Etisalat eyes takeover of local internet provider Nayatel

Interest from Chinese, Norwegian firms also expected.

ISLAMABAD: Telecoms operator Etisalat is in takeover talks with internet provider Nayatel, one of Pakistan’s fastest-growing companies.

“They want to totally buy us out,” said Nayatel Chairman Rashid Khan, adding talks had slowed over the potential cost of a deal. “Ultimately it comes down to price,” said Khan, adding he also expected interest from Chinese and Norwegian companies. No one from Etisalat was immediately available for comment. Gulf-based Etisalat, the Arab world’s second-biggest telecoms firm, has faced tough competition at home after its monopoly was broken in 2007 by Dubai-based du and operates in 18 countries.

Nayatel made its name by investing early in a fibre-optic network for direct connections to homes and businesses to allow for heavier data download.

The internet, telephone and cable TV service provider has a paid-up capital of about $5 million. Annual sales among its 7,000 customers top $12 million, said Khan, with revenue growth of 40-50 per cent a year.

Nayatel is hoping to expand its domestic business beyond Islamabad and Rawalpindi to Lahore and Karachi, which has an estimated population of 18 million. It also has ambitions to penetrate overseas markets by lending its fibre-optic expertise.

“I am talking to someone who wants us to invest in Afghanistan, someone who wants us to work in Saudi Arabia and someone who wants us to work in Turkey,” said Khan in Nayatel’s modest Islamabad office.

Between 2004 and 2009, 34 per cent of the $19 billion in foreign direct investment in Pakistan flowed to the telecom sector, according to the Pakistan Telecommunications Authority. Major investors included the UAE, United States, Norway and China.

Getting foreign companies to invest in Pakistan is not easy, with the country’s image hurt by security concerns. Khan, however, is more troubled by a government that he perceives has failed on all fronts, and holds out few hopes that it will try to attract investment from overseas or at home.

Published in The Express Tribune, January 25^th,2011.