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Etisalat eyes takeover of Pakistan’s Nayatel
Says talks have slowed over price; Also expects Chinese, Norwegian firms to show interest; In talks about penetrating overseas markets
January 24, 2011 4:04 by Reuters
Telecoms operator Etisalat is in takeover talks with internet provider Nayatel, one of Pakistan’s fastest-growing companies.
“They want to totally buy us out,” Nayatel chairman Rashid Khan told Reuters in an interview, adding talks had slowed over the potential cost of a deal.
“Ultimately it comes down to price,” said Khan, adding he also expected interest from Chinese and Norwegian companies.
No one from Etisalat was immediately available for comment.
Gulf-based Etisalat, the Arab world’s second-biggest telecoms firm, has faced tough competition at home after its monopoly was broken in 2007 by Dubai-based du and operates in 18 countries.
Nayatel made its name by investing early in a fibre-optic network for direct connections to homes and businesses to allow for heavier data downloads.
The internet, telephone and cable TV service provider has paid-up capital of about $5 million. Annual sales among its 7,000 customers top $12 million, said Khan, with revenue growth of 40-50 percent a year.
Nayatel is hoping to expand its domestic business beyond Islamabad and Rawalpindi to Lahore and Pakistan’s biggest city, Karachi, which has an estimated population of 18 million.
It also has ambitions to penetrate overseas markets by lending its fibre-optic expertise.
“I am talking to someone who wants us to invest in Afghanistan, someone who wants us to work in Saudi Arabia and someone who wants us to work in Turkey,” said Khan in Nayatel’s modest Islamabad office.
Between 2004 and 2009, 34 percent of the $19 billion in foreign direct investment in Pakistan flowed to the telecom sector, according to the Pakistan Telecommunications Authority.
Major investors included the UAE, United States, Norway and China.
Getting foreign companies to invest in Pakistan isn’t easy, with the country’s image hurt by a Taliban campaign of suicide bombings to destabilise the U.S.-backed government.
Khan, however, is more troubled by a government that he perceives has failed on all fronts, and holds out few hopes that it will try to attract investment from overseas or at home.
“They are a disaster in everything, whether it’s law and order, governance, financial management, you name it. They have made a mess of things,” he said.
“This government is fighting for survival every day. They are not interested in helping anyone else out.”
(Editing by Chris Allbritton and David Hulmes)
(For more Reuters coverage of Pakistan, see: http://www.reuters.com/places/pakistan)
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