Archive for July 25th, 2007

Warid has something to singtel about…

Published by Muhammad Farooq on July 25, 2007 under Companies, Foreign Investment, Investment, Pakistan, Telecommunications

Rumors started to surface back in May that Warid Telecom, Pakistan’s third largest mobile operator is in talks with several foreign firms, including Singapore Telecommunications (Singtel), to sell a minority stake. This week, Abu Dhabi-based Warid Telecom Group International has confirmed the sale of a 30% stake in its Pakistani operations to SingTel, in a deal worth USD758 million. Warid, started operations in 2005 and as of end June has around 10 million customers in Pakistan; a market share of roughly 17 percent.  

Pakistan telecom market 

With a large population in excess of 160 million growing at over 2 percent per annum, and a young median age of 20 years, Pakistan represents the sixth largest population base in the world. Its mobile phone sector has been growing at a rapid pace, with the number of subscribers reaching 58.4 million at the end of April (around 35 percent of the population) from only 12.8 million in 2005. In the presence of a freeze on new licences, the only way for international telecoms companies to get a foot hold in this lucrative mobile sector is by picking up stakes in existing players. Last year, mobile operators invested US$2 billion in Pakistan, 54% of the total foreign direct investment in the country, according to the Pakistan Telecommunications Authority (PTA). Pakistan telecom market is still a bargain compared to some other markets with less customer bases. There is a strong potential for growth in subscriber base; evidence of which is repeat attempts by foreign operators to get a slice of this pie.  

First Try:

Previously Etisalat of UAE acquired a controlling stake in PTCL beating China Mobile and SingTel with a purchase price of US$2.5 billion. The price offered by China Mobile was US$1.409 billion and SingTel US$1.167 billion. Other ‘firsts’ by Gulf shoppers include Omantel’s purchase of World Call and Qtel’s purchase of Burraq Telecom.

Second Try:

China Mobile, the world’s biggest mobile phone company, which had earlier failed to buy PTCL, bought 89 per cent of Paktel for $284m, its first acquisition outside its home market (even though Paktel was losing money at the time). This was a blessing in more than one way, since reports suggested that weeks before the takeover, Millicom was preparing to close Paktel down. It owed $29 million in licence fees to the Pakistan government at the end of 2006. China Mobile immediately announced plans to pump in $400 million to beef up the network; the lion’s share went to Ericsson and Alcatel-Lucent.

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