KARACHI: The Pakistan Telecommunications Company Limited (PTCL) submitted a “binding offer” on Friday to Warid Telecom for acquisition of 100 per cent shares in Abu Dhabi group owned Warid.
The ‘material information’ was conveyed to the shareholders by the PTCL Board half an hour before the close of trading in the second session on Friday.
Prior to submission of the ‘binding offer’, the PTCL Board had authorised the issuance of offer to the shareholders in Warid Telecom in the meeting of the board on Dec 18.
Following the announcement, the market started to size up the deal.
According to brokerage Shajar Capital, the deal could fall in the range of $500 million to $1 billion.
The telecom sector analyst Abrar Hussain at First Capital Equities pointed out that the PTCL had avoided to mention the acquisition cost.
“However, market gossip suggests it has to be as high as $78 per subscriber,” the analyst said.
As Warid holds 12.8m subscribers in the country’s overall mobile market of 129.6m subscribers, the price of acquisition could work out at $1bn, analyst Abrar calculated offhand.
Warid holds 10pc share in the mobile market, which places it in the fifth place among the five players. However, PTCL takes the third place through its fully-owned subsidiary Pakistan Telecom Mobile Limited (Ufone), which retains 24.8m subscribers. “If the deal goes through, Ufone would be able to add a huge number of subscribers to move closer to the market leader, Mobilink which boasts 37.4m subscribers,” a telecom sector watcher stated.
To recount the facts, initially three strong candidates had expressed interest in buying out the stake in Warid. Those included PTCL (Etisalat); Zong (China Mobile) and Mobilink (Vimplecom).
Later, Zong withdrew from the race after conducting business evaluation of the proposition.
However, some sector watchers believed that Vimplecom (Mobilink) had also submitted the bid, though there was no confirmed report on the issue.
Following the announcement on Friday, the PTCL stock weakened to intra-day low at Rs30.88, but later recovered to close 9 paisa up to Rs31.28 as investors’ thought the acquisition would not drastically dilute the PTCL stock price.
A market participant explained: “Although the deal will make PTCL one of the biggest player in the telecom industry, but due to short term weakness in the company’s share price, it can cause implication on PTCL dividend.”
The outright gainer from the deal was thought to be Bank Alfalah, which though holds a tiny 8.24pc shares in Warid Telecom, it could buffer up the Bank’s earnings and book value due to one time potential capital gains.
