PTCL sale in trouble?
Investors paying price for uncertainty: Takeover of PTCL By Dilawar Hussain
KARACHI, Sept 27: No news is not always good news. The government, the Pakistan Telecommunication Company Limited (PTCL) and most objectionably the Privatization Commission (PC) is maintaining a deafening silence on what is preventing the highest bidder — Dubai-based Etisalat (Emirates Telecommunication Company) from taking over the PTCL.
Etisalat had deposited earnest money amounting to $40 million with the SBP a short while after the bidding held on June 18 this year. But the buyer is still to pay the 90 per cent balance from $2.59 billion (Rs155.158 billion) that it had offered for 26 per cent shares with management rights in the company. At the time most people thought Etisalat’s bid of Rs117.01 per share to be surprisingly high. Runner-up China Mobile had sought to acquire the Pakistan telecom at only Rs63.48 per share. That was the moment of great satisfaction for the government and the PC. Now, as the date of takeover and more importantly the pay up of balance 90 per cent of the bid money continues to shift from August 18 to 24 to Sept 8 to 16 to 18 and now Sept 30, all that jubilation seems to be drowning in a glass full of gloom.
To the surprise of everyone, at the meeting of the Cabinet Committee on Privatization ((CCoP) on Monday with the prime minister in the chair, the progress on PTCL sell-off did not even get a mention. Minister for Privatization and Investment Dr Abdul Hafiz Shaikh, who had earlier promised to talk to the press about several issues including PTCL, supposedly took the flight from the back door just as soon as the meeting was over. Did the PM himself restrain the minister from keeping up his promise? And the question is why?
Ask a PTCL official about the telecom’s handing over/taking over and he would respond that it was none of their business, but that of the PC. At the Commission’s office in Islamabad, the federal minister and the secretary have conveniently made themselves unavailable to the media. Why is everyone avoiding a discussion about the PTCL privatization, as a plague? Why mus’nt the public know of where the transaction stands? What are those “problems in the finalization of post-bidding details” that should not be brought to the citizens’ knowledge? Quite clearly the more delay that is being made in making facts public, the more the transparency of the transaction is coming under a cloud.
Knowledgeable sources say three days after the bidding, Etisalat had raised several issues. Those 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 & taxes; custom duty waiver and ability to transfer acquired shares.
The press has been able to dig out only slight information about some of the matter. But most experts wondered why at all the sale of PTCL was brought under the hammer if all issues under the Share Purchase Agreement (SPA) and Shareholding Agreement (SHA) had not first been amicably settled.
The government and the PC may be unaware, but the investors are paying the price of uncertainty. PTCL released the company’s financial results for the year ended June 30, 2005 at the stock exchanges on Tuesday. The price of telecom stock plunged by Rs2.05 to close at Rs64. The reason being that the results and payout were lower than the lowest of analysts’ expectations. Most analysts were expecting the company to post earning per share (eps of Rs5.75-5.90); the actual turned out to be only Rs5.22. But the most heart breaking news was that the PTCL Board completely omitted a dividend, whereas investors were looking at a final payout between Rs3.50 to Rs5.50 per share.
The meeting of the board to approve the accounts was scheduled to begin at 9:30 in the morning but the announcement of financial figures was received not until 8 minutes before the close of trading session. But some punters took that also as a blessing in disguise, for investors who were given to faint, did not miss much of the day’s trading at the bourse!
KARACHI, Sept 27: No news is not always good news. The government, the Pakistan Telecommunication Company Limited (PTCL) and most objectionably the Privatization Commission (PC) is maintaining a deafening silence on what is preventing the highest bidder — Dubai-based Etisalat (Emirates Telecommunication Company) from taking over the PTCL.
Etisalat had deposited earnest money amounting to $40 million with the SBP a short while after the bidding held on June 18 this year. But the buyer is still to pay the 90 per cent balance from $2.59 billion (Rs155.158 billion) that it had offered for 26 per cent shares with management rights in the company. At the time most people thought Etisalat’s bid of Rs117.01 per share to be surprisingly high. Runner-up China Mobile had sought to acquire the Pakistan telecom at only Rs63.48 per share. That was the moment of great satisfaction for the government and the PC. Now, as the date of takeover and more importantly the pay up of balance 90 per cent of the bid money continues to shift from August 18 to 24 to Sept 8 to 16 to 18 and now Sept 30, all that jubilation seems to be drowning in a glass full of gloom.
To the surprise of everyone, at the meeting of the Cabinet Committee on Privatization ((CCoP) on Monday with the prime minister in the chair, the progress on PTCL sell-off did not even get a mention. Minister for Privatization and Investment Dr Abdul Hafiz Shaikh, who had earlier promised to talk to the press about several issues including PTCL, supposedly took the flight from the back door just as soon as the meeting was over. Did the PM himself restrain the minister from keeping up his promise? And the question is why?
Ask a PTCL official about the telecom’s handing over/taking over and he would respond that it was none of their business, but that of the PC. At the Commission’s office in Islamabad, the federal minister and the secretary have conveniently made themselves unavailable to the media. Why is everyone avoiding a discussion about the PTCL privatization, as a plague? Why mus’nt the public know of where the transaction stands? What are those “problems in the finalization of post-bidding details” that should not be brought to the citizens’ knowledge? Quite clearly the more delay that is being made in making facts public, the more the transparency of the transaction is coming under a cloud.
Knowledgeable sources say three days after the bidding, Etisalat had raised several issues. Those 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 & taxes; custom duty waiver and ability to transfer acquired shares.
The press has been able to dig out only slight information about some of the matter. But most experts wondered why at all the sale of PTCL was brought under the hammer if all issues under the Share Purchase Agreement (SPA) and Shareholding Agreement (SHA) had not first been amicably settled.
The government and the PC may be unaware, but the investors are paying the price of uncertainty. PTCL released the company’s financial results for the year ended June 30, 2005 at the stock exchanges on Tuesday. The price of telecom stock plunged by Rs2.05 to close at Rs64. The reason being that the results and payout were lower than the lowest of analysts’ expectations. Most analysts were expecting the company to post earning per share (eps of Rs5.75-5.90); the actual turned out to be only Rs5.22. But the most heart breaking news was that the PTCL Board completely omitted a dividend, whereas investors were looking at a final payout between Rs3.50 to Rs5.50 per share.
The meeting of the board to approve the accounts was scheduled to begin at 9:30 in the morning but the announcement of financial figures was received not until 8 minutes before the close of trading session. But some punters took that also as a blessing in disguise, for investors who were given to faint, did not miss much of the day’s trading at the bourse!
posted by India News Watch at 8:51 AM
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