Telecom Dreams Sold Dirt Cheap

In response to Mr Shakir reply no 19:

You wrote:

``this deal was quite lucrative so why was it that only one company bid for a huge and lucrative infrastructure JV??``

Good point. Please answer your own question becuase your article fails to do so. It is these holes in your argument -ie these answered questions that I have a problem with. It is your illogical deductive thinking that leads you to make assumptions that need further evidence and research. Additionally there are many other questions I have that I would like you to explore

1)Did only one company bid? Who else wanted to?

2) what were the the pre-reqs and qualifications for the bid?

3) who are other companies in the Pakistani network infrastructure market that you feel could potentially do such a joint venture?

My own view point is that PTCL and most of Pakistan has a problem with landing investment - foreign or local . Huge firms espcially big infrastructure firms are not neccessarily investing in Pakistan with just firms like Nortel (and a few others) selling network components to Pakistan. I don`t see them investing in Pakistan anytime soon and I really don`t know if Pakistanis ISPs and infrastructure telcos have the monetary capital to invest in such a JV. Maybe ACL were the only people to invest in such a project because Pakistan is such a crazy place for investment (the only fools PTCL could get 4.8Million from) or maybe it was an under handed deal like your article has implied. But the fact of the matter is you need more proof and better information to say that it was a dirty deal. For all intense purposes the deal could be totally viable -not stupid neither corrupt.

Secondly leading from this point I never categorically denied your argument but merely stated that you cannot make your accusations with out obtaining more proof. To help you out and being in London I have located Akthar technologies phone number. Please give this CEO Mr. Mughal a call and say that Herald would like to interview him. (Hopefully Herald would pay for the costs). I think a lot of people would be interested to hear thic chap`s point of view and answer the questions that you yourself have not been able to get to the bottom of. Maybe then we can really see things in perspective and maybe then you yourself can finish your investigative article and gain credibility.

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Thirdly you wrote:

``Why should PTCL share revenues when it doesn`t need to. A JV is undertaken for two reasons: 1) a lack of expertise, and 2) a lack of capital.``

A JV could be taken for a number of reasons but primarily to make money. Hence to reduce the risk of a new investment (ie tele-housing) a joint partner might not neccessarily have the required expertise (though I presume hardware components and networking will be required -something ACL can provide) but a Joint partner can provide capital only .

Fourthly the other question I had relates to what you wrote in the article:

``The amount is a paltry US$ 4.48 million invested over a period of three years and not the US$ 30 million as stated by press release on PTCL’s website. Under the terms of this Agreement PTCL will have a 51% stake in this venture, while ACL will hold a 49% stake``

Back to tahmed`s point - How the hell can ACL expect 51% in the venture if if has only put in 4.48m out of a 30M investment even over a 3 year period? Either my friend you have your numbers wrong or the PTCL can`t even add up numbers. Plus money that is made (ie profit) should be shared according to % investment. This is basic business. Also you mentioned that ACL would invest over a period of time and would be use their profit stream generated from the JV back into the JV. Nothing wrong with that. Would have to look at the business model but it sounds a pretty risky venture from the ACL point of view and a good deal from PTCL`s view point of reducing their own risk.

Fifthly you wrote:

``Government will be sending negative signals to two very important types of investors``

WHy? If anything a joint venture if implemented well could spur growth in the telco industry and get local ASPs and ISPs to generate more revenue from telehousing by providing more services.

Sixthly to your point of ACL expertise and implementation. You yourself have mentioned that it is a JV and that PTCL can do most of the services. The question you have to ask yourself is why ACL? In my opinion it could be the investment and even the expertise in hardware and software that is required to run a tele-house. PTCL has the knowledge of its infrastructure and network (why does it need someone else who does?) it might just need a PC company that can provide servers, PCs, hardware and basic software to service these tele-houses. ACL might just prove the bill. Please do more homework.

And to SameerJB and the very poetic Khursid - remember very time you might not understand something - jumping to conspiracy theories that the there is back hand dealing etc. is a very dangerous way to live in civil society. Yes I agree that in pakistan there is an immenese amount of corruption and government officials are always wanting kick backs, but to always, always jump to conclusions without seeing the whole picture condemns good innocent people. I have seen Mr. Mughal (ACL) speak at a venue and he seems to be a hard working low key conservative chap who has always aspired to return the success he has achieved abroad back to his country. It is important that we un-cover more facts and data before you condemn companies and people.

One day we might not trust any Pakistani at all and we end up living in a McCarthy era where even good people are bad.

i have one question for the critics. this deal was quite lucrative so why was it that only one company bid for a huge and lucrative infrastructure JV?? There are established infrastructure providers in this country with a track record whereas ACL has NONE.

