Etisalat has offered Pakistani Government $267 million as final prize to settle a decades old dispute.
In July 2005, Etisalat bought 26% shares in PTCL with management control at a price of $2.6 billion. If the government accepts the Etisalat offer, the total value of the privatization transaction would come down from $2.6 billion to $2.07 billion. The second-lowest bid was actually $1.4 billion.
Shaikh, who was privatization minister at the time, had tried to lure the company by offering it to make an initial payment of $1.4 billion and the remaining amount in nine installments until September 2010.
Pakistan decided to offer more incentives to Etisalat – including transferring properties in the name of the PTCL and giving it 3.5% of the revenues in technical service fee.
However, Etisalat again stopped making payments in 2010 on the pretext that Pakistan did not fulfill its contractual obligations by not transferring all the properties in the name of PTCL. The current offer is one-third of the total outstanding dues amounting to $800 million. The Dubai-based firm has proposed to cut roughly $533 million on account of properties that Pakistan has not transferred in the name of PTCL due to various reasons, according to sources in the finance and privatization ministries.
According to Pakistan’s assessment, the value of those properties was not more than $88 million. But according to the agreement, the highest value determined by any of the two parties would be the final price of the properties.
The PTCL is also passing through difficult times as the company’s market share are going down, standing at nearly 13.5%.
PTCL’s revenues for January-September 2019 stood at Rs53.77 billion against Rs53.55 billion in the same period of last year, according to the company’s balance sheet.
Its gross profit stood at Rs13.1 billion for January-September 2019, down from Rs13.7 billion.
Pakistan has blocked the annual technical service assistance fee after Etisalat withheld the privatization dues. The company’s balance sheet showed that PTCL owed Rs20.2 billion to Etisalat till September 2019 on account of the fee.