Published on December 11th, 2006 | by Babar Bhatti47
Future of Paktel
Paktel has been in the news recently. Its European parent company Millicom has decided to exit Pakistan and the fate of its assets and employees is unclear. This presents a test case for PTA – can it handle the difficult task of protecting investors, subscribers, employees and ensure continuity of Paktel operations?
Till now Pakistan Telecom Authority (PTA) has been enjoying the rewards of foreign direct investment and the telecom growth. For the first time now it has to deal with the messy part. A lot hinges on this. Millicom owes PTA money (US$ 29 Million) for the spectrum licence it bought in 2004. The way this dispute is handled will become a guideline for other telecom companies. It so happens that PTA has it hands full because of another nasty dispute with PTCL over bandwidth tariffs.
There have been speculations on this topic in the industry. Many have commented and voiced their opinions and concerns as well – see TM’s post on this. There have been many rumours in the media about Paktel’s future but no official word as of this writing.
It was reported that China Telecom may buy Paktel from Millicom. A brief note in The News states: Paktel, the first cellular company of Pakistan, is in negotiations with China’s famous ‘China Telecom’ for its sale. Paktel’s higher official told ‘The News’ that Millicom and China Telecom have reached an understanding on Paktel’s sale, further details will be announced in the next few days. China Telecom has shown great interest in Paktel and now only final meeting is being held to conclude the deal.
Separately a PTA spokesman provided the following comments which appeared in The News:
“There is a proper Cellular Mobile Policy, which defines each and every situation,” said the PTA official. “The situation, which is most likely to surface, is that Paktel may shut down its business or sell this out to someone but in both cases the PTA accounts must be cleared.”
He said the high-ups of Paktel and the PTA had a series of meetings to resolve the fee installment issue but the two sides failed to reach any agreement because of too many allowances demanded by the company.
It seems that it will take some more time for all these negotiations to come to some conclusion. China Telecom’s entry to Pakistan will be a very interesting event. It will be a tough decision for China Telecom administration to justify the acquistion and its associated cost. Any negative vibrations from this case will have repercussions for Pakistan’s nascent telecom industry. PTA should make sure that it takes a flexible stance and makes a wise decision.