As for doing my homework, I think I did more than enough. Outsourcing is cited as is lack of expertise in getting ACL to come in for this JV. Well if ACL has no experience then how would it execute? It was one of the pre-requisites of the tender that the company must have experience in the field. So how did they get past that? must have lied with the collusion of PTCL officials? As for bad due dilligence...that`s exactly what I`ve said here.

As for using ``meaningless`` numbers. I`d like to point out that why would you do a JV when the amounts involved are paltry....4 mil over 3 years...the rest to be reinvested from the revenues of the project. Why should PTCL share revenues when it doesn`t need to. A JV is undertaken for two reasons: 1) a lack of expertise, and 2) a lack of capital. Since both of these conditions weren`t present what`s the point? Someone was making large amounts of cash from this deal and it wasn`t the consumers for sure.

Personally I hate PTCL, the service they provide, the rates they charge, and almost everything about the large and corrupt organization so there`s no question about protecting them. I`ll be the happiest person once they`re privatized!

gfm #14

You forgot the point Mr. Shakir is making.

ACL has no experience for the contract they are bidding for.

While all such bid by company of the caliber of PTCL are outright rejected.

There are many Pakistan based companies who have experience in ISP etc according to article.

Just this point makes it fishy in the first place.

As I told on previous post what is happening behind closed doors away from the eyes of public nobody knows.

It is a genuine concern concerning the long history of nepotism in Pakistan.

TAhmed 321 #13

I am just stating the fact.

If we cannot trust our institutions, then we are ready to be fooled by people whom we trust.

It is not a matter of CASE BY CASE basis.

You would be interested to know that.

On the murder of Hakim Saeed Ahmed:

1- The prime minister of Pakistan came Ba nafs Nafees on Television declaring that MQM activists have murdered Hakim Saeed.

2- One person Fasih Jugno was tortured to death or according to police it was suicide:-).

3- Rest of the apprehended persons were given death sentence by anti terrorism terrorist courts.

4- After many legal wrangling and free trial it came out that the case was planted. And persons are Ba Izzat Baree now.

If these things are happening in front of the eyes of people and press. What is happening behind closed doors nobody knows.

We trust our politicians and journalists who are the only one suffering and being killed, exiled etc. And not the beaureucracy and army.

If jobs are being cut all over the country and budget of useless personnel for army is increasing one has to think what our priorities are.

Journalist Zindabad.

Politicians Zindabad.

Army and Civil Beareucracy Murdabad.

As the saying goes ``So Din choor Ke Ek Din Shah Ka``. Looks like days of Shah meaning Awaam are near.

Dear Shakir: I was also little suspicious about the information produced in your article although Ia m quite familiar with the working of Pakistani governments, BB, NS or Mushy make no difference.

So I have been doing google search about Akhter Computers Limited for the last few days. I am now more than before convinced that you are right. Never mind people who are convinced of transparency of Mushy`s government and would not consider of any foul play involved here.

Akhter Computers Limited is a 20 year old company, founded by a graduate from University of Liverpool. While in the past 20 years, some computer manufacturers have become big international organizatioinn and some disappeared, ACL has survivied as a peanut in the era of giants. There annual sale is about 100 million dollars and employs about 300 people. Their major costomers are schools and universities. Most of their income though generated by becoming a reseller of Toshiba computers. I do not know the profit margin but assuming 15 percent profit, they make about 15 million dollars per year.

Now this is not exactly a major player to be in joint venture with PTCL. They should not have even been invited for bidding or taken seriously for two reasons. 1) They are too small to own such a large share in PTCL future business, 2) They bring no expertise in the areas you mentioned in your article. They are computer assemblers and resellers and do not have expertise in telecom indutry.

It will be interesting to know who else made bids and if a giant in telecom industry made bid. If they did, why was it rejected in favor of a very very small potato who brings no expertise in any of the telecom areas. A company with 15 million or less annual profit in reselling computers is not fit to play the major role in telecom industry in Pakistan.

Without a doubt in my mind, I smell back door dealing here. For 4.8 million dollars or even 30 million dollars (which ACL will not have, due to being a very small company with small profit), PTCL is giving away their monoply in many areas of telecommunications.

