ISLAMABAD, 19 June 2005 — Pakistan yesterday sold a 26 percent stake in its largest telecom company for $2.59 billion to Etisalat of the United Arab Emirates after a standoff with workers delayed the sell-off.
Etisalat’s offer of $1.96 a share for Pakistan Telecommunication Co. Ltd. (PTCL) outbid those of China Mobile and SingTel which offered 1.06 dollar and 0.88 dollar a share respectively. “We are very happy over the bid which is beyond our expectations,” Pakistani minister of information technology, Owais Leghari, said. Troops and police seized control of the firm’s premises on June 12 following the government’s announcement the previous day that bids would be invited for the 26 percent stake.
Union leaders threatened to paralyze services if the decision was not withdrawn by last Wednesday. Trade unions said around 400 of their senior members had been arrested as the government sought to crack down on disruption ahead of the planned sale.
The government earlier postponed the sell-off to end a 10-day standoff with 55,000 PTCL workers. On Saturday PTCL workers staged a string of small demonstrations in several cities across the country, as security forces guarded key installations of the telecom’s company. Officials have said profit-making PTCL faces the possibility of a sharp decline in its revenues as private sector mobile phone companies spark intense competition in the telecom market. PTCL has 5.05 million fixed phone clients whereas the number of cellphone users has risen to 10.54 million in the past few years. The phone company earned 29 billion rupees ($483.33 million) in profits for the year ended June 2004. It has total of 1.39 billion shares with a current market price of 71.50 rupees ($1.20) a share.
Privatization Minister Hafeez Shaikh called it “a big success” for Pakistan.
Etisalat will have to deposit 30 percent of its bid price within 15 days and the rest would come within three months after formal approval of the deal. “We would forward the bid to the Cabinet on Monday for formal approval of the government,” Shaikh said.
Pakistan has raised more than 105 billion rupees ($1.75 billion) in the past three years by selling state assets. As one of the largest corporate entities in Pakistan, PTCL accounts for about 15 percent of the weighted-average index of 100 shares at the Karachi Stock Exchange.