A non-binding offer has been prepared by Pakistan Telecommunication Company Limited (PTCL) to acquire Telenor Pakistan, with a potential price range of $800 million to $1.2 billion. A majority of the directors of PTCL have approved expressing interest in acquiring Telenor Pakistan’s majority shares, as well as management control over the company. This deal will be financed by commercial loans guaranteed by Etisalat, the parent company.
According to top sources, PTCL has expressed its interest to Prime Minister Shehbaz Sharif and is prepared to proceed with the deal if both parties approve the non-binding offer. A binding offer, however, cannot be made until a few issues have been resolved.
As a result of the ongoing dollar liquidity crisis in Pakistan, Etisalat has requested payment in dollars outside of the country. In addition, Etisalat continues to owe PTCL $800 million from the privatization of PTCL that remains unresolved since 2005-2006. A number of issues need to be addressed, including the transfer of land in the name of Etisalat as well as unresolved employee issues.
PTCL will own two subsidiaries operating in Pakistan if the transaction is successful – Ufone and Telenor Pakistan. In view of Ufone’s current balance sheet, another significant acquisition is not possible; therefore, Etisalat is prepared to play a part in the finalization of the transaction.
It is necessary for the Economic Coordination Committee of the Cabinet and the Federal Cabinet to approve the acquisition of shares in PTCL due to the government’s ownership of these shares.
PTCL was the topic of a meeting chaired by Senator Mohammad Ishaq Dar, the Federal Minister of Finance and Revenue. The meeting was attended by the Secretary of Finance, Secretary of Privatization, and Secretary of IT and Telecom, along with Senator Azam Nazeer Tarar, Minister of Law and Justice. In order for PTCL to achieve its full potential, Dar stressed the importance of active participation from government nominees on the PTCL board.