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UAE dominated the economic scene this week, reflecting Gulf's close-and growing — investment and business relations with Pakistan. The euphoria was created by Etisalat's $2.59 billion purchase of 26 per cent shares of the state-owned Pakistan Telecommunications Corporation Ltd (PTCL) with management control. It is reflected in the financial sector bouancy. Above all it is reflected in statements by Prime Minister Shaukat Azizand Dr Ishrat Hussain, Governor, State Bank of Pakistan (SBP) the central bank, and top business leaders, for its impact on FDI inflows.
Special applause was focussed on UAE President His Highness Shaikh Khalifa bin Zayed Al Nahyan, and the UAE government.
Dr Mohamed Bin Khalfan bin Kharbash, Chairman, Etisalat, and the company's Chief Executive Officer (CEO) Obaid Saeed bin Mes'har, were specially praised for investing in Pakistan.
Obaid Saeed bin Mes'har, Etisalat CEO, very upbeat over the purchase, expects $2.59 billion "investment to pay off within five years, hopefully, sooner." Regarding Etisalat's $1.96 a share bid, he says," we feel this is the right value." His optimism is based on vast market opportunities and the fact that Etisalat will have PTCL's management control. Etisalat will fund the deal with 25 per cent equity and 75 per cent bank borrowing, with Dubai Islamic Bank's making 10 per cent equity and 10 per cent of debt portion.
Prime Minister Shaukat Aziz Chairing special meeting of the Cabinet Committee on Privatisation (CCoP), approved the sale to Etisalat, at $1.96 a share. Etisalat will pay a total of $2.59 billion for 1.326 billion shares. Dr Abdul Hafeez Sheikh, Minister of Investment & Privatisation (MoP) and Chairman of the Privatisation Commission (PC), architect of privatisation policy, who led the historic PTCL sale, is a renowned personality in global privatisation deals, having privatised Latin American and Argentinian state units on behalf of the World Bank. Dr Hafeez has issued a letter of acceptance (LoA) to Etisalat which is expected to deposit 25 per cent of total bid money within 14 days, and the remaining 75 per cent within the next 60 days.
Aziz said: "The government of Pakistan has accepted the highest bid of Etisalat of UAE for a 26 per cent stake and management control of the PTCL."
He said: "Three major telecom players participated in the PTCL bidding which is, in fact, a vote of confidence in Pakistan's economy and its future potential. Etisalat is a leading regional player, and growing its share in the regional countries. We think the price for PTCL received by the government reflects true value of the company and all stake holders will benefit from this transaction." He said," Pakistan enjoys very close and cordial relations with UAE. The Etisalat entry in the market will open the doors for other UAE potential investors to bolster economic and trade ties between our two countries. It's a major and very significant transaction, which is also very important from strategic point of view. There are natural synergies between UAE and Pakistan and the private sectors of the two countries."
On the back of PTCL deal, Prime Minister Shaukat Aziz has decided to speed up the ongoing process of privatisation, sale & investment in several mega, state-owned, high yield companies. These include: the 70 per cent oil market distributor and leader Pakistan State Oil (PSO), oil explorer and producer Pakistan Petroleum Ltd (PPL), important financial market player National Investment Trust (NIT) and the giant Pakistan Steel Mills, among others.
Etisalat won the PTCL deal with its $1.96 a share offer, against China Mobile (Hong Kong) Ltd that bid $ 1.06 a share, and Singapore Sing Tel's $0.88 a share. Market analysts had been hoping the total deal will range between $1.75 to $2.0 billion. But, an upbeat Etisalat offered $2.59896 billion , against China Mobile's $1.409 billion,and Sing Tel's $ 1.16688 billion.
The GoP reserve price was Rs62, approximately $1.03 a share. The GoP, in 1994, had sold 12 per cent of the PTCL shares at $ .82 each, through Global Depository Receipts (GDRs) and had picked up a total of $ 800 million. PTCL share was quoted at Rs67.30 each on June 17 — a day before the bidding. When the bourses opened June 20 after the sale, the price rose Rs3.35 to Rs70.65. Over the weekend it was trading at Rs65.95 with forecasts of considerable rise.
Earlier this year, it had reached the highest ever price of Rs100 a share of Rs10. PTCL is one of the top four shares quoted at the Karachi Stock Exchange. KSE-100 index rose 264.31 points to 7,663.04 June 20-the day after PTCL sale.
Etisalat acquisition and management control of PTCL, comes just 27 days after Shaikh Nahyan bin Mabark Al Nahyan's Abu Dhabi Group (ADG) started Alwarid in Pakistan — its $ 400 million, state of the art, highly innovative and aggressively competitive cellular services in Pakistan. ADG has invested in banking, real estate and telecom, including long distance and international (LDI), and wireless local loop (WLL). The group has invested $170 million in modern Bank Alfalah Ltd, $104 million in United Bank Ltd, and $100 million in Wateen Telecom (Pvt) Ltd.
The menu is designed to showcase a diverse array of India's most popular snacks
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