Demand for phones is expected to climb as the economy improves

The sale of Pakistan Telecommunication is the country's biggest privatisation.

It has proved controversial, with the firm's 65,000 staff protesting against possible job cuts and company buildings and sites being protected by soldiers.

Analysts also said that in order to outdo rivals Singapore Telecom and China Mobile, Etisalat might have overpaid for its stake.

"People were expecting up to $2bn, so any price over that will be considered to be overpriced," said Mohammed Sohail of Jahangir Siddiqui Capital Markets.

One factor contributing to the discrepancy in price and estimates may have been that fact that the value of Pakistan Telecommunication's (PCTL) real estate had not been given, said Imtiaz Gadar of KASB Securities.

Another may have been differing perceptions of the risks involved in investing in Pakistan, the analysts said.

Growth market?

Demand for telephone services is expected to surge as the country's economy improves.

Currently only one person in 10 owns a phone in Pakistan, analysts estimate, adding that there is huge room for growth in a nation of nearly 150 million inhabitants.

Prime Minister Shaukat Aziz said that the sale was a "vote of confidence in the improved macroeconomic situation and the potential that exists".

PCTL has about 5 million fixed phone lines, and provides internet services and owns one of the country's five mobile phone providers.

In the 12 months through June 2004, the company had a net profit of 29.2bn rupees ($489m).

Shares of PCTL have surged this year, adding 56% amid optimism about future demand for phone services.

Etisalat is 60% owned by the UAE government, which has been using record oil revenues to help finance expansion abroad as domestic demand slows.