About Etisalat DB from Etisalat Annual Statement

Etisalat DB Telecom Private Limited ()
The Group acquired, for a consideration of USD 24 million (AED 89 million), an additional 1 share in Etisalat DB Telecom Private Limited in
relation to the purchase by Etisalat DB Telecom Private Limited of the share capital of Allianz Infratech Private Limited, in accordance with
the Share Subscription Agreement. Furthermore, a minority shareholder of Etisalat DB Telecom Private Limited redeemed preference shares
amounting to AED 48 million. The preference shares did not have any ownership or voting rights attached to them and the redemption did
not result in any change to the minority interest’s stake in Etisalat DB Telecom Private Limited.


During the year ended 31 December 2009, Etisalat DB Telecom Private Limited (“Etisalat DB”) had signed a Passive Telecom Infrastructure Sharing Agreement with Reliance Infratel Limited (“RITL”) for sharing of passive infrastructure. However, due to certain technical matters, claims totalling INR 1,952 million (AED 160.1 million) have been made by RITL in relation to this agreement, which Etisalat DB has rejected.
No provision has been made in these consolidated financial statements as the Group’s management do not believe that there is any probable loss arising from the above matter.

Licence fees

Etisalat DB’s liability towards licence fees, Wireless Planning and Co-ordination charges and Spectrum charges (including interest and penalty), calculated based on the Adjusted Gross Revenue (“AGR”) comprising of interest income and other income earned in the period to 31 December 2010
totalled INR 309.1 (AED 25.3 million), of which INR 234.8 million (AED 19.3 million) has been paid to date. The amounts paid to date were made under protest to the Department of Telecommunication (“DoT”) as it included items of income that should be specifically excluded from the liability calculation.
In accordance with an Order, dated 30 August 2007, issued by the Telecom Disputes Settlement and Appellate Tribunal (“TDSAT”) income from interest, dividend and certain other heads of income have to be excluded while calculating the AGR. Based on a joint petition filed by Etisalat
DB on 7 May 2010 with TDSAT, the benefit of the original TDSAT order has now been extended to Etisalat DB and other petitioners from the date the petition was filed, 30 March 2009. Accordingly, Etisalat DB has filed a refund application with the DoT with respect to the amounts
paid subsequent to 30 March 2009 of INR 162.2 million (AED 13.3 million), which has been recognised in the current year income statement.
The DoT has appealed against the said Order in the Honourable Supreme Court of India and the final verdict of is awaited. No provision has been made in these consolidated financial statements as the Group’s management do not believe that there is any probable loss arising from the above matter.


Minimum Roll-out obligations

During the year ended 31 December 2010, the DoT served demand notices on Etisalat DB towards the imposition of liquidated damages for non-fulfillment of rollout obligations in 13 out of 15 circles totalling INR 349.0 million (AED 28.6 million). Etisalat DB has made the payment of liquidated damages for all the aforesaid notices under protest and has sought time to file a detailed response to DoT. Etisalat DB expects to
file suitable replies for all notices in due course. On 19 January 2011, Etisalat DB received similar notices for the remaining two circles totalling INR 117.5 million (AED 9.6 million) towards liquidated damages.
Show cause notices on licence application eligibility Etisalat DB has received ‘show cause’ notices from the Department of Telecommunications (DOT) seeking explanations on whether they met
the eligibility criteria for the UAS (Universal Access Services Licence) Application as per the DoT guidelines. Etisalat DB is in the process of  drafting its reply to present the correct factual position and will respond before the stipulated deadline. Based on management’s assessment of the facts, Etisalat DB does not expect any adverse consequences arising from these notices.