ETISLAT DEMANDS $450M DISCOUNT
July 12 - 18, 2010
Generally, speaking the privatisation of the telecom sector is a success story not only for the acquirers and the government but also the people at large which really make life easy of the common man.
The successful story of privatisation of PTCL in fact has set an example as to how the privatisation could yield a win situation in all respect. However, in order to avoid any possible complexity after the transfer of management, the people at the helm of affairs should ensure that the deal is done with a clean slate and in a transparent manner.
It is important to note that Etislat, a telecom giant of the United Arab Emirates, who is the acquirer of PTCL through privatisation of 26 percent management shares at a price of $2.6 billion has sought a deduction of $450 million in its remaining payment to the government of Pakistan.
The discount has been sought by Etislat on the ground of still un-transferred land titles from the total deal amount. However, according to sources, the government has a firm stand that no discount will be allowed to Etislat on the outstanding amount, except a facility to pay the amount in two installments.
It may be recalled that in 2006, UAE telecom giant acquired 26 per cent management shares (Class-B) at US$2.6billion under the government's "privatisation plan".
Sources said that share Purchase Agreement (SPA) between Etislat and the government of Pakistan required transfer of clean titles of property in favor of PTCL, which at that time was shared by PTCL and other different federal and provincial agencies.
It may be mentioned that out of total of 3,298 properties that were required to be transferred to PTCL, provincial governments and some owners of private properties had declined to give up the ownership of 310 properties of which some are under litigation sources said.
The decided time line for this procedure was January 2008, while Etislat has paid approximately paid $1.8billion while a remaining chunk of $800million has yet to be reimbursed to the government.
A breakdown of the payment schedule indicates that Etislat paid $1.4billion up-front and the remaining $1.2billion was to be paid in six equal biannual installments, sources added.
The present government, it may be mentioned, is also intended to privatise a number of public sector organizations including Faisalabad Electric Supply Company and Pakistan Petroleum Limited which are on top of the privatisation list with a view to inject liquidity into the financial system. The experience demands that before entering into any privatisation deal such snags like property titles should be cleared to transfer the privatised unit with a clean slate.
PTCL has recently announced that the EVDO footprint would expand to 100 cities/ towns solidifies bullish stance on broadband potential.
PTCL broadband subscriber's number has now reached 0.5million. a DSL footprint in more than 300 cities/towns, EVDO in 100 cities and further push to add subscribers to meet targets of 0.19mn subscribers within 18 months of project launch should support broadband growth and increase its share in patent's top-line to estimated 20% by financial year 2013.