Telecoms, internet in Pakistan

This is quite interesting because Paktel is the first International company bought by China Mobile, the world’s biggest wireless carrier by market capitalisation.

other links:
Xinhua
Financial Express, India
Light Reading
Reuters

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China Mobile takes control of Paktel

The News, KARACHI: China Mobile is set to enter into Pakistan’s cellular industry, as the Asian telecom giant has reached a $284 million deal with the Luxembourg-based Millicom International to acquire its operations in Pakistan Paktel, one of the six cellular operators in the country.

Sources in telecom said the Millicom International, which operated both AMPS and GSM cellular services through Paktel in Pakistan had formally announced the deal to finally wrap up its more than 15-year operations in the country.

“Millicom International has signed an agreement for the sale of 88.86 per cent shareholding, in Paktel Ltd to China Mobile Communications Corporation,” said a Millicom International statement.

“The transaction implies an enterprise valuation for Paktel Ltd of $460 million. The total cash consideration payable to Millicom as a result of the transaction (including the repayment of inter-company debt) is approximately $284 million.”

It said the completion of the transaction is subject to certain regulatory approvals and procedures and if such requirements were met, conclusion of the deal was expected to occur in late February 2007.

“Now the two parties would formally approach the telecom authorities in Pakistan to get a nod over the deal,” said a source close to the Millicom’s operations in Pakistan. The Millicom authorities in November 2005 announced that they were discussing the sale of one of its Pakistani units.

The same month Millicom, reported earnings before tax, depreciation and amortisation of $110.8 million, below the $117.6 million of the same period of 2004 and its shares were 3.09 per cent higher at 150 crowns after the figures.

In January 2006, Millicom International said following high number of unsolicited approaches its board of directors decided to conduct a review of strategic options for the company and appointed Morgan Stanley as financial adviser.

“With the sale of Paktel, Millicom telecom operation in Pakistan started in 1990 has become a history as it has already sold out its shares in Instaphone to local partners,” said the source. He said China Mobile was very much interested in Pakistani cellular market and also attempted to get a GSM licence in an open auction in 2003,” he added.

With more than 250 million wireless customer accounts as of last month, China Mobile is by far the world’s biggest wireless carrier and controls about two-thirds of the mobile market in China. “The move may trigger new kind of competition in the merging telecom markets including, Pakistan,” said the source.

“China Mobile has built one of the most extensive national cellular networks in the world, covering all of mainland China and the company’s strategy clearly shows that its target market is Asia and other emerging telecom markets.”

He said though Millicom’s Pakistan operations was not in a very attractive position, still the country offered one of the best business opportunities to telecom operators, as its most of the rural areas were without basic telecom facilities.

“By December 2006, Paktel enjoyed 1.3 million, which ranked the company at fifth in terms of market share among six cellular operators with total 48.50 million cell phone users across the country,” added the source. He said for China Mobile, Pakistan was among emerging markets, which represented a particularly attractive destination for telecom companies as western markets become saturated.

“In many developing nations, including the fixed-line infrastructure is poor and limited in its range, so cellular networks, which are cheaper to roll out than traditional lines, are used as the primary means of communication,” added the source.