Etisalat wants outstanding land sales deducted from PTCL deal

The United Arab Emirates-based telecom company, Etisalat wants outstanding land sales in its purchase of PTCL.

The United Arab Emirates-based telecom company, Etisalat wants outstanding land sales in its purchase of Pakistan Telecommunications Company Limited (PTCL) deducted from the deal value, a letter to the Pakistan government seen by Reuters showed, although an official rebuffed the idea.

Etisalat has been locked in a dispute over the $2.6 billion buy of a 26 per cent stake in PTCL since 2006, due to complications over land sales linked to the deal.

Etisalat International Pakistan (EIP) has paid only $1.8 billion so far, as it awaits the transfer of the land, and in a June 20 letter, it sought to deduct the value of the land yet to be transferred, estimated at some $450 million.

In the letter, Etisalat asked the government to suggest a cut-off date for the deduction and receive the balance of the payment.

However, a government official told Reuters on Thursday, on condition of anonymity, that it would “not accept any discounts” on the outstanding $800 million, although it would accept an initial $500 million and the balance at a later date.

“The remaining properties are private and not linked to the government at all, that’s why it’s taking more time,” the official said, declining to give a date when he expected the land transfers to be finalised.

The deal included the transfer of some 3,000 properties mainly located in Punjab and Sindh provinces to Etisalat, of which 93 per cent had been handed over, a government official said. Etisalat could not immediately be reached for comment.

Etisalat assumed management control of PTCL after purchasing 26 per cent stake in 2005-2006.

According to the initial terms of the agreement, Etisalat was supposed to pay $1.4 billion within one month after signing of the deal and the remaining amount of $1.2 billion in equal installments over four and a half years, with one installment every six months. Etisalat will manage the Pakistani company after the completion of the first payment.

Net profit of PTCL stood at Rs2.5 billion for the first nine months of fiscal year 2009 and its total assets amounted to Rs153 billion.

The company has a total installed capacity of six million fixed lines, of which more than three million access lines are currently in operation.

Furthermore, installed capacity of broadband is more than 0.6 million ports spread across 318 cities and towns of the country.

Published in The Express Tribune, July 2^nd, 2010.