ISLAMABAD, June 18: UAE’s company Etisalat on Saturday offered the highest bid of $2.59896 billion to acquire 26 per cent shares and management control of the Pakistan Telecommunication Company Limited (PTCL). The per share bid price is $1.96.

In rupee terms, the total value of 1.326 billion (26 per cent) shares comes to Rs155.158 billion, highest in the history of Pakistan, at a rate of Rs117.01 per share. Thus, the total value of the company has been placed at Rs596.76 billion.

“The winning bidder is Etisalat,” declared Minister for Privatization and Investment Dr Abdul Hafeez Sheikh, who presided over the bidding and congratulated Etisalat for the success.

He said the highest bid of the country’s largest ever transaction would be presented to the CCOP on Monday for approval. He said it was very encouraging that all the three bidders belonged to friendly countries.

The cabinet committee on privatization, which met just before the bidding and was presided over by Prime Minister Shaukat Aziz, had approved a reserve price of Rs62 per share. PTCL’s shares are being traded at around Rs67-68 per share in the stock market.

The impressive bid price offered by Etisalat is, thus, more than 100 per cent higher than market price and reserve price fixed by the government.

About 2.6 per cent shares of the company would be offered to PTCL workers at a discounted rate of $0.196 per share or 10 per cent of the bid price per share of $1.96.

The successful bidder would be required to deposit 25 per cent of the bid money within 14 days of the issuance of the letter of acceptance by the Privatization Commission after CCOPs formal approval.

The remaining 75 per cent amount would have to be deposited in 60 days period, after which the management would stand transferred to the new operator, Secretary Privatisation Tehsin Iqbal said.

The second highest bidder, China Mobile of China, offered a bid price of $1.06 (Rs63.48) per share or $1.409 billion (Rs84 billion) for 26 per cent shares, which was about 84 per cent lower than the highest bid. It estimated total value of the company at Rs323.74 billion.

The third bidder, Sing Tel of Singapore, offered a bid price of $0.88 (Rs52.54) per share or $1.16688 billion (Rs69.663 billion) for 26 per cent shares. This bid was about 80 per cent lower than the highest bid. Sing Tel valued the whole company at Rs267.9 billion.

As the highest bid was much higher than the second bid, there was no need for a second round of open bidding. The open bidding should have taken place if the difference between the bids remained less than 2.5 per cent, the secretary privatization explained.

The three bidders, who had already deposited $40 million each as earnest money to become eligible, were asked to submit sealed bids one by one and were opened by reporters. The rest of the five bidders pre-qualified by the Privatization Commission did not take part in the bidding.

The bidding was held under an extraordinary tight security and all roads leading to the venue were closed by the police and people were allowed to pass barricades after identification.

Inside the promises, the special branch officials carried out body search and took all mobile phones into custody.

The highest bid price was also better than Rs55 ($1.82) per share the company had received in 1994, when its 12 per cent shares were offloaded through global depository receipts (GDRs), an official said.

In 1994, total proceeds of the 12 per cent GDRs had amounted to about $800 million.

State Bank Governor Dr Ishrat Hussain termed the highest bid as a success and said it would reduce government’s fiscal deficit and enhance foreign exchange reserves.

Board of Investment Chairman Waseem Haqqie said the bid was definitely higher than expectations and hoped the buyer would improve quality of telecom service and reduce tariffs.

The chief executive of Etisalat said they were very happy to win Pakistan’s largest ever transaction. He said his company would improve the PTCL’s worth through value addition and take it to the new heights of progress. “This is the best offer in Pakistan’s history,” he said.

Secretary Privatization Tehsin Iqbal said the new operator would make it more charged and efficient service provider in the country. He said the new owner would take PTCL’s network to every nook and corner of the country and in areas where it had no access in the past, resulting in improvement in quality of service and reduction in tariff.

The 26 per cent (1,326,000,000) B-category shares of the country’s most profitable company were offered to the bidders as an integrated entity, including Ufone Mobile and Paknet Internet provider.

The PTCL is the leading provider of basic and mobile telephone and internet services. Besides having over 4.4 million telephone fixed line subscribers, the company also owns Pakistan Telecommunication Mobile Limited, Ufone GSM, and a countrywide internet service, Paknet.

Its unconsolidated financial results, excluding subsidiaries like Ufone and Paknet, show that in fiscal 2004, it generated Rs74.124 billion and earned an operating profit of Rs41.938 billion.

The net profit after tax in fiscal year 2004 (other than subsidiaries) stood at Rs29.169 billion and its total assets and equity amounted to Rs141.6 billion and Rs83.6 billion, respectively.

The company has a total installed capacity of 5.27 million fixed lines, of which 4.43 million access lines are currently in operation. At present, the government holds 88 per cent shares of the company.