[governance] Pakistan to Takeover PTCL if Etisalat Fails to Pay $800 Million till June 2012

[Arzak Khan]

Looks like Zardari government is ready to take extreme measures. The consequences of such an action and the message it will send to other operators will be colossal.   Cheers! Arzak
 > Date: Thu, 19 Apr 2012 16:18:29 +0200
> From: fouadbajwa at gmail.com
> To: ca at cafonso.ca
> CC: governance at lists.igcaucus.org
> Subject: Re: [governance] Pakistan to Takeover PTCL if Etisalat Fails to Pay $800 Million till June 2012
> 
> Its gonna be crazy i tell you :) Some actions have far longer
> implications. Its a setback attempt similar to many other cases
> popping up. Trying to repay IMF loans without fulfilling commitments
> doesn't really give any better results.
> 
> -- Foo
> 
> On Thu, Apr 19, 2012 at 4:14 PM, Carlos A. Afonso <ca at cafonso.ca> wrote:
> > ... and the sky will fall on Pakistan if they do this, like it fell on
> > Argentina for taking over parasitic Repsol's majority stake in YPF.
> >
> > frt rgds
> >
> > --c.a.
> >
> > On 04/19/2012 10:44 AM, Fouad Bajwa wrote:
> >> http://dawn.com/2012/04/09/pakistan-warns-etisalat-to-pay-800-million-or-face-hostile-takeover/
> >>
> >> Pakistan warns Etisalat to pay $800 million or face hostile takeover
> >>
> >> ISLAMABAD, April 8: Facing a serious financial crunch and fed up with
> >> Etisalat’s inflexibility in paying over $800 million in PTCL sale
> >> proceeds, Pakistan has asked the UAE-based firm to clear its dues
> >> before June this year or face hostile takeover of the country’s
> >> telecom giant by the government.
> >>
> >> Sources told Dawn that the stern warning was conveyed a few days ago
> >> to a high-level Etisalat delegation visiting Pakistan. The delegation
> >> met a government team led by Finance Minister Dr Abdul Hafeez Shaikh.
> >>
> >> The Etisalat delegation’s request for a meeting with Prime Minister
> >> Yousuf Raza Gilani was turned down pending resolution of the dispute,
> >> the sources said.
> >>
> >> Keeping in mind Pakistan’s friendly relations with the UAE, the
> >> Dubai-based majority owner and operator of the country’s largest
> >> telecom firm has been told that it may keep a maximum of $150 million
> >> — more than double the value of a couple of problematic properties —
> >> but release the rest of the amount (slightly over $650 million)
> >> upfront.
> >>
> >> Etisalat has held back $800 million in PTCL sale proceeds for well
> >> over five years now, although it won 26 per cent shareholding along
> >> with management control of the-then telecom monopoly for $2.6 billion
> >> in June 2005.
> >>
> >> The Etisalat has been given a month to respond positively to the offer
> >> “because the true value of the money for Pakistan is in May” because
> >> Islamabad has to make a repayment of about $800 million to the
> >> International Monetary Fund. Non-payment will adversely affect foreign
> >> exchange reserves and impact Pakistan’s exchange rate negatively. The
> >> economic managers have been showing $800 million PTCL proceeds in
> >> their budget documents as financing items to bridge fiscal deficit
> >> that is expected this year to cross a whopping 7.5 per cent of the GDP
> >> owing to uncertainty over PTCL dues, auction of 3G telecom licences
> >> and disbursements under the Coalition Support Fund from the United
> >> States.
> >>
> >> “Enough is enough” was the message conveyed to the Etisalat delegation
> >> in the presence of Finance Minister Shaikh.
> >>
> >> “If we do not hear a positive response in a month, we shall make sure
> >> your flight does not land in Pakistan,” a furious participant was
> >> quoted to have told the guests. Moreover, the Etisalat would be banned
> >> from bidding in 3G telecom licences auction due in a couple of months
> >> to raise about $1 billion.
> >>
> >> Prime Minister’s Principal Secretary Khushnood Lashari and Finance
> >> Secretary Abdul Wajid Rana who is also a government member on the PTCL
> >> board of directors were among those who attended the meeting. The
> >> strong position taken at the meeting, said the sources, had the full
> >> backing of the president and the prime minister.
> >>
> >> The Etisalat’s top executive, the sources said, suggested appointing
> >> an independent auditor for the valuation of three properties and asked
> >> the government side to wait till its conclusion but this was rejected
> >> outright.
> >>
> >> The sources said the finance minister told the delegation Islamabad
> >> was not asking for a mark-up on $800 million the Etisalat utilised for
> >> more than five years now but that it was unjustified to hold back such
> >> a big amount against three properties having a total value of less
> >> than $70 million. The properties are under the control of PTCL, but
> >> their titles cannot be transferred in the name of PTCL owing to legal
> >> complications.
> >>
> >> Moreover, Pakistan has never disputed transferring property titles in
> >> the name of PTCL and was earnestly making efforts to overcome legal
> >> complications.
> >>
> >> “They are ‘worthy foreign investors’ and some of us are overawed but
> >> this cannot go on indefinitely to the extent of compromising
> >> sovereignty,” a participant of the meeting said, adding that nobody
> >> ever talked about the non-payment issue with Etisalat as was taken up
> >> a week ago.
> >>
> >> The unusual stern warning of an extreme threat came following a lot of
> >> top level persuasions from Pakistan for the recovery of PTCL dues over
> >> the last two years. The government had sold about 26 per cent shares
> >> along with management control of Pakistan’s largest telecom operator
> >> in June 2005 when Dr Abdul Hafeez Shaikh was privatisation minister in
> >> the Musharraf government.
> >>
> >> Soon after becoming the finance minister in the PPP government, Mr
> >> Shaikh had taken up the matter with Sheikh Nahayan Al Mabarak, a
> >> senior UAE minister and owner of the Abu Dhabi group, for payment of
> >> the at least $500 million in June 2010 against transfer of about 98
> >> per cent of government properties. There were a total of 3,298
> >> properties that were required to be transferred to PTCL, of which all
> >> except only three are currently not in the name of the PTCL owing to
> >> legal complexities.
> >>
> >> Later in February 2011, President Asif Ali Zardari also took a special
> >> visit to Dubai to seek the intervention of the UAE leadership for
> >> payment of $800 million that Etisalat owed to Islamabad for the
> >> country’s largest privatisation transaction — Pakistan
> >> Telecommunication Company Limited —, but in vain.
> >>
> >>
> 
 		 	   		  
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