Etisalat: May Delay Payment to Pakistan

Etisalat expected to hold back its 5th payment in a row, which is due on March 31st, 2010, to the government of Pakistan. Until the dispute over the transfer of properties for 2006 acquisition of 26 per cent in Pakistan Telecom (PTCL) is resolved.

Chairman Etisalat said;

“So far, the Pakistani government has not released a list of properties to be transformed to PTCL ownership, when the list is released, the money will be paid.”

The amount Etisalat is withholding sums up to $799 million worth of payment the government of Pakistan until the acquisition are registered in PTCL’s name.

According to the Pakistan’s Ministry of Privatization (MOP), the Etisalat’s next payment is due March 31. As far as the question of properties is concerned, out of 311 properties 118 are already in the ownership of PTCL and 17 properties are “under some proceedings” and the government is now working to review the properties.

Federal secretary at Ministry of Privatization of Pakistan Shahab Khawaja said;

“We have formerly asked provincial governments to put value to the properties in their relevant provinces;” he also added, “Final assessment has not been conveyed. As soon as we get it, same will be conveyed to Etisalat and PTCL.”

In June 2005, Etisalat’s purchased 26 per cent stakes in PTCL, Pakistan’s telecom operator. By placing a bid of $2.6 billion and beating those of Singapore Telecom and China mobile.

Reconciliation of the deal delayed signing until April, 2006 but did not influence Etisalat’s bid. The contract predetermined a $1.4 billion up-front payment and for the rest to be paid in six-month installments over 4.5 years. The deal also assured Etisalat management rights of PTCL operations.

Since late 2007, Etisalat is taking into consideration purchase an additional 25 per cent stake but has not taken action.

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