Pakistan says will review UAE telecom giant’s deal next month

This undated file photo shows Etisalat business center in Dubai. (Etisalat/Handout via Reuters)
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Updated 29 May 2020

Pakistan says will review UAE telecom giant’s deal next month

  • Etisalat owes money as part of investment in PTCL but has withheld payment due to a property dispute
  • In 2018, Pakistan hinted it would take the issue to the international court of arbitration to recover the dues from 

KARACHI: As Pakistan’s long dispute with Abu Dhabi-listed telecom giant Etisalat over a pending $800 million bill remains unresolved, its privatization agreement concerning Pakistan Telecommunication Company Limited (PTCL) will be reviewed next month, a minister told Arab News.
“The review will be done next month. We will sit and find a resolution in any case and first priority will be given to the government of Pakistan ... Pakistan’s interests will be taken care of,” Federal Minister for Information Technology and Telecommunication Syed Amin ul Haque said on Wednesday.
He added that “the government of Pakistan is incurring huge losses” because of the deal.
An Etisalat consortium bought a 26-percent stake in PTCL for $2.6 billion in 2005 that gave Etisalat majority voting rights and management control. The UAE company paid an initial $1.80 billion, which also included transferring ownership of the properties to PTCL from the government. It was due to pay the remaining $800 million in six twice-yearly installments of $133 million.
Etisalat has been withholding the payment on the grounds that Pakistan has failed to mutate some of the 3,400 properties destined for PTCL as per the deal terms. The disputed properties turned out to be nontransferable due to ownership complications.
The Pakistani government informed Etisalat in January 2015 about the transfer of 3,214 properties, expecting that the company would pay the remaining amount after deducting the value of the nontransferable assets.
“Some 15 days back I called Etisalat people in an inter-ministerial meeting which was attended by the ministers of law and privatization,” Haque said, “We had called Etisalat chairman and other people, and it was decided that we will review it (the deal).”
Following attempts at resolution by the prime minister’s special adviser on finance, Dr. Abdul Hafeez Shaikh, Etisalat earlier this year said it would cut around $500 million from the remaining payment.
“They have sent a proposal of framework of settlement. There are many things including valuation and non-binding offer. We are considering and would be responding in few days and after that negotiations would be held,” Privatization Secretary Rizwan Malik told Arab News in January.
In 2018, Pakistan’s privatization ministry even hinted it would take the issue to the international court of arbitration to recover the dues from Etisalat.


$8bn blow to Erdogan as investors flee Turkey

Updated 09 July 2020

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.