ISLAMABAD, 13 March 2006 — Pakistan signed a formal agreement yesterday for its biggest privatization to date, handing over management control of its state-controlled telecoms company to Middle East-based buyer Etisalat.

A signing ceremony marking the transfer of a 26 percent stake in Pakistan Telecommunication Co. Ltd (PTCL), worth $2.6 billion, to Dubai-based Emirates Telecommunications (Etisalat) was held at the prime minister’s house in Islamabad.

The ceremony was attended by officials of PTCL and Etisalat and presided over by Prime Minister Shaukat Aziz.

The two sides agreed last December to a deal under which Etisalat, a UAE monopoly, would pay $1.4 billion up front for the stake and the rest spread over five years.

An earlier deal agreed in June ran into trouble after the UAE firm failed to meet payment deadlines.

Aziz said he was delighted that the deal had been completed and called it a historic day for the government’s reform program and for relations between Pakistan and UAE.

“Today’s transaction signifies a quantum leap in the economic relationship between the two countries,” he said.

“Now it is up to the management of Etisalat to develop the PTCL franchise, to use Pakistan as a outsourcing venue so people here can help improve the possibilities of Etisalat globally, not just in Pakistan.”

Referring to the difficulties the deal faced last year, he said: “The end result is good for PTCL, it’s good for Etisalat, it’s good for shareholders of both companies and good for the people of Pakistan and the UAE.”

He pledged that the government would cooperate fully with Etisalat to improve efficiency at PTCL in order to make it “a world class company”.

PTCL is Pakistan’s second-largest listed company and has a market value of $4.3 billion. The deal with Etisalat involves 1.33 billion shares out of a total of 5.1 billion.

Last month PTCL reported a 25.41 percent fall in its half-year net profit to 10.83 billion rupees ($180.65 million), compared with 14.52 billion a year earlier.

Analysts said the reduced profit was due to the impact of competition on international call revenue, which outweighed subscriber growth.