Pakistan Oilfields largest stakeholder in Space Telecom

The Pakistan Oilfields Limited said it has largest stake in the Space Telecom, one of the new cell phone services, to get license to operate in the country.
The Space Telecom (Pvt) Limited was declared a successful bidder in the bidding of the GSM cellular mobile phone license on April 14.
The Pakistan Oilfields with a 40 percent will be the largest shareholder in the new GSM cellular phone venture, the company said in a statement to the Karachi Stock Exchange.
On April 14, the Telenor ASA and the Space Telecom agreed to pay $291 million each for new cell-phone licenses in Pakistan, hoping to tap a market in which less than 3 percent of the nation's almost 150 million people use the devices.
The two companies beat seven other bidders in an auction held on Wednesday in Islamabad.
Mohammad Sohail, head of research at Investcapital Securities, said the value of the cellular license has been set at $291 million or Rs 16.7 billion through the bidding process. Of this, 50 percent will have to be paid up-front with the rest being paid over 14 years.
Other than that, infrastructure investment amounting to $400-500 million (Rs 23 billion - 28.8 billion is also expected. The capital structure for the new cellular phone business is yet undisclosed.
The business is expected to add a significant value to the Pakistan Oilfield, said Sohail, adding the older licensees, such as Ufone are operating at 20-25 percent average return on equity, however, the license was free for them.
"We believe that in the current low interest rate scenario, the Pakistan Oilfield is likely to use significantly more debt than internally generated funds, especially given the relatively unleveraged nature of its balance-sheet", he said, adding this will enable it to earn a return higher than its capital cost.
"According to our initial estimates, we expect another 10-20 percent increase in the value of the Pakistan Oilfield share price owing to this investment", he said.
Pakistan is looking to boost the number of mobile phone-users to 10 percent of the population by 2008, and wants to attract industry investment of $1.5 billion over the next five years, said analysts, adding the possibility for rapid growth makes it one of the more attractive emerging markets in Asia.
The Pakistan Oilfields profit fell 6 percent to Rs 1.25 billion ($22 million) in six months to December 31. Oilfields share price during the week fell by Rs 4.55 to Rs 225 its share price made an intra-day high of Rs 233.70.