Batelco JV ordered to shut down mobile network – India.

In a shocking move, the Indian Department of Telecom has asked a Bahrain Telecommunications Co (Batelco) JV in India to shut down its 2 month old operation. The company has approximately 500,000 subscribers who will be affected by this move.

S-Tel , a joint venture between the Siva Group and Bahrain Telecommunications Co (Batelco), had launched services in 3 circles in the country – Himachal Pradesh, Orissa and Bihar starting December 2009.

The government body sent the notice on Friday and has not spelt out the details of the security concerns leading to the order. Sources close to the situation cite one of 2 possible reasons:

1. ZTE a Chinese vendor is supplying the network equipment – India had made it mandatory for all telcos to get security clearance for setting up a mobile network using imported equipment.

2. Bahrain-based Batelco’s presence in the JV, and that may have flagged something to the Indian authorities.  (surprising though!)

The company had earlier announced investments of close to $4 Billion  in rolling out 2G services with a target of achieving 20 million subscribers by 2016 and EBITDA  break-even by 2013.

Believe it or not, this is not the first time. Earlier in 2002, Koshika Telecom had its licenses revoked due to non-payment of dues and just last year, a Russian venture (ByCell) lost out because of security concerns over the company’s shareholding and source of funds.