Better find the connection that got Humayun Mughal such a lucrative deal. Mushy and Mushy`s government dealings are as fraudulent as his predecessors. Favoritism, kickbacks and nepotism continue.....

from http://www.ptcl.com.pk/ptcl/news/



PRESS RELEASE ON ESTABLISHMENT OF TELEHOUSING JOINT VENTURE PARTNERSHIP BETWEEN PTCL AND AKHTAR COMPUTER UK

In pursuance of the Government policy on IT, Pakistan Telecommunications Company Limited and Mr. Humayun Mughal, Chief Executive Akhter Computers UK have come to an understanding to establish a Joint Venture Company for provision of Tele-housing facilities in the country. The project envisages an investment of about US$ 30 million in the country. This initiative will open new vistas of opportunities for cost effective provisioning of data and Internet services. PTCL and ACL would be first in this region to introduce the concept of Tele-houses and PTCL will be one of the pioneering telcos that has taken major initiative on the national scale. This project will facilitate optimal utilization of the existing facilities and infrastructure and to bring about a major IT and Internet boom by introducing international level expertise through this JV partnership. This will provide opportunity for further infusion of direct foreign investment through companies who will locate their equipment in the Tele-house.

This became possible as a result of open bidding process and after Board approval, today we are signing a joint letter of understanding on principles and intent for establishment of Telehousing project under JV arrangements. Tele-house provides a convenient and secure environment to locate the telecom equipment of various players on terms to be settled between the management of Tele-house and the clients. It is a central facility for operators to interconnect with each other and is a key component of today`s market. Tele-housing facilities are provided in a premise that has full security, (like guards, video cameras, proximity alarms and palm print readers) fully conditioned and managed space and stable round the clock power supplies. As a result of this project all major cities of Pakistan will be connected through 1Gigabit backbone which in future would be enhanced to 10Gb according to emerging needs and demands. Individual Firms in the Tele-house may have their independent customer base. The Tele-housing facilities may include provisioning of purpose built facilities used for co-location of ISPs systems, web hosting, content provision, financial services, data ware housing, e-business and other services.

Both the parties are confident that with the establishment of Tele-houses, which will be operative by early in 2nd quarter of next year, we will have a major break-through in the area of Information Technology and HR Development. This will be a strategic move in acquiring a significant position on the IT map of the world giving Pakistan an edge in the region leading to strategic regional hub. This move will also help PTCL to meet the challenges of deregulation by using latest technology to built national high-speed data network.

To mr Shakir,

Once again I have to agree with tahmed`s points in his response to your response. You wrote:

``PTCL was matching ACL`s contribution and was essentially cutting them in to provide services that they could have themselves provided. where`s the logic in that?``

I can tell you the logic - Outsourcing or divesting. If you look at all the big telephone companies in the world AT&T, C&W British Telecom , NTT they are all divesting and rolling of businesses they neccessarily do not want to be in - in the future. Not to say that I know PTCL`s strategy for the future but it would make perfect sense for them to slowly roll out of certain businesses through setting up of new companies and JVs.

Secondly you do have a minor point that maybe the government ie PTCL did not correctly pick a suitable candidate for a joint venture. Similarly, ACL is not neccessarily at fault for while telphony may not be a core comptency in their product offering it is any area where many firms like them are moving into - network infrastructure and web hosting services are areas that firms such as Compaq and Dell and many other smaller firms have also put their fingers in.

Thirdly it would be PTCL`s fault for not doing a more due diligence study on ACL - but then again your article fails to give any conclusive proof that ACL`s contract was a ``under the table`` deal. Suggestions and sound bytes are not enough

I think the key point Mr. Shakir for you is just do more research and better analysis in the future. Your article is well written and we do need more people like you in Pakistan uncovering the truth and doing investigative journalism. I have immense respect for people like you who are at least doing their best and actually making a change in their country.

But it is absolutely essential that all facts are taken into account before insinuations are made. Good lives of people can be ruined with the touch of a pen. The article is merely a skeleton that needs more data, logic and conclusive proof to back up its accusations.

krashid #11 ``Government institutions ... cannot be trusted...The only people we trust a little bit who are in journalism, and politics.``

Is PTCL, whose views the article projects while ignoring other points of view and without providing any factual substantiation, not a government institution? I am glad to report that normally you write more intelligently than you have done so far on this board.

As for journalists and politicians (!) whom you trust, that is fine. No one is questioning Shakir Sahib`s personal integrity or lack thereof: what is relevant to this discussion is that his article makes such a trashy case for protecting PTCL (namely, it basically questions why PTCL needs competition of any kind when it is capable of providing various telecomm services), in one-sided (quotes PTCL directors only), and throws in a couple of meaningless numbers.

Let`s face it, you got fooled into going along with the hogwash in this article in your first pos,t and now you are taking your frustration out on poor gfm.

hi guys....seems your privatization program has the same hurdles we chaps facein india....good to know we r not alone in this galaxy.

devkant.

gfm # *

Thanks for compliment.

I am ready to be blown up baby.

A country whose Government institutions can misguide and give wrong figures to institutions like IMF and World Bank, cannot be trusted.

Give me ten thousands reasons instead of paltry less than ten, it does not change an iota.

The only people we trust a little bit who are in journalism, and politics.

