KARACHI, May 19: Pakistan Telecommunication Company Limited (PTCL) declared an interim cash dividend at Rs3 (30 per cent) per share for the year ending June 30, 2006, the biggest beneficiary of which would be the government itself.

The board of directors of PTCL on Friday went out of the way to hold an early meeting and announce an interim dividend. Etisalat — which now holds the majority seats on the board by virtue of its 26 per cent holding and management control, would distribute Rs15.3 billion in interim cash dividend, with the biggest slice of Rs11.46 billion going into the government’s kitty, since the state still owns 62 per cent equity stake in the telecom.

The post-privatisation shareholding by Etisalat is 26 per cent, but it could be assumed that since the new owners have made part payment of the bid price, they would be entitled to just half the share of their claim on the dividend. The public owns 12 per cent shares that constitute free float in the total 5.1 billion outstanding shares in the company. At Rs3 per share, they would receive an aggregate sum of just about Rs1.8 billion.

There was considerable anguish among the general investing public when the telecom omitted a dividend at the meeting of its board on April 26 that was held to approve the nine months accounts to March 31, 2006. PTCL had skipped a final dividend for the previous year as well. But that omission was understood to be fair as the privatisation of the telecom was at the time in the doldrums. However, the company had to take a lot of flak for its tight fisted-ness as no dividend was again announced with the 3Q06 results, which was 20 months since the previous payout.

Many other corporate announcements during the nine months reporting season also fell short of market expectations but none had the weight to drag the entire stock market down as PTCL or to dampen investor sentiments as the privatised telecom giant, due to its heavy weightage in the stock index.

So what made the telecom change its mind and go out of the way to make a payout? Many market pundits thought that the small shareholders in PTCL with only 12 per cent stake could have hardly had the power to push the board into declaring a dividend. They believe that it must be the government that could have exercised its influence or even pleaded with the new owners to declare an interim pay out. The reason being that the amount of Rs11.46 billion that the government would receive, should help in bridging some of the wide fiscal deficit that is staring the state in the face.