Emirates Telecommunications Corporation (Etisalat) has pulled out of India and has begun legal proceedings against its partners in Etisalat DB (EDB), formerly known as Swan Telecom.

The decision comes after the Supreme Court of India cancelled 122 telecoms licences in a corruption probe. India’s former communications minister Andimuthu Raja was accused of underselling the licences in 2008, costing the country $39bn in lost revenue.

Etisalat said it is taking vice-chairman Shahid Balwa and director Vinod Goenka of Majestic, part owners of EDB to court for fraud and misrepresentation, in a statement.

“Etisalat’s case is that it was induced into its investment in the company without any disclosure of the matters that are now alleged by the Central Bank of India and the Supreme Court to have occurred in connection with the obtaining of second generation licences (2G),” says the statement.

The company admits it is facing “very significant financial losses on its investment” in the Indian operation. It recently signed off AED1bn ($272m) after federal royalty fees in impairment charges, reducing its net profit for the end of 2011 by 24 per cent.

The telecoms operator is also outsourcing its business support services in a bid to cut back on costs.

“Etisalat has prepare a plan to shift some of its staff members to work in new centres with the corporation or transfer them into private companies, who have been selected to provide specialised services,” says Nasser bin Obood, acting chief executive officer at Etisalat.