A signing ceremony marking the transfer of a 26% stake in PTCL, worth US$ 2.6 billion, to Etisalat was held at Prime Minister Shaukat Aziz’s house in Islamabad.

The two sides agreed last December to a deal under which Etisalat, UAE’s telecom monopoly, would pay US$ 1.4 billion up front for the stake and the rest spread over five years. An earlier deal agreed in June ran into trouble after Etisalat failed to meet payment deadlines.

Aziz pledged that the government would cooperate fully with Etisalat to improve efficiency at PTCL in order to make it "a world class company".

PTCL is Pakistan's second-largest listed company and has a market value of US$ 4.3 billion. The deal with Etisalat involves 1.33 billion shares out of a total of 5.1 billion. Last month PTCL reported a 25.41% fall in its half-year net profit to 10.83 billion rupees (US$ 180.65 million), compared with 14.52 billion a year earlier. Analysts said the reduced profit was due to the impact of competition on international call revenue, which outweighed subscriber growth.

PTCL's 56-year monopoly on landlines ended in December 2002 when the government introduced deregulation that allowed the entry of private operators. Since then, dozens of rivals, including domestic wireless providers such as Worldcall and Telecard, have taken some of PTCL's call traffic and forced it to slash charges. An across-the-board salary hike agreed last May after employees protested the privatisation also put pressure on costs.

Etisalat Chief Executive Mohammed Hussain Omran said the firm was in "advanced discussion" with Afghanistan, but did not elaborate. Etisalat said in January it was in talks to enter the Afghan telecoms market and was discussing alternatives for provision of mobile as well as fixed-line network services.

Source: Reuters story - WDR/Intelecon Regulatory News