Islamabad – Pakistan Telecommunication Authority on Tuesday approved Mobilink-Warid Merger subject to unconditional acceptance of some conditions.
One of the major conditions, in the long list, states that Mobilink will accept and own all liabilities of Warid Telecom.
The authority binds both the parties not to reduce total number of interconnection circuits (E1s) allocated by them to other operators, including LL, LDI, cellular licensees, without its prior approval.
It also directed not to use interconnect capacities or their pricing in a manner to impede other operators’ access to the customer of the merged entity.
PTA warned that it would be free to take any legal action, if information provided by Mobilink and Warid to the regulator for the approval of application was found to be fabricated, incomplete or false.
The regulator also told PMCL (Mobilink) and Warid to continue to submit their annual audited financial statements as separate entities till the amalgamation order. PTA further asked both Mobilink and Warid to submit an unconditional acceptance of all the terms and conditions to obtain the NOC from the authority.
In its 25-page determination, the authority said PMCL was a dominant player in terms of shares in total cellular mobile revenues (28.7 percent) and subscriptions (29 percent), while Warid had the smallest share in terms of revenues (11.2 percent) and subscribers (8.4 percent) amongst the five mobile operators.
The merger of PMCL and Warid will lead to merged entity’s combined revenue share of 39.9 percent and subscribers share of 37.4 percent.
PTA has given 15 days time to both the companies to submit unconditional acceptance of the above-mentioned terms and conditions, after which they would be issued a formal NOC.
With CCP’s approval already granted, and a NOC from PTA, both companies will file an acquisition case with the SECP, and that’s where 100 percent shares of Warid will be transferred to Mobilink.
After transfer of the shares, both the parties will get a nod from Islamabad High Court, and that’s when the merger will officially be termed as done and complete.
Mobilink-Warid merger was a much anticipated development ever since the European telecom giant, VimpelCom, had, last year, announced 100 per acquisition of Warid Telecom, the Pakistani subsidiary of Abu Dhabi Group, which had been looking to exit the market since the latter half of 2012.
After the announcement of the merger, the total subscriber base of the Mobilink-Warid would reach 45 million; Telenor is second with 33 million; Zong is third with 23 million, and Ufone 19 million.
The industry believes the telecom sector in Pakistan is not too big for five operators; hence correction was required through mergers.
Many believe more consolidations are expected within the next couple of years.
Though none of the parties disclosed the transaction amount, the Amsterdam-based parent of Mobilink has agreed to offer 15 percent shares (of Mobilink) to the Dhabi Group. The combined revenue of both companies, as of September 2015, was $1.4 billion.
The transaction is expected to create capital and operational expenditures synergies with a net present value of approximately $500 million.
Launched in 2005, Warid expanded its network to almost 18 million subscribers by 2009. Though it made a strong footprint in the urban centers, the company failed to expand to rural areas and reportedly lost over 5 million users by the end of 2013.
According to analysts, the acquisition of smallest operator by the market leader will certainly have some impact on the country’s telecom market. Small players are already under pressure because of high taxation and need to be protected.