Citing the growing cost of doing business as the key reason behind the sale, the source said that the company had started suffering losses due to the swift appreciation of the US dollar…reports Asian Lite News
Ownership of Pakistan’s second-largest cellular service provider may soon change hands as Telenor Pakistan looks to exit the country amid growing cost of doing business and shrinking prospects, according to a media report.
As per those privy to the development, Telenor Pakistan is said to be in talks with an Emirates-based multinational telecom firm to sell its operations, Dawn reported.
Although a spokesperson for Telenor Pakistan declined to comment on the development, insiders told Dawn that talks between the Emirati firm, which already has a strong presence in Pakistan, and Telenor have reached an “advanced stage”.
“The Emirati company already has a sizable presence in Pakistan, in nearly all key areas of the telecom sector and it is interested in further consolidating its position,” the source said.
Citing the growing cost of doing business as the key reason behind the sale, the source said that the company had started suffering losses due to the swift appreciation of the US dollar, Dawn reported.
The company’s operational costs have touched $55 million, the source said, pointing out that the largest chunk of this was consumed by electricity prices documents show that in the outgoing financial year, the company paid around $17 million in power bills alone to keep its infrastructure running.
In view of this, experts say it is understandable that Telenor Pakistan would look to cut its losses and from the company’s perspective prefer to expand into a region where business prospects or rates of return are better than in Pakistan.
The company had reportedly set an asking price between $1 billion and $1.2bn, but the interested party is looking to spend $780-910 million on the acquisition.
Financial emergency
The consistent depreciation of the Pakistani rupee is deepening the economic crisis in the country, said the Pakistan Business Forum (PBF).
In a statement, PBF CEO Ahmad Jawad said: “Pakistan’s economy continues to slump despite resumption of the much-awaited International Monetary Fund’s (IMF) Programme. Finance Minister Ishaq Dar must announce a clear policy on the rupee to ease the pain of traders and to save the industries.
“We still have foreign debt of $130 billion and $73 billion due in three years. Our deficit for next three years is a minimum of $20 to $30 billion. Additionally, super inflation is killing the poor. This is a financial emergency.”
He further said that “high inflation, unemployment and low profitability continue to plague the business community and despite that the government has withdrawn its electricity concession given to exporters and is projected to increase the levy on petrol and diesel to Rs50 per litre by January 2023”, reports The Express Tribune.
“Adding to their miseries, the government is also considering imposing GST — all negative indicators for the country’s economy,” he added.
“Even bond and currency markets, which had shown more confidence in Pakistan after the IMF deal, are pricing in high once again over concerns of the country defaulting on its foreign debt,” said Jawad.
“Since the end of August, the yields on some of the government’s international bonds have jumped by a third, while the currency is one of the worst performing in Asia.
“Is it not shameful for Pakistan that we rejoice in repaying the $1 billion Sukuk, but don’t take any steps to save the dollars we are wasting. Using daylight will save $3.5 billion,” claimed the PBF CEO.