ISLAMABAD: Wateen Telecom and Jazz Telecom voiced strong opposition to the proposed acquisition of Telenor Pakistan by PTCL and its merger with Ufone during a Competition Commission of Pakistan (CCP) hearing on Wednesday.
The Phase II Merger Review of PTCL’s planned acquisition of 100 per cent shareholding in Telenor Pakistan and Orion Towers Private Limited is currently underway. The hearing was conducted by CCP Chairman Dr Kabir Ahmed Sidhu, with members Salman Amin and Abdul Rashid Sheikh also in attendance.
The PTCL said in December that it had signed a share purchase agreement with Telenor Pakistan to buy all its shares based on an enterprise value of Rs108 billion ($380 million). The deal, structured on a cash-free, debt-free basis, is subject to regulatory approvals and customary closing conditions.
The development came as the Norway-based Telenor group has been restructuring its Asian businesses, building bigger units in Thailand and Malaysia via local mergers.
PTCL defends acquisition, highlights its potential to bring about efficiency, economies of scale
During Wednesday’s hearing, Mian Samiud Din, counsel for Wateen Telecom, expressed concerns over PTCL’s dominant role as a wholesale supplier of several backhaul services for cellular mobile operators (CMOs), including Long Distance and International (LDI) services.
He highlighted that PTCL had recently shifted the LDI service for Ufone from Wateen in Balochistan. He warned that following the merger, PTCL might monopolise all LDI business currently held by Telenor.
The CCP was informed that while there are around 20 LDI companies operating in Pakistan, PTCL already commands a 48pc market share. Mr Sami cautioned that PTCL’s position as a dominant player could potentially lead to the foreclosure of its competitors in the LDI business. He emphasised the need to consider all aspects of competition that may be affected by the merger.
Meanwhile, Khalid Ibrahim, the counsel for Jazz Telecom, argued that PTCL’s acquisition of Telenor would give it a dominant position in the market and urged the CCP to impose both pre-merger and post-merger conditions to safeguard competition.
Mr Ibrahim suggested that the conditions should include a requirement for the merged entities to allow other mobile operators to use their network on mutually agreed terms. He also proposed that PTCL should be mandated to provide wholesale, non-discriminatory access to other operators, as well as fair terms for infrastructure, fibre, and spectrum sharing and trading.
In contrast, PTCL’s legal representative, Rahat Kaunain Hassan, a former CCP chairperson, defended the acquisition, highlighting its potential to bring about efficiency, economies of scale and advancements towards a “Digital Pakistan” by transforming the IT ecosystem.
The CCP has requested additional data and information from PTCL and Telenor to assist in the Phase II Merger Review.
Published in Dawn, October 3rd, 2024
