Etisalat may soon clear $800 million owed to Pakistan Finance Minister Ishaq Dar
Islamabad (Sundy, June 8th, 2014) – Pakistan expects Etisalat to soon settle the $799 million it owes from a 2006 investment in the country’s former telecom monopoly.
Settlement would provide vital funds for the cash-strapped government.
Etisalat, the United Arab Emirates’ largest telecom operator by revenue and subscribers, led a consortium that bought a 26-percent stake in Pakistan Telecommunication Co. Ltd (PTCL) for $2.6 billion.
But Etisalat, which also obtained majority voting rights in PTCL, withheld $799 million it owes on the deal because of Pakistan’s failure to reassign ownership of 3,248 properties to PTCL as per the sale agreement.
“The release of funds is expected shortly,” Ishaq Dar, Pakistan’s finance minister, told Reuters in an emailed response to questions.
PTCL is still due 31 properties, but these are unlikely to ever be transferred due to various reasons including legal impediments, Dar said.
This leaves Etisalat with two options – to surrender PTCL’s right to these properties and reduce the amount the UAE operator owes Pakistan by their combined agreed value, or withhold the same amount until it receives titles to these properties.
Dar ruled out taking punitive action against Etisalat to try to force the company to pay, while Etisalat did not respond to repeated requests for comment regarding Pakistan.
Etisalat paid an initial $1.8 billion for the PTCL deal and was to pay the remaining $799 million in six twice-yearly instalments of $133 million.
Etiolate owned 90 percent of the acquiring consortium, giving it a 23.4 percent stake in PTCL. The consortium’s bid was $1.2 billion more than the next highest offer and in 2012 Etisalat took an impairment of $645 million on PTCL, whose current market value is $1.12 billion, Reuters data shows.
Receiving the bulk of the money Etisalat owes would boost Pakistan government coffers. The International Monetary Fund (IMF) saved Pakistan from possible default by agreeing last September to lend it $6.7 billion over three years.