Pakistan says rift is because of Etisalat’s management issues
Etisalat's position becoming more and more untenable. Certainly some senior Etisalat executives have been fired, but this is a major corporation. They should either pay up or formally announce that it was all a mistake and back out.

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Pakistan says rift is because of Etisalat’s management issues
BY ISAAC JOHN

2 December 2005


DUBAI — Amid rumours that Pakistan Telecommunications Company Ltd (PTCL) — currently deadlocked in its negotiations with Etisalat to salvage a $2.6 billion sales deal for 26 per cent shares — is weighing the options of suing the UAE telecom operator, a high-ranking official said the crisis was due to management issues in the UAE company.

Pakistan’s Information Technology Minister Awais Leghari was quoted in an interview as saying: "There have been some differences after the recent sale but these have been not due to any discrepancies on the part of Pakistan Telecommunications Company Limited, but due to management issues in Etisalat." Sources close to the negotiations said the talks between the two sides centre on demands from Etisalat for more time to settle.

In the UAE, an Etisalat spokesman declined to comment on this. Asked about rumours about PTCL's move to sue Etisalat, he said he would not make any remarks on that too.

The Pakistan minister, expressing hope that the state-owned national telecom giant's privatisation deal with Etisalat would be closed soon, said the Privatisation Commission was in contact with Etisalat and was working on ironing out the differences. He also said that in contacts thus far, Etisalat had not conveyed any differences based on any action by the PTCL management.

He said that Etisalat’s investment in PTCL was not just a business deal but represented the long-term relationship between Pakistan and the UAE.

Another Pakistani official was quoted in a news report as saying that Islamabad should consider trying to salvage the deal by softening some of the payment terms. “We have a history with the UAE. If we can work around our difficulties, a deal with Etisalat could be in our best interest,” he said. He said the present crisis could jeopardise the close ties Pakistan has built over the past three decades with the UAE.

Pakistan government's deal with Etisalat to sell a 26 per cent stake with management rights in PTCL was hailed as the country's largest privatisation bid. But Etisalat has since missed two deadlines to pay the outstanding 90 per cent owed, prompting Pakistan’s privatisation commission to begin proceedings to cancel the deal. Since then, Abdul Hafeez Shaikh, Pakistan’s privatisation minister, has flown to Dubai to meet senior UAE government officials in an effort to salvage the deal. Sources said the issues raised by Etisalat included deferred payment structure; ability to pledge the acquired shares; right to increase shareholding via a ‘call option’ for additional ‘A’ class shares; allowing dual listing of PTCL shares in UAE; management agreement; exemption from withholding tax; waiver of duties and taxes; customs duty waiver and ability to transfer acquired shares.
- posted @ Saturday, December 03, 2005