KARACHI – Emirates Telecom-communications, a state-owned monopoly mobile-phone service provider in the United Arab Emirates, bid $2.55 billion for a stake in government-owned Pakistan Telecommunications, beating offers from Chinese and Singaporean companies.

Abu Dhabi-based Etisalat offered to pay $1.96 for each of the 1.3 billion shares Pakistan is selling in the nation’s largest phone service provider. It outbid Singapore Telecommunications and China Mobile Communications for the 26 percent stake, Abdul Hafeez Shaikh, chief of the Islamabad-based Privatization Commission said today.
The bid compares with the $3.3 billion raised in 14 years of asset sales by the South Asian nation until now. Pakistan is accelerating disposals of stakes in state-owned companies to help repay $36.7 billion of overseas debt.
”This is landmark transaction, and it will improve the profile of Pakistan,’’ said Najam Ali, who manages the equivalent of $290 million as chief executive officer at Abamco in Karachi. ”This will encourage other overseas investors to look for investment opportunities in Pakistan.’’

The stake will give Etisalat a foothold in a market of 150 million where only one in 10 people has a phone, compared with nine out of 10 in Singapore, a city-state of 4 million. Etisalat’s bid, equivalent to 117 rupees a share, is at a 74 percent premium to Pakistan Telecom’s stock price yesterday, when it gained 0.3 percent to 67.3 rupees on the Karachi Stock Exchange. The 26 percent stake has a market value of 87.4 billion rupees ($1.46 billion). ”We will make a lot of progress while expanding the business,’’ Obaid bin Saeed Mes’har, Etisalat’s chief executive officer, told reporters after the bidding. Etisalat has five million customers in the United Arab Emirates, he said. Etisalat ”is looking to become a big telecom operator in the region after investments in Saudi Arabia and Pakistan,’’ said Moazzam Malik, a director at BMA Capital, which is advising Etisalat.

A cabinet committee headed by Prime Minister Shaukat Aziz will officially approve the bid today, Shaikh said. His remarks were broadcast on the Geo and AAJ television channels. China Mobile Communications, China’s biggest mobile phone service provider, bid $1.063 for each Pak Telecom share, Shaikh said. Singapore Telecommunications, Southeast Asia’s biggest phone company, bid 88 cents for each share, he said.

”We congratulate Etisalat for the highest bid,’’ said Peter Heng, a spokesman for Singapore Telecommunications, in an interview in Singapore. ”We wish them and government of Pakistan a successful partnership. ’’Etisalat ”will be looking to expand as there is lack of penetration in Pakistan,’’ said Julian Ball, a vice president of corporate finance at JPMorgan Chase. ”It is the consumer who will benefit from the sale as the new buyer will look to improve and expand.’’

JPMorgan advised the government on the sale. Ball spoke in an interview in Islamabad after the results were announced. The Etisalat bid is above the $2.1 billion median forecast of 13 securities companies and banks surveyed by Bloomberg. Pakistan Telecommunications’ monopoly ended when the government in 2004 licensed more than 70 companies to start fixed-line phone services to create competition. The government sold a 12 percent stake in Pakistan Telecom in 1994, raising $700 million. Labor unions, concerned about possible job losses, had protested against the government’s plan to reduce its stake, going on strike and delaying the auction.

”We are satisfied with the government’s explanation about selling a stake in Pakistan Telecommunication,’’ said Rana Tahir, a member of the union that called off the strike, on phone on June 15. The government had deployed troops and police to protect telecommunications facilities.