Etisalat Recognises Impairment Charges against Indian Operations

On Thursday, February 2, 2012 the Supreme Court of India revoked 122 UAS licenses that were issued by the Government of India in January 2008. The ruling was against the process the Indian government adopted to issue the license and the pricing method adopted for awarding the spectrum. Eight operators are impacted by this ruling, including some renowned International operators. Etisalat, which has partial ownership in Etisalat DB, is among these operators.
The Supreme Court’s decision took the entire industry by surprise and significantly alters the competitive landscape in India’s telecommunications market. In accordance with International Financial Reporting Standards (IFRS), Etisalat’s management has decided to recognize an impairment charge in its 2011 consolidated financial statements amounting to an aggregate of AED 3,044 million before Federal Royalty against the full carrying value of goodwill; amounting to AED 1,227 million; and the net assets including licenses of its Indian operations. The net impact of this charge on our consolidated net profit after Federal Royalty amounts to AED 1,020 million.
Etisalat expects the Government of India to bring about a rapid and just solution and to fairly compensate investors and Etisalat’s senior management is fully engaged to safeguard its investment. Etisalat is also continuing to assess the legal consequences of the Supreme Court’s decision and Etisalat’s strategic options in India.
Etisalat reiterates that its investment in Swan took place long after the 2G licenses were awarded and that Etisalat has always conducted itself according to the highest standards and according to the law.
Etisalat is a prudent and mature investor that respects its shareholders and follows strategies in full compliance to local and international laws and best practice.
This is the strategy that was followed in India throughout the legal process and because of this the Etisalat Group remains in a strong position to continue its global expansion strategy whenever and wherever opportunities arise with due regards to risk and international best practice.