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Pakistan has agreed in principle to allow Etisalat of the United Arab Emirates to pay for a controlling stake in Pakistan Telecom over two to five years, in order to break a three-month deadlock over the privatisation.

The move is a departure from previous government policy and underlines the importance attached by the Pakistani authorities to the sale of Pakistan Telecommunications Company (PTCL) ? the largest privatisation in the country?s history.

?The government has agreed in principle that Etisalat would not be able to make its $2.34bn payment in a single go. We now accept the need for staggered payments over a few years and negotiations are continuing,? a senior telecommunications ministry official told the FT.

It is unclear whether Etisalat would agree to the compromise, but the proposal by the Pakistani government would bring the two sides closer together.

In July, Etisalat won an auction to buy 26 per cent of PTCL?s stock, along with the right to manage the company, for $2.6bn, and paid $260m up front. Etisalat beat offers of $1.41bn from China Mobile and $1.17bn from Singapore Telecom.

However, the deal stalled in September when Etisalat failed to meet a deadline to pay the remaining $2.34bn.

Analysts said Etisalat had raised several issues after its successful bid, including seeking to make deferred payments, permission for the dual listing of PTCL shares on the UAE and Karachi stock markets, and tax exemptions. Pakistani leaders have lobbied behind the scenes to salvage the deal.

The ministry official said that General Pervez Musharraf, Pakistan?s president, and Shaukat Aziz, the prime minister, were thought to have discussed the issue with UAE leaders.

He added that the formula offered to Etisalat sought an immediate payment of about $1.15bn on top of the $260m already paid. That would bring Etisalat?s payment during the present financial year, which ends in June, in line with China Mobile?s original offer.

?We want to emphasise, Etisalat must at least match China Mobile?s bid.?

Copyright The Financial Times Limited 2017. All rights reserved.
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