By Alex Ritman
Obaid Bin Mes’har, head of Etisalat's international arm, has resigned with rumours suggesting a link to the ongoing PTCL saga.
CommsMEA has learnt that the CEO of Etisalat International, Obaid Saied Bin Mes’har, has resigned from his position. No information was given regarding his reason for stepping down, his future plans or his replacement, but according to a spokesperson for Etisalat he resigned, “last week or the week before”.
Bin Mes’har was appointed to the role when Etisalat International was formed in March 2005, moving up from general manager, Dubai region. Since the establishment of Etisalat’s expansionary arm, the operator has undergone an enormous international growth programme under Bin Mes’har.
After acquiring a 50% stake in West African mobile operator Atlantique Telecom for US$130 million in April, Etisalat was then awarded a nationwide operating licence in Tanzania. In June the operator won the auction for a 26% stake in Pakistan Telecommunications Company Limited (PTCL) with a US$2.6 billion bid. It failed in the race for a 55% stake in Turk Telecom in July, ending its bidding at US$6.5 billion and making way for Saudi Oger to step in, having offered US$6.55 billion.
While Etisalat is yet to release any official statement regarding the resignation of Bin Mes’har, there is a suggestion that Bin Mes’har’s departure may in fact be linked to Etisalat’s failure to ratify the US$2.6 billion acquisition of the 26% stake in PTCL. Having won the bid in June, Etisalat agreed to make a 25% down payment, with the remaining 75% to be paid by August 28. This deadline was subsequently moved to October 28, but was passed without payment. Emergency meetings in both Pakistan and Dubai involving the Pakistani prime minister and senior Etisalat officials have been held without a resolution having yet been reached.
Reports in Dubai earlier this month stated that Etisalat was seeking more time as it was facing “financial problems in submitting the payment,” though this speculation has since moved on to suggest Etisalat is looking to reconsider the deal having realised the premium it paid.
“Etisalat overpaid, and the Pakistani government know they overpaid,” says Taha Rangwala, a senior analyst at Pyramid Research. “The Pakistani government is trying to salvage this deal as badly as possible, because they need the financial resources, and it’s a great deal they’re getting.”
For the quarter to end-September, profits at PTCL fell 12% leading to a reduction in the stock price.
“So if there was another auction today, they wouldn’t be able to get such a high bid, as the stock price has fallen by around 10%,” says Rangwala.
Pyramid’s Rangwala suggests Etisalat is looking to reduce the financial burden of its investment, and is looking for concessions.
“They’re saying that they want to raise some of the dollars that they (pledged), but from Pakistani banks.” This would mitigate some risk, and is a way of prolonging the time-span for payment of the outstanding amount.
“Another condition is that Etisalat wants to be able to sell some of its stake to a domestic or foreign entity,” he says, adding that this is something Etisalat should have thought of earlier.
“There are a long list of concessions Etisalat is looking for,” claims Rangwala. He predicts that if the Pakistani government meets 90% of the concessions, then Etisalat will go along with the deal.
“Otherwise, and I think this is the likely scenario, Etisalat will forfeit their deposit and there will be another round of bidding.”