This week Turkcell acknowledged that it had submitted a pre-qualification application to the privatisation process of PTCL, the move being a pre-condition for receiving the related tender documents.

The Pakistani authorities are in the throes of selling off a 26% stake in the national telco and transferring its management control to a strategic partner. Turkcell joins a fairly large group of parties to have at least made expressions of interest (EOI) in the deal. At the end of January the Pakistani Privatisation Commission announced that it had received EOI from 14 organisations. Those that were named at that point were: Etisalat (UAE), SingTel (Singapore), Mobile Telecommunications Co (Kuwait), MTN International (Pty) Ltd (South Africa), Saudi Oger Limited (Saudi Arabia), China Mobile Communication Company (China), Millicom International, Saudi Telecom (Saudi Arabia) and Telecom Malaysia (Malaysia).

With an 88% stake in the company, the Government of Pakistan is PTCL's majority owner. The remaining 12% of shares are listed on the stock exchange. According to Privatisation Committee PTCL sales literature, the telco is currently the only provider of fixed line telephony to the private sector (despite its monopoly ending on 31 December 2002) and it has 100% ownership of the country's backbone telecommunications infrastructure. PTCL operates a network of 5.27mn lines installed, with 4.43mn access lines in service. The company also provides mobile services through its wholly owned subsidiary Pakistan Telephone Mobile Ltd (PTML), currently the country's second largest mobile operator with a 25% market share.

Reporting in February for the first half of the current financial year, PTCL posted revenue up 6.4% to PKR39.16bn (PKR0.01698 = US$1), and profit after tax up 9.3% to PKR14.52bn.

According to figures from the national regulator, the Pakistan Telecommunications Authority (PTA), total Pakistani tele-density had reached a modest 8.47% at the end of 2004 (3.19% fixed, 5.28% mobile). Earlier this year the PTA chairman Major General (R) Shahzada Alam Malik predicted that the number of cell phone users could reach 15mn by the end of 2005, adding that overall tele-density was estimated to increase to 10% during this period.

Low tele-density coupled with a growing economy and a relatively benign regulatory regime make the PTCL sell-off quite an attractive proposition. However, the telco's wireline monopoly is under attack, with 12 long distance international (LDI) and 73 fixed local loop (LL) licences recently awarded. The mobile business is also heating up with Telenor and Warid Telecom now joining the country's existing four operators. Even so, estimates of the value of 26% of PTCL range from US$750mn to over US$1bn.

Evaluation of the EOI and the drawing up of a bidder shortlist is scheduled for 12 March.
John Williamson