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Finally, Dhabi group has disclosed that it is in talks with several Pakistani operators including Telenor and PTCL to sell its part of the shares. The spokesman did not talk about the value of deal but rather confirmed its intention to offload its share along with management control.
Dhabi Group has already sold 30% shares to Singtel in 2007 for US $758 Million that valued the whole company at $ 2.9 Billion. Just recently it sold its 51% stakes in African operations to Indian company, Essar and later Airtel, famous Indian groups, acquired 70% shares in Warid Bangladesh which is having tough time being a late entrant into the industry.
At the time of Bangladeshi deal, few weeks back, CEO Abu Dhabi Group, Mr. Bashir Tahir had confirmed that Dhabi Group did not want to sell the Pakistani operations and all the news are just rumors. Mr. Bashir has suddenly changed its stance and said while talking to a newspaper, “Every operator in Pakistan is looking for consolidation,” said Bashir Tahir, the chief executive of the Abu Dhabi Group. “We are talking to every operator and we know they are also talking to each other.”
Mr Tahir said he had been negotiating with Pakistan Telecommunication Corporation (PTCL), the country’s largest telecoms company, and Telenor, the incumbent operator in Norway that owns a subsidiary in Pakistan. “PTCL has shown keen interest in Warid Telecom,” he said. “We are talking with them and I’d be happy to invest with them, but the bases have to be clear.”
It was an interesting aspect that Telenor had never denied and ruled out the possibility for any such deal.
Whoever gets the stakes in Warid (Telenor or PTCL), will become the largest operator in Pakistan, by network and the customer base as well crossing the Mobilink which is the largest operator currently.
PTCL owns the Ufone mobile brand and is managed by Etisalat, the UAE’s largest telecoms company, which owns a 26 per cent stake in the operator. If a deal is struck, the newly merged company would immediately become the largest mobile phone operator in Pakistan, controlling at least 40 per cent of the market.
“Whenever a deal happens, the operator will get a big lead on the others,” said Ali Tahir, the group chief commercial officer of Warid Telecom.
“We’d rather have a slice of the bigger pie.” Pakistan has more than 97.6 million mobile phone subscribers and a penetration rate of 59.03 per cent, figures from the Pakistan Telecommunications Authority showed. It is forecast to grow to 130.6 million subscribers by 2013, according to IE Market Research. The industry generated revenues of 212.42bn Pakistani rupees (Dh9.18bn) in 2008, while the monthly average revenue per user rate is about 185 rupees, the regulator said. Ali Tahir, the son of Bashir Tahir, said the economic and political situation in Pakistan over the past two years had made it difficult to grow Warid Telecom.
“Liquidity in this market has dried up,” he said. “Inflation has increased and the [Pakistani rupee] has depreciated by up to 40 per cent.
“While we have maintained market share and revenues, it has been a challenge because we have borrowed in dollars.”
PTCL would be a likely acquirer of Warid Telecom, said Ahmed Nabil, the chief operating officer at Javed Omar Vohra, a brokerage in Karachi. Although Ufone holds about 19 per cent of the mobile phone market, the company needs a boost as its monthly subscriber gains have slowed and its profit outlook is being impaired by its rivals, Mr Nabil said.
“For [PTCL], it makes sense to take over other operators to expand their operation base and add revenue sources,” he said. The Abu Dhabi Group’s investment portfolio, which it says is worth more than $10bn, includes a number of banking and construction businesses, predominantly in Asia and Africa.
It has been involved in Pakistan since 1997, when it purchased Bank Alfalah, then a three-branch bank that has now grown into the fifth-largest financial institution in the country.
“If you are a passive investor and want to manage a telecoms company, it is very difficult to do,” Mr Tahir said. Any deal is likely to include a “put clause” that will give the Abu Dhabi Group the option of selling the rest of its stake at a set price within three years, he said.
The investment bank Goldman Sachs is advising the Abu Dhabi Group.
Other advisers involved in the negotiations are JP Morgan Chase for SingTel and Citibank for Telenor, Mr Tahir said.
Originally posted on TheNational
Sir, Its very interesting story but i am wondering why Warid is going to sign his brand ambassador if he wants to out of market and handed over the share to another operator i believe you have to consider before break the story and also one thing for merger point of view kindly publish the PTA guideline
Dear Mr. Rizvi, I haven't mentioned that company is going to close its operations in Pakistan. Its own CEO, Mr. Bashir Tahir has revealed that it has decided to sell its part of the shares to one of the buyers and the likely ones are Telenor and PTCL.
Who ever gets the company will run it as a separate brand, its a general opinion, just couple of departments will see the changes.