ISLAMABAD – The Competition Commission of Pakistan (CCP) has raised significant concerns over Pakistan Telecommunication Company Limited’s (PTCL) business plan in the ongoing Phase-II review of its proposed acquisition of 100% shareholding in Telenor Pakistan (Private) Limited (TP) and Orion Towers (Private) Limited (OT). The review, conducted under Section 11(6) of the Competition Act, 2010, aims to assess the merger’s potential impact on competition in Pakistan’s telecom and tower infrastructure sectors.
In a detailed hearing, PTCL’s senior management and legal team presented their business plan, including the rationale for the merger, expected efficiencies, and regulatory accounts. However, the CCP bench, comprising Chairman Dr. Kabir Ahmed Sidhu, Member Salman Amin, and Member Abdul Rashid Sheikh, raised probing questions regarding the merger’s potential to affect market competition and consumer welfare. The Commission emphasized the need for greater clarity on several aspects of the deal, including operational integration, long-term market positioning, and potential impacts on consumers.
Industry sources reveal that the CCP had concerns about PTCL’s post-merger strategy, especially with regards to its plans for operational integration. One of the major concerns raised by the bench was regarding how PTCL intended to integrate its operations with Telenor Pakistan and Orion Towers in a way that would benefit consumers and improve service quality.
The Commission also pointed out inconsistencies in PTCL’s financial projections and questioned the assumptions underlying its regulatory framework, suggesting that these may not fully account for the competitive implications of the merger.
The Commission sought additional documentation and data from PTCL to verify its claims, especially those related to service quality, pricing, and market behaviour post-merger. According to sources, CCP is approaching the transaction with increased scrutiny due to its size and potential to reshape the competitive landscape in Pakistan’s telecom sector. The Phase-II review is standard when a transaction is deemed likely to raise substantial competition concerns, and it involves a thorough examination of the deal’s potential effects on market dynamics.
A significant hurdle for PTCL’s proposed merger is the persistent financial losses of Ufone, its mobile services subsidiary. Ufone’s ongoing struggles have raised doubts about PTCL’s ability to manage an expanded telecom operation effectively. Sources disclosed that PTCL has yet to convince the CCP of the viability of its post-merger strategy, particularly in terms of expanding its customer base and efficiently utilizing telecom tower infrastructure.
The Commission expressed concerns about PTCL’s ability to run an expanded telecom operation, given the current state of Ufone’s finances. The CCP hinted that if PTCL is already facing challenges with running its existing telecom operations, it is unclear how the company intends to handle a larger merged entity. Specifically, CCP members questioned how PTCL would use the expanded tower infrastructure to attract new customers, a key element of the proposed business plan.
In response to the Commission’s concerns, PTCL has requested additional time to submit a more detailed and comprehensive response to the questions raised during the review. The CCP has agreed to grant this extension, allowing PTCL to address the unresolved issues in greater detail. The Commission emphasized the importance of transparency and robust planning, particularly for such a large-scale transaction with potential implications for the telecom sector.
The CCP reiterated its commitment to safeguarding fair competition and protecting consumer choice. The Commission emphasised that any transaction of this scale must demonstrate clear, transparent, and well-documented plans for integration and operational efficiency. The final decision on the merger will be made after a thorough examination of the additional information requested from PTCL.
PTCL’s bid to acquire 100% of Telenor Pakistan and Orion Towers was a significant move within Pakistan’s telecom industry. The deal could combine PTCL’s existing infrastructure with Telenor’s customer base and tower network, potentially consolidating the market. However, regulatory bodies, including the CCP, have raised red flags due to concerns about competition and the financial health of PTCL’s subsidiaries, particularly Ufone. The outcome of the CCP’s review will be pivotal in determining whether the merger is approved, approved with conditions, or blocked altogether.
