Emirati telecom giant ‘mulling exit’

ISLAMABAD: A leading business group from the Middle East is said to be in the process of reviewing its exposure to Pakistan’s telecom sector, as part of a broader portfolio optimisation exercise that could potentially lead to its exit from the Pakistan Telecom­muni­cation Company Ltd (PTCL).

Background discussions with sources in the diplomatic and financial sectors suggest that Etisalat’s plans are still at the preliminary assessment stage, with no final decision taken as yet.

Insiders say the UAE-based telecom giant had indicated that the review is driven by a combination of global macroeconomic uncertainty, regional geopolitical tensions, and evolving capital allocation strategies among sovereign-linked investors.

“This is part of a wider internal review being undertaken by Gulf investors across multiple jurisdictions. It is not specific to Pakistan, nor is it indicative of any immediate divestment decision,” an official privy to the development said.

For Pakistan, PTCL remains a strategically important entity, despite its mixed-ownership — the government and its entities still hold around 62pc stake in it, although 26pc shares and management control is in the hands of the Gulf telecom giant — which recently rebranded to ‘e&’ (Etisalat and) and is in the process of corporate restructuring.

The remaining 12pc shares are held by private investors, through the Pakistan Stock Exchange (PSX).

Interestingly, PTCL has been facing continuous losses over the past couple of years, turning a profit only recently following its acquisition of Telenor Pakistan — one of the major players in the country’s telecom sector in yesteryears.

Just recently, Islamabad repaid about $3.5bn to UAE which had been rolling over these deposits for years to shore up Pakistan’s foreign exchange reserve target under multiple IMF programmes.

Concurrently, Saudi Arabia has increased its role in maintaining Pakistan’s reserves by enhancing the volume of its safe deposits in Pakistan by $3bn to $8bn, to fill the financing gap under IMF requirements. Meanwhile, the IMF’s executive board is set to meet on May 8 to clear disbursement of another $1.21bn tranche for Pakistan.

Shift to ‘strategic autonomy’?

Sources referred to the UAE’s recent measured rebalancing toward US dollar reserves and domestic market commitments amid global volatility, saying that this reflects standard focus on hard-currency buffers, balance-of-payment stability, and capital efficiency.

“Any review of foreign assets is, therefore, driven by risk-adjusted returns and opportunity cost, not country-specific factors,” a top government official insisted.

This assessment is contextualised, and lent credence, by the UAE’s recent decision to exit the oil producing bloc, Opec and Opec+. Abu Dhabi has said that it is broadly reassessing its role and contributions across multilateral organisations.

“Strategic autonomy remains the UAE’s enduring choice,” senior Emirati official Anwar Gargash told a conference in the UAE earlier this week.

Etisalat had successfully acquired PTCL — previously state-controlled — with a $2.6bn bid in 2005 for acquisition of 26pc stakes with management control, but stopped payments after clearing $1.8bn.

Since then it has held back $800m on the basis of the inability of the government of Pakistan to transfer all PTCL properties to the privatised entity.

The two sides have also held discussions in the past on the deduction of value of more than 100 non-transferable properties, and payment of other dues, but could not reach an amicable solution.

Diplomatic channels reiterated that Pakistan-UAE economic cooperation remained intact, and that the current review aligned with global investment management practices.