A process of rethinking has developed in the relevant
circles about the Privatisation of Pakistan Telecommunication Company
Limited (PTCL) in view of the huge profits shown by the company last
year. In the year 2002 the PTCL contributed Rs.19.5 billion in the form
of annual profits to the national exchequer besides its tax payments of
According to a school of thought its makes no sense
to sell PTCL in the present context. They believe that the Privatisation
Commission should focus on those state-owned commercial organisations
which caused total loss of Rs.90 billion to the national exchequer
during 2002 alone. The losses have come down from Rs.120 billion about 3
years back but the same are still clossal and the commission should put
theses units on the top priority of their sell-out programme. The
state-owned Pakistan Telecommunication Company Limited has long been a
cash cow for the government contributing billion of rupees to its
revenues. So there seemed no justification for its hurried sale
specially at present when the telecommunication industry around the
world is not in good shape. It has still not come out of the great crash
of 2002. If the government were to sell PTCL now it would get only a
fraction of company's true worth, they argue.
Based on these arguments advanced by a group in the
Finance Ministry the Ministry of Science and Technology (the controlling
ministry of PTCL) is considering to extend the time frame of PTCL
privatisation. The other group, equally vehment, is of the view that
this is the right time to privatise PTCL as its huge profits will
attract buyers. With deregulation of the telecommunication sector which
is in the offing, the PTCL will loose its monopoly and consequently its
profits would he reduced considerably. The loss in profits will
naturally affect its sale price. In order to survive in the deregulated
highly competitive environment, the PTCL has to be revamped at a high
cost in order to make the organisation better-equipped to provide
flawless service to its subscribers. Even after doing that it would not
be certain that PTCL would so effectively compete in the market with
private operations and maintain its profitability level. This line of
argument sounds equally weighty. Faced with delimma the Ministry of
Science and Technology is also thinking to extend time frame for
deregulation as well.
According to reports the Ministry of Science and
Technology has prepared a draft plan for extending the deregulation time
frame, which it as reportedly been advised by the Ministry of Finance to
stretch out by two to tree years. The Finance Ministry has suggested a
new schedule, keeping in mind future revenue generation from PTCL and
prospective investment by private investors in the telecom sector.
The deregulation of PTCL is part of the plan for the
deregulation of the telecom sector as a whole, in order to level the
playing field for private sector firms.
The Pakistan Telecommunication Authority decided to
deregulate telecom service by doing away with PTCL's monopoly, with a
view to allowing competition that would lead to better services for
consumers. But the move to privatise PTCL comes at a time when telecom
firms around the world are in serious trouble.
The best option available under the circumstances
seems to gradually unload government shares through stock market. The
recent performance of the stock market and improvement in the fiscal and
monetary position of the government auger well for the success of the
privatisation process through stock markets. A manifestation of this is
the realisation of Rs.2.7 billion in the shortest span of just five
weeks through the disinvestment of government-owned shares in Attock
Refinery Limited, Pakistan Oilfields Limited, DG Khan Cement and some
shares of National Bank on the stock markets.
It, however, appears that Privatisation has taken a
back seat in the priorities of the present government. High hopes
attached to the democratic set-up about privatisation agenda are on the
wane, as the things are not moving as envisaged.
Authorities are unsure about the maturity of
transactions approved by the Musharraf cabinet and were likely to be
completed in 2003. The list of transactions targeted for bidding in
2003, now seems extremely difficult if not impossible to achieve. The
Privatisation Commission, according to sources is not optimistic of
meeting its envisaged or targeted bidding.
In its annual report 2002, the Privatisation
Commission enlisted 20 types of sales for the present calendar year.
However, the things are not reportedly moving as envisaged because of
lack of foreign investment and scarcity of potential buyers. Not even
one has been achieved so far.