ACTIVITY IN THE TELECOM SECTOR

MARIAM NASIR
Manager Research
July 02 - July 08, 2007

TELECOM BOOMING

With the current run-up of mergers in the banking sector, the telecom sector also started with the same. The Pakistan telecom sector has great potential and keeping the same in view many foreign companies has ventured into Pakistan territories to get hold of the profit making entities. Pakistan telecom sector's share almost three percent in the total GDP growth in the previous fiscal against 1.93 percent contribution to the sector made during 2003-04. Rising tele-density and increased interests of foreign players in the country's telecom market was the major reason behind it. A huge investment of 950 million dollars in FY05 contributed by six cellular companies, ie Mobilink, Ufone, Telenor, Warid, Paktel and Instaphone provided the real boom to it. After that the country's telecom sector has attracted US$1.41 billion foreign direct investment during the first nine months of 2006-07, retaining top position among all other sectors.

According to recent statistics, the number of mobile subscribers in the country has jumped to 60.9 million with cellular density, rising to 39.16 percent. During May, the mobile phone subscribers in Pakistan increased by 2.6 million and the total subscribers' base jumped to 60.9 million that attributed to new telecom policy, which has broken the over five-decade-old monopoly of Pakistan Telecommunication Company Limited (PTCL).

Starting of with the takeover of PTCL by ETISALAT the telecom sector witnessed great activity. The Singapore Telecommunications (SingTel) and the Warid Telecom announced that they have entered into a definitive agreement, China Mobile Ltd., the world's largest mobile-phone operator acquired Paktel Ltd, TeleCard has planned to sell out its minority shares to one of the foreign business groups and last but not the least Orascom recently acquired 100% shares of Mobilink Pakistan.

ORASCOM BOUGHT 11.3% STAKE OF MOBILINK

Orascom purchased 11.3% stake in Mobilink for a sum of US$290 million. This has now resulted in Orascom owning 100% of the cellular company. The deal values Mobilink at around US$2,566 million translating into a per subscriber value of US$101.

SINGTEL TO BUY 30% OF WARID

The Singapore Telecommunications (SingTel) and the Warid Telecom announced that they have entered into a definitive agreement subsequent to which SingTel will acquire a 30 per cent equity stake in the Warid for an estimated $758 million. After commercial launch in 2005, the Warid Telecom has reached nearly 9.7 million in reported subscriber numbers, representing an estimated market share of 16.6 per cent, and making it the third largest mobile operator in Pakistan, as of April 2007.

CHINA MOBILE BOUGHT PAKTEL

China Mobile Ltd., the world's largest mobile-phone operator, bought 100 per cent shares of Paktel Ltd. for $460 million and renamed it as CMPak Limited. China Mobile Communications Corporation (CMCC) purchased all of CMPak's minority shareholding from its local shareholders M/s Millitel Limited and Mrs Bilqis Qureshi. CMPak plans to invest $400 million in Pakistan this year to expand its network aimed at building new network capacity of more than 20m customer base.

TELECARD PLANS TO SELL STAKE TO UAE GROUP

The country's pioneer and the largest payphone companies are in talks with foreign groups to sell off its share. TeleCard - one of few payphone companies in the country has planned to sell out its minority shares to one of the foreign business groups. It is expected to reach deal in the days to come. The company has initiated talks with a UAE group and there are several other intentional players, which it eyes to engage in.

OMAN TELECOM IN TALKS WITH WORLDCALL TELECOM

Omantel, the smallest telecom operator in the Gulf Arab region by market value, is also in negotiations to buy a minority stake in a Gulf Arab telecom operator. Omantel was considering buying a Pakistani telecom company to expand outside its home market, where it lost its mobile phone monopoly in 2005 and will lose a fixed-line monopoly this year. Industry source in Pakistan said Omantel was in talks with Worldcall, which runs long distance and international (LDI) as well as wireless local loop (WLL) services.