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Pakistan warns Etisalat of hostile takeover
12 April 2012
UAE-based operator Etisalat must pay $800 million as part of PTCL deal or face hostile takeover, says Pakistan
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Pakistan has asked UAE-based operator Etisalat to pay the $800 million said to be still owing from its purchase of a stake in incumbent operator PTCL almost seven years ago. The government wants the money before June 2012, and is threatening a hostile takeover of PTCL if Etisalat does not pay up.
The Pakistani government also threatened to ban Etisalat from participating in the upcoming 3G licence auction expected to raise around $1 billion, if the operator fails to make the payment.
A team of Pakistani government representatives conveyed this message to an Etisalat delegation visiting the country, reported Pakistani newspaper Dawn, citing unnamed sources.
Etisalat acquired a 26% stake and management control of PTCL for $2.6 billion in 2005, but has not paid $800 million of the sum, says the government.
Although the titles of three PTCL-controlled properties cannot be transferred in the name of PTCL due to legal issues, the government team criticised Etisalat for holding back such a significant amount against the three properties, which have a combined value of under $70 million, said the report. Although Etisalat’s owner has been permitted to retain a maximum of $150 million, it has to pay the remaining amount upfront.
The $800 million is significant because Pakistan is due to repay an $800 million loan to the International Monetary Fund at the same time. If it fails to pay, this will impact on the country’s foreign exchange reserves and exchange rate.
A government team rejected Etisalat’s suggestion that an independent auditor be appointed for valuation of the three disputed properties, said the report.
PTCL, Pakistan’s former telecommunications monopoly, was fully owned by the government, but after a privatisation process, 26% stake and control was acquired by Etisalat, and 12% stake by the public. GTB
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