, Etisalat could pick up more stake in Vodafone Idea (Vi), which is already looking for external investors to raise capital for increasing capex levels.
The telecom sector has also become a lot more stable for investors to look at from a short-term to medium-term perspective. Reforms 2.0 are also in the process of being introduced, which will aid the telecom sector further in doing better business. More developments should come in the following days.