India proves graveyard for another mobile brand

ETISALAT, the Abu Dhabi-based mobile phone operator, has had its wings clipped in India where authorities have accused the company of breaching share rules. Five directors from the Barcelona and FIFA sponsor’s India subsidiary were accused of investment and foreign exchange misdemeanours totalling $1.6bn relating to its gaining a majority stake in local Swan Telecom. India with its 1.1bn population, more than half under 25, represents a huge potential mobile market but Etisalat’s experience is reminiscent of Vodafone’s foray into the market where it fell out with its local JV partner, Essar. Vodafone recently paid $5.46bn to extricate itself from the relationship and now owns 74% of its Indian business but only after a $3.7bn write down of the business’ value in 2007. This move caused by higher than expected spectrum charges effectively wiped out 25% of its investment and shows just how hard it is to crack this lucrative market.