Inside Financial Markets



By Matt Smith

DUBAI, Feb 4 (Reuters) – Pakistan estimates 34 properties due to Etisalat ETEL.AD are worth $92 million, a government official said, meaning the telecom operator could still owe the government $708 million in a near-decade long dispute that is slowly being resolved.

Recovering this amount, equivalent to 71.61 billion rupees, and close to Pakistan’s combined federal budget for education (64 billion rupees) and healthcare (10 billion rupees) in 2014-15, would be a welcome boost to the cash-strapped administration.

An Etisalat-led consortium in 2005 agreed to pay $2.6 billion for 26 percent of Pakistan Telecommunication Co PTCA.KA(PTCL), but the Abu Dhabi-listed operator has withheld $800 million because the government did not transfer title of some properties to PTCL as per the deal terms.

Of the 3,500 properties destined for PTCL, all but 34 have now been handed over to the former telecom monopoly, Azeem Qadir, a consultant for Pakistan’s Ministry of Privatization, told Reuters.

The remaining 34 cannot be signed over due to ownership complications and so the value of these properties will be deducted from the amount Etisalat owes.

The government and Etisalat have each hired independent firms to assess the properties on their behalf and submit a valuation to HSBC HSBA.L, the holder of an escrow account relating to the disputed properties, Qadir said.

Pakistan did so in January, valuing them at $92 million and is now awaiting Etisalat’s valuation, he said.

The higher of the two estimates will then be used to calculate a final settlement, although the government could go to arbitration if Etisalat suggests a markedly higher price, Qadir added.

Etisalat, which did not respond to requests for comment on the matter, paid an initial $1.8 billion for the PTCL stake and was due to pay the remaining $800 million in six twice-yearly instalments of $133 million.

The UAE operator owned 90 percent of the acquiring consortium, giving it a 23.4 percent stake in PTCL.

The consortium’s bid was $1.2 billion more than the next highest offer and in 2012 Etisalat took an impairment of $645 million on PTCL, whose current market value is $953 million, Reuters data shows.

PTCL reported a loss of 407 million rupees ($4 million) in the three months to Sept. 30, according to Reuters data, while its annual profit fell by nearly half from 2004 to 2013. ($1 = 101.1300 Pakistani rupees)


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)