Pakistan official seeks inquiry into Etisalat's market conduct

The Pakistan minister of privatisation says the government needs to investigate the sale of a 26 per cent managing stake in Pakistan Telecommunications

A long-running dispute between Etisalat and Pakistani authorities has escalated this week, with the Pakistan minister of privatisation calling for an inquiry into the company's conduct in the market. Waqar Ahmed Khan said the government needed to investigate the sale of a 26 per cent managing stake in Pakistan Telecommunications.

Etisalat concluded the deal in 2006 with the country's previous government, which was led by the military general Pervez Musharraf. "The deal was full of flaws and legal advisers had asked the then government to scrap it, otherwise it would be considered contrary to rules," Mr Khan said. Tensions over the deal have simmered for the past year, with Etisalat withholding payment of US$800 million (Dh2.93 billion) of the purchase price, saying the government had not lived up to the obligations outlined in the deal.

The dispute centres on hundreds of properties across the country that Etisalat said were included in the purchase. The company has said it would withhold payment until ownership of the properties was transferred. Mr Khan told Pakistan's parliament this week that many of the 3,500 properties included in the deal were not owned by the federal government, and their private owners were disputing the transfer.

Spokesmen for the UAE national telecommunications operator were not available yesterday. Pakistan is the largest single source of customers for Etisalat, the international subsidiaries of which have more than 100 million subscribers. Meanwhile, Etisalat is yet to close a deal to acquire a stake in the mobile operator Korek, the Iraqi company confirmed yesterday. Negotiations on the deal have been in progress for almost two years.

The companies are yet to agree on the size of the stake to be sold or the price, a Korek spokesman told Reuters, responding to a report in the Arabic-language Al Bayan newspaper. The report, citing unnamed sources in the Iraqi government, said Etisalat had struck a deal to acquire a majority stake in Korek, which is the smallest of Iraq's three mobile operators. [e-mail]