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Pakistan’s main cabinet committee on privatisation chaired by prime minister Shaukat Aziz on Friday approved the sale of a controlling stake in the country’s main telecoms company to Etisalat of the United Arab Emirates, ending months of uncertainty.

Under the new terms of the deal, Etisalat will immediately pay about $1.14bn of the $2.6bn it agreed to pay last July for a 26 per cent stake in Pakistan Telecommunications Company (PTCL). Etisalat has already paid $260m, or 10 per cent of its bid as a down payment.

And in a major concession, Pakistan agreed to allow Etisalat to pay the remaining $1.2bn over the next five years.

Pakistani officials had threatened to cancel the deal after Etisalat failed to meet its deadline of paying the remaining 90 per cent of its offer last October.

Pakistani government officials said yesterday, Etisalat’s failure to meet the October deadline had also coincided with its demand for new concessions such as seeking the listing of further shares of PTCL on the Dubai stock exchange and acceptance by Pakistan of staggered payments over a five-year period.

But one official said, he was satisfied that the new agreement to pay up to $1.14bn would still match the next best bid for PTCL offered by China Mobile.

Sakib Sherani, chief economist in Pakistan for ABN Amro, said: “In the short term, the conclusion helps to forestall some of the growing uncertainty surrounding Pakistan’s privatisation programme. But in the long run, lessons will have to be learnt from this case in terms of how things can go wrong”.

Ministry officials said, they were already considering new safeguards for future privatisations. These could include requiring successful bidders to have a down payment of more than just 10 per cent.

Pakistani gas companies, mutual funds and oil marketing companies are all due for privatisation this year.

A new management representing Etisalat is likely to take charge of PTCL next month, a privatisation ministry official said.

Copyright The Financial Times Limited 2019. All rights reserved.

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