And don`t worry baby Jahil- (pl. Johla) will take the knickers down of ParRhe Likhe Jahil.

Dear Shakir: Thanks for responding to my questions. Your responses are quite inadequate, unfortunately, as follows:

On your point (a), you say ``PTCL was matching ACL`s contribution``. If one accepts what you say, then this means PTCL is providing $4.5 million. But then PTCL and ACL together put in $9 m, and this leaves a gap of $21 million (total investment being $30 million, per your article). Who is this annonymous sugar-daddy who is putting in two-thirds of the investment that you ignore in your article and ignore in responding to my explicit question? I can only conclude that you are not interested in facts, and are just putting in a couple of numbers to create the impression of investigative reporting in what is basically a jumble of misconceptions and rhetoric.

On (b), if printed matter was indeed used in analyzing the financial aspects of the deal, then whoever used it did, for reasons described above, did a shoddy job of presenting the figures.

On (c), if ``ACL was contacted via e-mail but there was no response``, then this should have been mentioned in the article. And from your lack of response on my question regarding contacting the privatization commission I assume they were not contacted at all. And yet, it is the privatization commission that is most directly answerable to the public on this question. I find it astounding that you leave out basic facts, you leave out the point of view of other concerned parties, and respond (later on in your post) to gfm by saying that if there are other aspects he should let you know.

I would welcome investigative reporting like this. As gfm correctly notes, responsible journalism is an important foundation for a civilized society. But your article does nothing more than provide public forum for presenting the point of view of a bunch of PTCL bureaucrats jealously guarding any intrusion into their empire.

In future, if you wish to develop a career as an investigative journalist, I would suggest doing your homework and presenting facts from which the reader can draw his conclusions.

Interesting article .I think I remember this article .Anyways , seems a tad incomplete , perhaps some chowkwalla can add to this?

To krashid reply number 5:

men are from mars and women are from venus. And pal you ain`t from any planet in this galaxy system.

Firstly I am gonna blow you away on your inane and dumb comments -

Secondly if you have lived in Pakistan you will understand that journalism is not of the highest quality and while herald is a reputed magazine you do have the occassion of shoddy journalism. and this shoddy journalism.

thirdly if you understand anything about public opinion you will understand that the pen is mightier than the sword and that journalists hold a vast amount of responsibility in printing objective facts - this chap has printed stattments from PTCL execs -bureaucrats who have probably fed this guy the story and who have been eating at taxpayers money in this government utility for many years.

Fourthly the company in mention ACL is a reputed company in the UK and as computers are becoming commodities (if you do anything about technology) they are making investments into telecom. Nothing wrong with that. Nothing wrong with a joint venture either but in this article the numbers don`t add as pointed out by reply number 3.

Fifthly like any like minded Pakistani I would like to sniff out and know what is rotten in the state of Denmark but I would like to have conclusive proof before slinging the dirt and accusations on ``shady`` deals.

Sixthly if you had brains and a little insight you would realise that this article is probably more about PTCL bureaucrats afraid of losing their jobs. You see competition is better than monopoly -thought you might know that.

Seventhly, my comment in my reply was that the journalist needs more facts to back his claims and give us more clarity regarding the numbers as tahmed has pointed out. Also please explain to me how a joint venture from PTCL actually creates competition? If PTCL has invested money in a JVC than it will expect a return if it makes a profit with ACL?

Smell the roses before you shred them buddy and easy on the personal attacks and language.

Flaming is a pathetic trait that has developed on Chowk becuase of ignorant folk like you.

to answer tahmed321`s questions:

a) PTCL was matching ACL`s contribution and was essentially cutting them in to provide services that they could have themselves provided. where`s the logic in that?

b) the herald had access to PTCL minutes and ACL`s proposals so it was printed matter from ACL and PTCL which were used in analyzing the financial aspects of the whole deal.

c) ACL was contacted via e-mail but there was no response. In addition, nobody knew them in the pakistani market. in islamabad they have a hardware store and that`s it.

now to answer gfm

all the financial aspects of this deal are based on ACL`s own proposals and not insight. No one doubts ACL`s stature as a hardware assembler but that doesn`t give them the right to lie on a government tender or otherwise. they don`t have any expertise in the area of managing networks or infrastructure projects, and the terms being offered to them were ridiculous as well. btw the 4.5 million investment was supposed to be phased over 3 years - so not a lot of cash being put up by them in the first place. if there are any other sides to the story please let me know.

krashid #5 bhai, itna ghusa??

gfm #4

You know what.

Who give the damn f-k to other side of story.

Do you think anybody will buy anything after reporting by HERALD.

Or do you think the other side will tell true story.

How old are you brother and for how long you are staying on Mars.

Also you know what.

The deal is fishy.