Toughening its stand against a proposal of Etisalat DB to pump in additional Rs 380 crore and gain management control in Swan Telecom, the government has decided to convey to the Delhi High Court its reservations about the telecom firm's move citing "security reasons".
Highly placed sources in the government said the Home Ministry would file a detailed affidavit before the high court explaining its position as to why it refused to give security clearance to telecom firm Etisalat DB to bring in investment.
Foreign Investment Promotion Board (FIPB) had rejected Etisalat's proposal for further investment of Rs 380 crore in the country following objection by the Home Ministry.
The four grounds on which the clearance could not be given to Etisalat DB included its presence in Pakistan and Afghanistan and attempt by Etisalat to mount telecommunication surveillance application software on Blackberry within UAE in 2009, the Home Ministry's note to FIPB said.
The other two reasons are - the company's backend technical tie-up with Huawei, which is a company founded by Chinese People's Liberation Army officer, and the company having the capacity to remotely manipulate the equipment it supplies to its clients and that company executive Shahid Usman Balwa should not be associated with Etisalat either as director or in any other capacity.
Following this, Balwa approached the Delhi High Court which served a notice to the Home Ministry. "We will also tell the high court why we have objected to Balwa's association with Etisalat," the source said. Balwa in his petition claimed that he was being unfairly targeted by the government.
Etisalat proposes to increase its stake in Etisalat DB Telecom by buying 5% stake from Genex Exim Ventures — a Chennai-based company. Earlier, Etisalat brought 45% in Swan Telecom for a cash consideration of up to USD 900 million.
Etisalat DB Telecom Private Limited, a subsidiary of UAE based Etisalat Telecommunications Corporation, is stated to have obtained licenses for provision of Unified Access Services (UAS) for areas of Andhra Pradesh, Delhi, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Mumbai, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh (East) and Uttar Pradesh (West).
The company proposes to offer a whole range of services on its network including UAS, ISP services, Internet telephony services originating in India, Internet Services, broadband services, national long distance calls and international long distance calls.