The Competition Commission of Pakistan (CCP) is nearing the conclusion of the initial phase of the merger process involving the acquisition of Telenor Pakistan by Pakistan Telecommunication Company Limited (PTCL). Sources within the Commission have disclosed that teams have diligently collected all requisite documentation from pertinent stakeholders, with the analysis expected to wrap up by March 30.
In accordance with the stipulations of the Competition Act, 2010, the Phase-I assessment of mergers must be finalized within 30 days subsequent to the acceptance of the application. This preliminary phase primarily seeks to determine whether the merger would fortify a dominant market position.
Presently, PTCL maintains full ownership of Ufone. In 2023, the company entered into a sale purchase agreement to acquire Telenor from its parent company in Norway. The proposed merger of PTCL/Ufone with Telenor Pakistan is perceived as unlikely to result in any significant market distortions within Pakistan’s cellular landscape.
Data from the Pakistan Telecommunication Authority (PTA) reveals that Telenor Pakistan ranks as the third-largest mobile telecom company with a subscriber base of 44.78 million, while Ufone holds the fourth position with 25.28 million subscribers. Collectively, their subscriber base totals 70.06 million. However, Jazz leads the market with 70.95 million subscribers, constituting 37.31% of the total market share. Upon completion of the merger, the combined strength of Ufone and Telenor Pakistan will account for 36.84% of subscribers in the country.
Currently, Zong Pakistan occupies the second position with 47.40 million subscribers. Nevertheless, post-merger formalities, it will rank as the third-largest among Pakistan’s cellular mobile companies.
With the government holding a 62% stake and UAE telco “e&” controlling 26% stake in PTCL, the company is poised to emerge as the largest telecom operator in Pakistan. This has raised concerns regarding market dominance by a single entity, which the CCP will address in its Phase II review of the industry.
It is noteworthy that the CCP had previously conducted a Phase II review from February 12, 2016, to March 9, 2016, when Jazz acquired Warid Telecom. This review was prompted by apprehensions over Jazz’s potential dominance subsequent to the merger.
A senior official of Ufone has hinted at the possibility of CCP initiating a Phase II review under certain conditions, such as complaints from the remaining two telecom operators or to ensure transparency in the process. Phase II review, if instigated, is a 90-day process conducted when a merger significantly reduces competition by consolidating or strengthening a dominant position.
Upon successful completion of the Phase II review by CCP, the formal merger between PTCL/Ufone and Telenor Pakistan is anticipated to commence after the start of the next fiscal year.
Concurrently, the Ufone-Telenor merger meets other Phase II review thresholds, including combined assets exceeding Rs 1 billion for the merging parties and their combined revenue surpassing Rs 1 billion.