Despite problems, it seems, foreign investors are still interested in doing business in Pakistan.
Exclusive: China Mobile, Etisalat weighing bids for Pakistan telco - sources | Reuters
Pakistan mobile operator Warid Telecom has been put up for sale by its Abu Dhabi owners and is likely to draw interest from China Mobile and Etisalat, sources familiar with the matter said on Tuesday.
The Abu Dhabi Group, a conglomerate led by a ruling family member in the oil-rich emirate, is seeking to sell all 100-percent of shares in Warid Telecom, two of the sources said, speaking on condition of anonymity.
The third source, however, said the company would also be prepared to sell a smaller controlling stake.
Pakistan’s mobile telecommunications sector has five operators and is ripe for consolidation after a period when a troubled economy, increasingly high levels of market penetration and stiff competition has forced companies’ margins lower.
The sellers have mandated U.S. investment bank Lazard and British lender Standard Chartered as advisers for the process, the sources said. One estimated a sale could fetch about $1 billion.
Walid Irshaid, the chief executive of Pakistan Telecommunications (PTCL), a unit of United Arab Emirates-based Etisalat, said the company is weighing a potential bid.
“We are interested to see if it makes sense for us, but it’s not only us. Warid is an existing operator that has been here for many years and so we’re saying ‘let’s look at the prospects,’” he told Reuters.
“There are too many players in Pakistan. Margins have eroded for everybody and the market must consolidate - we’re all operating under low margins and low ARPU (average revenue per user) and that isn’t long-term sustainable.”
Warid Telecom declined to comment. China Mobile, which has increased its subscriber base by nearly three-quarters since 2010-11 and operates under the Zong brand, was not immediately for comment.
SHRINKAGE
Warid launched its cellular services in Pakistan in May 2005 and had 12.54 million subscribers at the end of March of this year, down from 17.39 million in 2010-11, making the company the country’s smallest operator.
Pakistan’s total subscriber base rose 12.2 percent to 122.1 million over the same period, meaning Warid’s market share fell to 10.3 percent from 16 percent.
The other operators in Pakistan are Oslo-based Telenor and Orascom Telecom, which operates under the name Mobilink and is the sector leader. Neither was immediately available for comment.
PTCL’s mobile business is under the Ufone brand, while it has a 95 percent share of the country’s fixed line subscribers.
“The board (Warid Telecom) has been looking for a business partner to add value to Warid,” a second source familiar with the matter said, adding China Mobile and Etisalat had both expressed interest in acquiring the company.
In 2007, Singapore Telcommunications bought a 30-percent stake in Warid for about $758 million. That stake purchase gave Warid Telecom an enterprise value of about $2.5 billion.
SingTel sold back that stake in January for $150 million and a right to receive 7.5 percent of the net proceeds from any future sale, public offering or merger of Warid.
The Abu Dhabi conglomerate also agreed to sell Warid Telecom’s Uganda business to Bharti Airtel in April without revealing the financial details of the transaction.
Bharti recently agreed to buy the remaining 30 percent in Warid Telecom Bangladesh after taking a 70 pct stake in that business in 2010.
The Abu Dhabi Group, led by ruling family member Sheikh Nahayan Mabarak al-Nahayan, invests in emerging markets and also has large investments in Pakistan including Bank Alfalah Ltd, Al Razi Healthcare and Wateen Telecom.