ISLAMABAD: The Competition Commission of Pakistan’s investigation has provisionally concluded that PTCL’s proposed acquisition of Telenor Pakistan (Private) Limited and Orion Towers Private Limited could lead to a substantial lessening of competition in the telecommunication industry, potentially limiting consumer choice.
M/s. Pakistan Telecommunication Company Limited (PTCL), is a public-listed company, offers a wide range of telecommunication services across Pakistan, Azad Jammu & Kashmir (AJK), and Gilgit Baltistan (GB), including cellular mobile telephony service, Wireless Local Loop service, Direct-to-Home television service, and financial services through its subsidiaries.
On the other hand, Telenor Pakistan and Orion Towers are wholly-owned subsidiaries of M/s. Telenor Pakistan BV (TPBV), and are engaged in providing cellular mobile and allied services in Pakistan, AJK and GB.
The investigation revealed that PTCL has already been identified as a Significant Market Power (SMP) Operator in several key markets by the Pakistan Telecommunication Authority (PTA). With existing overlaps, the merger between PTCL and Telenor Pakistan is likely to further reduce competition, particularly in markets with few competitors. This reduction in competition could lead to adverse outcomes for consumers, such as higher prices or diminished choice and quality of services.
“With existing overlaps, the CCP found that, should the deal go ahead, the merger is likely to reduce choice, options, and competition in markets where there are only very few competitors and could lead to worse outcomes for the customers,” said CCP.
According to CCP, M/s. Pakistan Mobile Telecommunications Limited acquisition of M/s. Warid Telecom (Private) Limited reduced the number of network operators in 2016. Through the proposed merger, one out of remaining four players would also be eliminated from the industry. The CCP is concerned that this lessening of competition may result in higher prices or a reduction in choice or quality for customers hence, the transaction will be referred for an in-depth Phase-2 analysis, said CCP in a statement issued to media on Monday.
The CCP aims to provide better services and product to the consumers of Pakistan by increasing competition in the telecommunication industry, CCP added.
In December, 2023, the Pakistan Telecommunication Company Ltd (PTCL) announced that it has signed a share purchase agreement with Telenor Pakistan to buy 100 per cent of its shares based on an enterprise value of Rs108 billion ($380 million). However, the deal, structured on a cash-free, debt-free basis, was subject to regulatory approvals and customary closing conditions.
Following the PTCL’s announcement to purchase 100 percent shares of Telenor, the Competition Commission of Pakistan (CCP) initiated an investigation into the proposed acquisition of M/s. Telenor Pakistan (Private) Limited (TP) and Orion Towers Private Limited (OT) by M/s. Pakistan Telecommunication Company Limited (PTCL). And, the preliminary findings have now suggested that this merger may significantly diminish competition within the telecommunications sector.
It is pertinent to mention that the outcome of the investigation and subsequent analysis will play a crucial role in determining the regulatory response to the proposed merger, with a focus on safeguarding consumer interests and promoting fair competition within the telecommunications industry.
