Pakistan warns Etisalat to pay $800 million

Telecom Lead Asia: The Pakistan government has asked
the UAE-based Etisalat to clear $800 million payment for PTCL sale proceeds
before June or face hostile takeover of the telecom business by the government.

 

Recently, Etisalat decided to stop its Indian operations
in the wake of the recent Supreme Court order to cancel its telecom licenses in
the country.

 

Supreme Court verdict against 122 2G licenses

 

The company had asked its mobile users to migrate to
other Indian operators through mobile number portability.

 

Mobile number portability (MNP) requests gone up to 4.32
million in February

 

Due to the Supreme Court order to cancel 2G licenses in
122 telecom circles, the requests for mobile number portability (MNP) adoption
have gone up to 4.32 million in February 2012 from 3.55 million requests in
January 2012.

 

According to a report in Dawn, the government already
conveyed warning to a high-level Etisalat delegation. The delegation met a
government team led by Finance Minister Abdul Hafeez Shaikh.

 

The Dubai-based firm has been told that it may keep a
maximum of $150 million – more than double the value of a couple of problematic
properties – but release the rest of the amount (slightly over $650 million)
upfront.

 

The Etisalat has been given a month to respond positively
to the offer because Islamabad has to make a repayment of about $800 million to
the International Monetary Fund.

 

The report said that non-payment will adversely affect
foreign exchange reserves and impact Pakistan’s exchange rate negatively. The
economic managers have been showing $800 million PTCL proceeds in their budget
documents as financing items to bridge fiscal deficit that is expected this
year to cross a whopping 7.5 per cent of the GDP owing to uncertainty over PTCL
dues, auction of 3G telecom licences and disbursements under the Coalition
Support Fund from the United States.

 

Etisalat, the no.1 telecoms operator in the United Arab
Emirates, led a consortium that bought a 26 percent stake in the Pakistani
former monopoly for $2.6 billion in 2006.

 

The deal included transferring ownership of about 3,000
real estate properties to PTCL from the government, but this stalled and
Etisalat withheld the final $800 million it owed.

 

The dispute has dragged on for more than four years,
during which PTCL’s market capitalization has fallen to $522 million, according
to Reuters data, making Etisalat’s stake worth less than $120 million.

 

Etisalat owns 90 percent of the acquiring consortium,
giving it a 23 percent stake in PTCL. The consortium’s bid was $1.2 billion
more than the next highest bid.

 

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