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Long wait on the line for sell-off

June 1, 2005. Financial Times

By Farhan Bokhari




In the heart of Karachi's business district is a fast food café whose walls are pasted with old newspapers. Every time Shuja Rizvi walks past he is reminded of the years of delay in privatising Pakistan's main telecom monopoly.

As senior equity analyst at Karachi's Capital One brokerage house, Mr Rizvi notes a story published in 1992 which predicted the privatisation of Pakistan Telecommunication Company (PTCL) later that year.

Thirteen years later, PTCL - one of the largest public sector companies and the exclusive provider of fixed telephone connections - is closer to its privatisation this month, with senior officials hoping to settle on a buyer from up to seven contenders. "It's been a long delay, but it's finally happening," says Mr Rizvi.

The company's privatisation was held up, in part because of objections from Pakistan's powerful defence forces, which wanted their own communication network before the monopoly could be sold.

Once the government created a separate network for the defence services, plans for privatisation were delayed for a mix of reasons, from lacklustre investor interest driven by concerns over Pakistan's internal security conditions, to worries over grim economic prospects from the mid-1990s onwards.

Armed with the confidence of an economic recovery now underway and the privatisation programme showing signs of movement with the successful sale of other companies, Pakistan is finally seeking offers from prospective investors seeking 26 per cent of PTCL's stock.

Although the new investor will be buying only a minority stake, the government will surrender all management control, finally ending almost six decades of the public sector's unquestioned dominance over Pakistan's telecom services. The Pakistani government owns 88 per cent of PTCL's stock while the rest has been sold to individual investors.

The prospective investors lined up to present their final bids for PTCL later this month include China Mobile Communications, China's leading cellular operator, Singapore's Singtel, Etisalaat of the United Arab Emirates, Telekom Malaysia, Riyadh-based Saudi Oger, Turkcell of Turkey and Egypt's Al Mal consortium.

"We are finally getting to the end of our journey on PTCL," says Abdul Hafeez Shaikh, the privatisation minister. "It's been a long road but its happening".


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