KARACHI (updated on: October 29, 2005, 22:17 PST): Pakistan has cancelled a deal with the UAE's Etisalat to buy a 26 percent stake in Pakistan Telecommunication Corporation (PTCL), a government official said on Saturday.

Emirates Telecommunications Corporation (Etisalat) agreed to buy the stake in PTCL in June for $2.59 billion in Pakistan's biggest privatisation, when the government sold 1.33 billion shares, or 26 percent of the total 5.1 billion shares.

"We have served the notice to Etisalat for cancellation of the deal because they have not paid the amount within the required time," the official said without giving further details.

An Etisalat spokesman in Dubai declined to comment.

"I have no comments at this time. We will issue a statement within two days," Ahmed bin Ali, Etisalat's manager of corporate communications, told Reuters.

The much-awaited handover of the stake was expected in September, but Pakistan said at the time both parties had agreed to extend the completion date to Oct. 28.

Analysts said Etisalat raised several issues soon after its successful bid including a deferred payment structure, permission to list PTCL shares in the UAE market as well as in Karachi, and various tax exemptions.

Etisalat may be pressing for the concessions because it paid a price that exceeded market expectations and was far higher than other bids, they said.

The cancellation of the Etisalat deal is the second setback to Pakistan's privatisation agenda this year.

Saudi group Kanooz al Watan had agreed to acquire a 73 percent stake in the Karachi Electric Supply Corporation but failed to deposit the required money. On Friday, PTCL's shares closed 0.60 rupees down at 60.20 rupees.

First KESC and Now PTCL. What these Arabs wants to do with us??

Yaar its cool....we get to confiscate their earnest money!!

These Arabs have the mentality to get everything cheap as they got at home. One exception they do not mind to pay ten times for "white whore" in their pleasure trips in west.

And the full news is that the 2nd lowest bider chinese company also refused to take over PTCL.

So Pakistan gets to keep intial amount so it is cool.


I think that Pakistan should not sell these compnaies any thing because they don't have enough money. Anyway PTCL is making a lot of profit it is KESC which is the troubled company.

ye that i was about to say

typical arab mentality to run away from the slightest hint of a challenge. the rumors had been swirling for quite some time. there had been complicated issues that the company had not done proper homework into, and probably panicked. not good news for the privatization commission. they already had one headache with KESC (which apparently might be near settlement with a local karachi firm). hope this issue is resolved. i would like to see PTCL sold to a chinese company. much more reliable in my opinion. they'll probably market to the second highest bidder now.

sh*t......aik umeed ki kiran thi woh bhi khatam ho gayi... no hope for a corruption-free , junaid khan-free, telephone line distortion-free and rishwat-khori-free PTCL ... :( my Dreams of AFFORDABLE, REAL Broadband are now over........ :(

this is not good news. It takes us back months with the privatisation process and is not a good advert for our programme either. PTLC is a very profitable corporation, i wonder why the Arabs are so reluctant to take it over especially after investing millions into the deal already?

Yaar PTCL is a friggin cash cow. Only negative aspect is the stupid arse, badly behaved, half literate staff which it employs. The same a holes who went on strike AGAINST the privatisation.....since they knew that their lazy asses will get shipped out in a private governance structure and their days of sitting at office and drinking chai all day will be over.

The new owners, whoever they are, should enforce a shape up or ship out policy on these ingrates.

They probably think the deal is overpriced

so whats going to happen now since it looks like the second highest bidder has also pulled out?

i'm sure the PC will figure something out. dr. abdul hafeez sheikh has flown to dubai to meet etisilat officials. i'm expecting a whole new bidding process. we'll probably see new companies. so dont worry mr. ehtisham, you're dreams for broadband are not over.