The Abu Dhabi Group is “talking” to operators in Pakistan as it looks to possibly offload a controlling stake in Warid Telecom (Pakistan), in which it holds 70%, to either Pakistan Telecommunication Corporation Ltd (PTCL), Telenor Pakistan or 30%…
The Abu Dhabi Group is “talking” to operators in Pakistan as it looks to possibly offload a controlling stake in Warid Telecom (Pakistan), in which it holds 70%, to either Pakistan Telecommunication Corporation Ltd (PTCL), Telenor Pakistan or 30% shareholder SingTel.
A source close to the company told TelecomFinance that while there has been no official comment from the Abu Dhabi Group regarding the sale, “all operators are talking to each other as consolidation is ripe and makes sense in a market like this. It is obviously every operators desire to be number one in order to make money in this market.”
Goldman Sachs is understood to be advising the Abu Dhabi Group. JP Morgan Chase is thought to be working with SingTel and Citibank advising Telenor.
The size of the stake the Arab firm wishes to sell is at this stage unclear.
In 2007, the Abu Dhabi Group sold a 30% stake in Warid Telecom (Pakistan) to SingTel for US$758m in a deal that valued the company at US$2.9bn.
However, the price was and still is seen as very high in most quarters, especially considering the state of Pakistan’s economy, infrastructure and political stability. The country is in the midst of a violent civil war that has seen Pakistani security forces pitted against Islamic militants in the country’s tribal backwaters. The country, like many others, has also seen liquidity dry up and the Pakistani rupee plummet in value, leaving firms to borrow in dollars. These factors have consistently deterred foreign investors and it is expected that Warid will sell at an approximate 30% to 40% loss. Warid Pakistan is now valued at around US$1.8bn.
In addition, investment banking sources have consistently said that the Pakistani telecoms market, which hosts five major operators, is overcrowded and due for consolidation.
Etisalat-owned PTCL is the most likely to pick up Warid’s stake, becoming the country’s largest operator with a 40% market share.
The Abu Dhabi Group is owned by the royal family of Abu Dhabi and controlled by his highness Sheikh Nahyan Mubarak Al Nahyan. The group has also recently sold a 51% stake in its two largest African networks to Essar and a 70% stake in Warid (Bangladesh) network to Bharti Airtel.
The moves suggest a strategic shift from being active shareholders to passive bystanders.
Warid Telecom (Pakistan) is the third-largest mobile phone operator in Pakistan with around 8.5 million subscribers and a 20% market share.
