China Mobile buys Millicom’s Paktel

22 Jan 2007

Millicom International cellular has confirmed that it has signed an agreement for the sale of its 88.86% stake in Pakistani wireless operator Paktel to China Mobile Communications Corp for USD284 million in cash. Completion of the deal is contingent on receiving the necessary approvals, but it expected to be closed by the end of February 2007.

According to TeleGeography’s GlobalComms database Paktel received a mobile operating concession in 1991 and launched Pakistan’s first commercial cellular services later that year over an AMPS network. The company was founded by UK-based Cable & Wireless, but sold to Millicom International Cellular (MIC) — majority owner of rival Pakcom — in November 2000. MIC oversaw the upgrade of the AMPS network to TDMA, which it launched under the brand name Tango.

Paktel was awarded a GSM-900 licence in February 2003, supplemented by GSM-1800 spectrum in October 2003, and revealed plans to invest USD150 million in the rollout of digital services, financed by the National Bank of Pakistan, United Bank, Standard Chartered Bank and Askari Commercial Bank. However, when the PTA subsequently awarded two new GSM licences in April 2004, Paktel’s GSM-1800 spectrum allocation became a bone of contention between operator and regulator. Having sold the new licences for USD291 million each, the PTA said it wanted to introduce licence fees for existing spectrum allocations, leading Paktel to file a lawsuit against the regulator in August 2004. Paktel argued that the spectrum fees could not be applied retroactively but its appeal was thrown out by the High Court in Lahore just days later. It opted not to utilise the GSM-1800 spectrum and the relationship between Paktel and the PTA has been strained ever since. MIC agreed to offload a 10% stake in Paktel to Arfeen Group in June 2006 as part of a deal which saw it sell its entire stake in Pakcom to the same buyer. In November 2006 MIC said it was considering selling its remaining equity in Paktel or closing the cellco down altogether. In December 2006 it emerged that Kuwait’s Mobile Telecommunications Company (MTC) was interested in buying Paktel, but China Mobile appears to have had deeper pockets.

Pakistan, China Mobile, China Mobile Communications Group (previously CMCC), DONT USE China Mobile Communication Company (CMC), Millicom International Cellular (MIC), Zong (CMPak)