DB Realty plunges on Etisalat withdrawing its telecom operations from India

Valor Estate Ltd. | Construction - Real Estate | Construction & Infrastructure | BSE: 533160 | NSE: DBREALTY

23 Feb 2012 Evaluate

DB Realty is currently trading at Rs. 85.10, down by 3.80 points or 4.27% from its previous closing of Rs. 88.90 on the BSE.

The scrip opened at Rs 87.90 and has touched a high and low of Rs 89.45 and Rs 73.65 respectively. So far 1162036 shares were traded on the counter.

The BSE group 'B' stock of face value Rs 10 has touched a 52 week high of Rs 130.00 on 31-Mar-2011 and a 52 week low of Rs 45.05 on 22-Dec-2011.

Last one week high and low of the scrip stood at Rs 102.50 and Rs 73.65 respectively. The current market cap of the company is Rs 2021.48 crore.

The promoters holding in the company stood at 61.97% while Institutions and Non-Institutions held 6.24% and 31.80% respectively.

Abu Dhabi-based telecom operator Etisalat would be winding up the operations of its telecom joint venture with DB Realty. Etisalat owns about 45% stake in Etisalat DB, a joint venture (JV) between Indian player DB Group and Etisalat of UAE.

The move comes in the background of the Supreme Court’s decision to revoke all 122 licenses issued by the Government of India in January 2008 ', which in turn has removed the company’s ability to operate from June 2, 2012. Etisalat is the second foreign company, after Bahrain Telecom, to exit India, following the apex court ruling of February 2. However, the foreign company is still suppose to make a decision of participation on proposed auction as the Supreme Court after ordering cancelation of 122 licences issued by the then telecom minister A Raja in 2008 on first-come-first-serve basis, asked the government to issue fresh licenses through auction.

The company now will make a decision on its future participation in the Indian market when there is clarity on the auction process and telecommunications policy and greater legal and regulatory certainty and stability.

The Etisalat board's decision, which was unanimous, will affect about 1.67 million subscribers that Etisalat DB has, mostly in northern India; they will get 30 days to transfer to a different service provider. In addition, all of Etisalat DB employees will be laid off.Etisalat, earlier this month booked an impairment charge of $827 million on its Indian operations, leading to a 24 per cent drop in its net profit.