Etisalat dealt another blow in India - FT.com

Indian authorities over the weekend accused five directors of Etisalat DB, the Indian joint venture of the UAE’s telecoms operator, of alleged foreign direct investment and foreign exchange violations worth about $1.6bn.

Balesh Kumar, the Enforcement Directorate special director who issued the notices, told the Financial Times that Etisalat had increased its stake in Swan Telecom – later renamed Etisalat DB – above 49 per cent without seeking regulatory approval. Under India’s FDI rules for the telecoms sector, a foreign group seeking to acquire a stake greater than 49 per cent needs approval from the Foreign Investment Promotion Board for the transaction.

Etisalat acquired a 45 per cent stake in Swan Telecom for $900m in 2008. However, the UAE group later bought another 5 per cent stake from Genex Exim, a small financial services group based in south India, increasing its overall stake above 49 per cent.

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