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The privatisation process of Pakistan Telecommunication Company Limited (PTCL) is being completed timely. Dr.
Abdul Hafeez Shaikh Federal Minister for Privatisation & Investment stated this while addressing Investors Forum
here today.

He said that it was the government's endeavor to complete the process in a most transparent manner as per
schedule and up to the satisfaction of all stakeholders including the prospective bidders, consumers and the workers.

The Privatisation Commission held an Investors Forum to respond to the queries of the potential bidders and to
inform them about the bidding process for acquiring 26 % shares of Pakistan Telecommunication Company Limited
(PTCL) with management control as a wholly integrated telecom operator here today. Pakistan Telecommunication
Company Limited (PTCL).

The meeting was participated by the well prepared authorized representatives of eight pre- qualified potential bidders
who have completed due diligence of the transaction in the data room. Mr. M. Tahsin Khan Iqbal, Secretary
Privatisation Commission, PTCL management and the Financial Advisor responded to the inquiries made by the
participants in a detailed Question & Answer session.

Later, replying to a group of media men, Mr. M. Tahsin Khan Iqbal Secretary Privatisation Commission said that the
employees enjoyed the right to protest, however, it would not affect the process.

PTCL is the leading provider of basic telephone services to the private sector in Pakistan with over 4.4 million
telephone lines in service. Besides providing fixed line and ancillary services, PTCL owns Pakistan
Telecommunication Mobile Limited, one of five GSM cellular providers in Pakistan and Paknet a countrywide Internet
service provider. Its strong financial position demonstrated during FY 2004 excluding subsidiaries as per
unconsolidated financials of PTCL indicates: Revenue PKR 74,124 million, Operating profit: PKR: 41938 million, Net
Profit after Tax: PKR:29,169 million, Total Assets: PKR: 141,595 million, Total Equity: PKR: 83,600 million, with a
network of installed 5.27 million lines and 4.43 million access lines in service.

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$#%&,(-&(**)

Pakistan and China enjoy excellent friendly relations, which need to further develop in the economic areas. Dr. Abdul
Hafeez Shaikh Federal Minister for Privatisation & Investment stated during a meeting with the visiting delegation of
China Mobile Communication Corporation (CMCC) led by VP Mr. Li Yue here today.

The Minister while appreciating serious interest from Chinese entrepreneurs in the privatisation of Pakistan
Telecommunication Company Limited (PTCL) hoped that other Chinese business groups would also come forward
towards new ventures and to take active part in Pakistan's Privatisation Program.

We have already privatised major portion of our banking and manufacturing sector while their existed tremendous
scope in the finance, infrastructure, power and telecom sectors, he said.

Dr. Hafeez Shaikh further stated that the interest shown by Norway, UAE, Egypt, China and other countries in the
mobile and Telecom sectors was encouraging to support our endeavor to privatise PTCL, which received remarkable
number of 18 EOIs and among those eight prospective and potential bidders have already been pre-qualified, which
were from various regions of the world. The eight pre-qualified parties for PTCL include 1. Sing Tel, Singapore, 2.
Emirates Telecommunication Corporation (ETISALAT), 3. Telecom Malaysia, 4. Mobile Telecommunication
Company, Kuwait, 5. Saudi Oger Limited, Saudi Arabia, 6. Turkcell, 7. China Mobile Communication Corporation, 8.
Saudi Telecom Company. In addition, one party namely Consortium of Almal & Detecon is pre-qualified conditionally.

