Etisalat May Face $ 800m Pakistan Payout

Pakistan Telecommunication (PTCL) should soon receive assets due to it as part of its partial privatization, its chief executive said, a development that could trigger an US$800m payment from shareholder Etisalat to the government.

Etisalat, the number one telecoms operator in the UAE, led a consortium that bought a 26-percent stake in the Pakistani former monopoly for US$2.6bn in 2006.

The deal included transferring ownership of about 3,000 real estate properties to PTCL from the government, but this stalled and Etisalat withheld the final US$800m it owed.

The dispute has dragged on for more than four years, during which PTCL’s market capitalization has fallen to US$522m, according to Reuters data, making Etisalat’s stake worth less than US$120m.

“We are waiting for the final lot of transferring the titles of some properties,” Walid Irshaid, PTCL CEO of Pakistan, told Reuters.

“We are very close to finalizing,” he said, adding that he expected the remaining around 100 properties to be transferred this year.

“Some of these lands are under provincial government control and some under the federal government. This issue is always contentious,” said Irshaid.

No comment was available from Etisalat, despite repeated requests for a statement on whether it would pay the outstanding money to Pakistan or whether it was seeking a discount on the original deal price.

Etisalat owns 90 percent of the acquiring consortium, giving it a 23 percent stake in PTCL. The consortium’s bid was US$1.2bn more than the next highest bid.

Profits at PTCL, which is majority government-owned, have plummeted since Etisalat took management control and the sector was opened up for more competition.

In the financial year ending June 30, 2005, the Pakistani operator made a net profit of PKR27.3bn (US$301m), according to Reuters data, but six years later this had slumped to PKR8.4bn.