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Etisalat unit keen on buying Pakistan telco

It is eyeing Warid Telecom to gain access to its network infrastructure

Gulf News

Dubai: Abu Dhabi’s Emirates Telecommunications Corp. or Etisalat on Monday said its subsidiary in Pakistan had expressed interest in acquiring local competitor Warid Telecom, marking a potential consolidation phase in the country’s telecom sector ahead of the award of 3G licences.

“Etisalat Group holds a stake in PTCL with managerial control and PTCL has expressed an interest in Warid Telecom,” Ahmad Bin Ali, senior vice president of corporate communications at etisalat, said in an e-mailed statement. “Etisalat Group cannot offer further comment and will not comment on speculation regarding Warid Telecom.”

Pakistan Telecommunications Co. Ltd, or PTCL, is looking to buy Warid Telecom to gain access to its network infrastructure in major cities and its high value customers, according to a person familiar with the matter, who declined to be identified. Etisalat holds a 26 per cent stake in PTCL.

Warid is 100 per cent owned by the Abu Dhabi Group, a holding company owned by Shaikh Nahyan Bin Mubarak Al Nahyan. The group, which holds assets in a number of sectors including banks, property and insurance, has made clear it does not intend to invest anymore cash in Warid Telecom, effectively putting the asset up for sale, the person said.

The Pakistani government is widely expected to auction 3G licences this year, which will require a significant level of investment from operators in both acquiring the licences and rolling out network infrastructure. Abu Dhabi Group is not prepared to put up the cash for such an investment as Warid’s operation is loss-making, and any buyer would have to take on the telco’s debt, the person added.

In January, Singapore Telecommunications Ltd., or SingTel, sold a 30 per cent stake in Warid after purchasing the holding in 2007 for $758 million (Dh2.8 billion). It said it would receive $150 million in cash and a 7.5 per cent share of proceeds from any future sale or public offering of Warid. In total, Singtel said it would take an estimated loss of about 230 million Singapore dollars (Dh664.8 million) on the transaction.

Daniel Ritz, etisalat’s chief strategy officer, said in an interview last week that etisalat would look at further opportunities for acquisitions that could consolidate its existing portfolio or were a good fit for the business, following the announcement that the telco had entered exclusive talks with France’s Vivendi SA over its 53 per cent stake in Maroc Telecom for €3.9 billion (Dh18.98 billion).

Launched in May 2005, Warid is the smallest of five operators in terms of subscribers, servicing about 12.5 million customers, according to local press reports. Ufone, the PTCL brand, is the country’s third operator behind Orascom Telecom’s Mobilink and Oslo-based Telenor and ahead of China Mobile’s Zong.