The leader of the delegation Mr. Li Yue lauded the fast pace of privatisation progress made by Pakistan under the
leadership of Dr. Abdul Hafeez Shaikh and assured that Chinese entrepreneurs were fully confident of the quality and
would continue their strong support to the privatisation program of Pakistan. PTCL privatisation would further develop
the business and economic activity in Pakistan, being a valuable chance for serious
participants, he observed. He also made a detailed presentation regarding the CMCC operations and services. Mr. M.
Tahsin Khan Iqbal Secretary PC and Mr. Tallat Mian, EDG BOI were also present during the meeting.
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The Privatisation Commission has
The Privatisation Commission will now

received an enthusiastic response from
interested strategic investors for the
privatisation of Pakistan Telecom
Company Limited (PTCL). Eleven firms
around the world have submitted
Expressions of Interest (EOIs), which
indicates investor confidence in the
government's economic policies.
be requesting those who submitted an
EOI to submit a detailed statement of
qualifications, which will be used to pre-
qualify parties. The pre-qualification
exercise to be carried out in consultation
with the Financial Advisor is aimed at
ensuring that the strategic investor has
the financial, managerial and technical
capability to manage the company in a
The current effort to privatise PTCL proficient manner. Pre-qualified parties
began in 1998 with the appointment of a will be allowed a period to conduct their
consortium led by Goldman Sachs own due diligence of the company,
International as the Financial Advisor. JP which will be followed by a competitive
Morgan has recently supplemented and open bidding process.
Goldman Sachs' efforts.
PTCL is the exclusive provider of basic
Advertisements soliciting EOIs from telephony in Pakistan with over 3.2
potential strategic investors for the million telephone lines in service.
privatisation of PTCL were placed in the Besides providing fixed line, value added
national and international press in April and other ancillary services, PTCL owns
and May this year. The last date for subsidiaries that provide cellular and
submissions of EOIs was June 30, 2001. Internet services. Since its
transformation from a public sector
Eleven firms or consortiums from eight corporation into a publicly listed
countries have submitted EOI's. In some corporate entity in 1996, PTCL has
instances, the lead investor in a implemented an aggressive restructuring
consortium has indicated the name of program, the primary aim of which is to
well-known telecom operator who would improve profitability through increased
join the consortium. The names of the customer focus and efficiency and to
firms or lead investors in the consortium, prepare the company for the highly
along with their country of incorporation, competitive environment envisaged once
are given below: PTCL's exclusivity on fixed telephony
expires in December 2002.
1 Align Technologies - USA
2 Commercial Network Limited -
Pakistan
3 Crescent Investment Management
LLC - USA
4 Fintur Holding BV Ltd. Turkey
5 Khanjee Holding Incorporated - USA
6 Nahayan Mabarak Al-Nahayan Abu
Dhabi Group - UAE
7 Orascom Telecom - Egypt.
8 Pakbell - Pacetel (Pvt.) Limited -
Pakistan
9 Queste Communications - Australia
10 Saudi Oger Limited - Saudi Arabia
11 Yousif S. F. Al Sabah - Kuwait

p
 
  

 
 
 
 

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Apr 02 - 08, 2001

The Minister for Privatization, Altaf Saleem, while addressing a "Media Seminar on privatization" in
Islamabad, disclosed that International telecom giants are in the run to buy Pakistan's state-owned
telecom company, which is being offered for sale with the management control to the private sector on
March 29th. The commission will invite Expressions of Interest (EOI) for the utility called Pakistan
Telecommunications or PTCL, for the sale of its shares and management control to a strategic investor.

The firms, which have expressed their seriousness to buy the PTCL, include the Quest of Australia,
Beirut-based O. J. Group of Saudi Arabia (owned by Lebanese Prime Minister Rafiq Hariri) and Oricsson
of Egypt. One company each from Malaysia and United Arab Emirates (whose names could not be
confirmed) have also shown their interest in the deal.

"There will be more companies coming in once we invite the EOI," Altaf told reporters. The Privatization
Commission and Mediators arranged the one-day seminar, which was also addressed by young Finance
Minister of Sindh Abdul Hafeez Sheikh and Adviser Privatization Commission Mateen Thobani.

Goldman Sachs, the Financial Adviser to the Privatization Commission on PTCL since 1998, has readied
the transaction to offer to the international market. "By June the transaction will be taken to the market,"
Altaf said.

