Abu Dhabi: Etisalat will likely withhold its fifth payment in a row, due at the end of this month, to the Pakistani Government for the acquisition of a 26 per cent in Pakistan Telecom (PTCL) as a dispute over the transfer of properties to PTCL remains unresolved.
"Until now, the government [of Pakistan] has not released a list of properties to be converted [to PTCL ownership]," Mohammad Omran told Gulf News. "When the list is released, the money will be paid.
Etisalat is withholding $799 million (Dh2.9 billion) worth of payments to the Pakistani Government until properties originally part of the company's 2006 acquisition in PTCL are registered in PTCL's name. In an emailed statement, Pakistan's Ministry of Privatisation said Etisalat's next payment is due March 31. Of the 311 properties in question, 118 are already in the possession of PTCL and 17 properties are "under some litigation". The government is now working to appraise the properties, the statement said.
Valuation
"We have already approached provincial governments to put value to the properties in their respective provinces," said Shahab Khawaja, federal secretary at MOP. "Final valuation has not been conveyed. As soon as we get it, [the] same will be conveyed to Etisalat and PTCL."
Etisalat's investment in Pakistan is yet to pay off, with the market producing the lowest average revenues per user of any of its international investments at $3, compared to $5-$6 in Egypt and $49 in UAE. Still Omran said his company plans to stick with its decision to enter Pakistan, with plans to expand network coverage and provide new services such as Blackberry in the near future, he said.
"From an operational perspective, [the property transfer issue] does not affect them," said Al Mal Capital Telecom Analyst Irfan Ellam.
"What it does affect is what they ultimately end up paying for the [PTCL stake].
"There's room to grow in the Pakistani market, the question is in what form. In Pakistan you should see more infrastructure-sharing, and that should bring down costs for the operators and allow Etisalat to attract new subscribers," Ellam added.
In June 2005, etisalat's $2.6 billion (Dh9.5 billion) bid beat those of Singapore Telecom and China mobile for the purchase of a 26 per cent stake in PTCL, Pakistan's telecom operator.
Renegotiation of the deal postponed signing until April, 2006 but did not affect etisalat's bid. The contract stipulated a $1.4 billion up-front payment and for the remainder to be paid in six-month instalments over 4.5 years. The deal also guaranteed etisalat management rights of PTCL operations.
Since late 2007, etisalat has said it is considering acquiring an additional 25 per cent stake but has not taken action.
