Etisalat, the UAE telecommunication giant, will be using the advisory services of Goldman Sachs Group as it prepares to bid for Pakistan mobile operator Warid Telecom. Besides Etisalat, China Mobile is expected to be a potential bidder for Warid. The sale, which is likely to fetch an estimated USD 1 billion, will mark the consolidation phase in Pakistan’s mobile market.
Warid, the country’s smallest operator, has been struggling in recent years to retain its market share and profitability in the highly competitive telecom landscape of Pakistan. Five operators serve Pakistan’s mobile telecommunications sector, which is characterized by high levels of market penetration and cut-throat competition. The competition has forced operators to slash margins and devise attractive marketing campaigns to lure more customers.
Warid Telecom, the smallest player in Pakistan’s mobile market, is currently owned by conglomerate The Abu Dhabi Group, led by the Abu Dhabi royal Sheikh Nahayan bin Mubarak al-Nahayan. The company, which launched its operations in Pakistan in May 2005, has been struggling to cope with competition. Since 2010-11, its customer base has shrunk from 17.39 million to 12.54 million customers.
Over the last decade, Abu Dhabi Group has made significant investments in Pakistan to benefit from liberal policies in the banking and telecom sectors of the country. However, the group is now consolidating its operations in Pakistan to focus only on lucrative industries in the country. Earlier this year, the group scrapped investment plans of around USD 45 billion over 15 years on a real estate project in Pakistan. The plan had envisaged developing grand residential properties on an island, while also constructing the world’s tallest tower came under discussion.
Etisalat already operates in Pakistan through its stake in Pakistan Telecommunication Co (PTCL). According to Daniel Ritz, Etisalat’s chief strategy officer, the company was interested in strengthening its position in the country by pursuing strategic opportunities. Etisalat has also recently entered into an exclusive agreement with Vivendi for acquisition of its 53 percent stake in Morocco’s Maroc Telecom.