The Goldman Sachs is likely to be supplemented by another household name in world's financial
markets, JP Morgan, to help fetch the best price for Pakistan's prized entity. The Minister claimed that the
PTCL privatization would improve the service, generate more revenue and jobs and reduce tariff. He,
however, did not agree with the view that the regulatory bodies, including the Pakistan
Telecommunication Authority (PTA) had failed to protect consumers rights.

Saleem agreed with a questioner that the PTCL would not be sold at a prices at which it could have been
sold few years ago. The depressed telecom market at international level and the fact that PTCL had left
only two years monopoly period before the opening of local market for all international players under
WTO agreement, were identified as two main reasons for a significant decrease in PTCL price, he said.
They however still believed that the transaction is still quite exciting as a number of international firms
have shown their interest in buying the utility. The situation has certainly improved (in favour of Pakistan)
after the meeting of Pakistan Development Forum.

The Minister told newsmen that the United Bank Limited (UBL) will also be offered for sale on March 28
as the commission will invite Expression of Interest (EOI) on that date. The government plans to off load
26 per cent shares of UBL with transfer of management to a private investor. The Minister disclosed that
there was a proposal to inject Rs. 22 billion as fresh equity on the Bank to turn-it-around before under-
taking its privatization. "We however, shot down the proposal and asked the government to privatize it
immediately", he said adding that Habib Bank Limited will also be offered for sale on similar basis by June
2002. The government has already handed over 49 per cent shares of ABL and MCB.

Other than telecom and banking, the oil and gas and power sectors are also coming up for sale to stop
immense financial bleeding by the state owned enterprises. Pakistan pays 25 billion rupees in gas
subsidy providing relief to only 3 million people at the cost of whole nation, Altaf said. Annual losses to the
exchequer by public sector entities amounts to 80 billion to 90 billion rupees per annum. "Privatization will
benefit the bulk of consumers, investors and taxpayers," Altaf said.

Pakistan has earned well over 30 billion rupees from the 12 per cent sale of PTCL shares to date, which
comes to 65 per cent of the total US$ 1.7 billion proceeds gained by downloading the state entities during
the last 10 years.

Pakistan estimates to generate US$ 3 billion revenue from the sale of 51 per cent shares of state
enterprises in next 18 months. Major transactions include telecommunications, oil and gas, banking,
power and industry.

Creeking under the huge burden of US$ 37 billion foreign loans, Pakistan has put in place a law binding
the governments to allocate 90 per cent of the privatization proceeds for debt retirement. The social
development sector will get the remaining 10 per cent proceeds.

Since 1990s the Privatization has been the integral part of successive governments. The present
government has also given the Privatization Commission more independence by promoting it to the level
of a Ministry. Other than implementing sectoral reforms it has also attempted to strengthen the regulatory
framework.

Earlier, the Sindh Finance Minister Abdul Hafeez Sheikh, addressing the seminar, said the privatization
process required strong political will to achieve the desired targets. He was of the view that some vested
interest were opposing and hindering the process.

Arguing forcefully in favour of Privatization, Sheikh said the hidden opponents of the process should be
handled properly. "The chief executive of an enterprise should be sacked if he opposes the privatization,
"Sheikh said adding that the privatization process, in most of the countries, had benefited both politically
and economically to the government which took up the task and completed it.

The Sindh Finance Minister said that the bureaucracy should not be running a car factory or a fertilizer
producing plant. "This is not their job, "Sheikh said, "and they can not run it efficiently." He said the huge
amount being wasted on the public sector enterprises could be used for development projects once this
financial bleeding stopped.

Mateen Thobani, the Adviser Privatization Commission gave a presentation on the Privatization process
and procedures. He said the government had introduced certain regulations to ensure transparency of the
deals. Thobani said the government was also creating an enabling environment through sectoral reforms,
deregulation and liberalisation.