PTCL’s Privatization: The Biggest Financial Scam in Pakistan’s History?
The fall of corporate giants like ENRON and WORLDCOM left many learning impressions for both public and private sector enterprises besides stakeholders including governments, employees, Board of Directors and strategic partners. In both of the above mentioned historical cases, the core reason was fraudulent conduct by the corporate level management. The top officers consistently kept hiding the true financial facts and figures bearing losses and public reports kept displaying healthy financial results and profitability, which strengthened the trust of shareholders and partners to keep investing besides helping the share price to grow further in the stock market.
Unfortunately, we might have another big financial scandal in Pakistan in upcoming days – this is about privatization of PTCL. As you may recall Etisalat acquired a 26% strategic stake along with management control in 2006 after months of deals and bargaining on the actual value of the deal. Now the scandal reported in the papers claims that PTCL was worth a lot more. PTCL no doubt is one of the strongest corporate enterprises not only in Pakistan but also in the continent known as Asia. Therefore, if the news story becomes true, it will have a devastating effect on the Pakistan’s Telecom market, Economy and Pakistan’s political stability. Pakistan’s image, which already is in crisis, will be hurt further. The business schools around the world surely will have another good case study.
Jang, one of leading Urdu newspaper in Pakistan, has highlighted news on the secret contract over privatization of PTCL as shown above. An ex-Senior Vice President has claimed the privatization as Pakistan’s Biggest Financial Scandal. PTCL former official further commented that the deal was closed on 2.6 billion dollars including U-fone & Paknet, however only U-fone had enterprise value of more than 6 billion dollars which does not include assets of U-fone. Moreover, pricing decisions were made through old records instead of determining current market value, which means, it was like Buy One Get 2 Free offer. It has been reported further that in September 2006, when Etisalat had refused to honor the deal, they were offered a secret price discount of 394 million dollars along with commitment to lay off 20,000 employees and to bear the 50% cost of layout. Supreme Court of Pakistan has already given decision against the privatization of PSO and Pakistan Steel and if PTCL’s privatization gets challenged on true facts, it will bring horrifying results.
Created by Babar Bhatti, TelecomPk.Net is a leading source of information and analysis about Pakistan Telecom industry. 
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