On October 1, 2025, after months of intense scrutiny and stakeholder consultations, the Competition Commission of Pakistan (CCP) delivered its verdict on what may prove to be Pakistan’s most significant telecommunications transaction since the Mobilink-Warid merger of 2016. The conditional approval of Pakistan Telecommunication Company Limited’s (PTCL) Rs108 billion ($400 million) acquisition of Telenor Pakistan didn’t just greenlight a corporate transaction, it fundamentally rewrote the competitive landscape of Pakistan’s digital economy.
The decision transforms a fragmented four-player mobile market, where Jazz commanded 37%, Zong held 26%, Telenor controlled 22%, and Ufone struggled with 14%, into a concentrated three-operator structure. Post-merger, the newly created MergeCo, combining Telenor’s network strength with Ufone’s PTCL backing, will control approximately 35% of Pakistan’s mobile market, creating a near-duopoly with Jazz while potentially squeezing third-placed Zong into an increasingly marginal position.
Yet the CCP’s 147-page order, dense with technical analysis and unprecedented regulatory conditions, tells a far more nuanced story than simple market consolidation. It reveals deep anxieties about vertical integration, infrastructure foreclosure, and the delicate balance between enabling sector sustainability and protecting consumer welfare in an industry simultaneously experiencing explosive data growth and catastrophic revenue decline.
The deal’s unlikely origins
The transaction’s genesis lies not in strategic ambition but strategic retreat. Telenor, the Norwegian telecommunications giant, has been systematically exiting low growth markets, divesting operations in Myanmar, and now Pakistan as part of a global portfolio rationalization. For PTCL, majority-owned by UAE’s e& since 2006, the opportunity represented something more desperate: a chance to salvage its struggling mobile subsidiary Ufone, perpetually trapped in fourth place and bleeding cash.
Economics tells the story of distress. Topline Securities’ analysis reveals PTCL acquired Telenor at a remarkable 2.25x EV/EBITDA multiple, a significant discount to the estimated 5x fair value for Pakistani telecommunications assets. With Telenor’s balance sheet showing Rs160-170 billion in non-current assets against a purchase price of Rs108 billion, PTCL secured what amounts to a bargain purchase, with the tower portfolio alone valued at approximately the entire consideration.
The International Finance Corporation (IFC), World Bank’s private sector arm, led a $400 million financing consortium including British International Investment, providing seven-year tenor debt. This multilateral development finance involvement signals both commercial opportunity, acquiring distressed assets cheaply, and strategic importance, as Pakistan’s digital infrastructure investment aligns with broader economic development objectives.
The CCP’s exhaustive analysis examined distinct markets where the merger creates overlaps or raises foreclosure concerns, each revealing different competitive dynamics and regulatory anxieties.
The core battlefield
In retail mobile services, the merger’s impact is most visible and contentious. The CCP’s Herfindahl-Hirschman Index (HHI) analysis, the standard measure of market concentration, shows concerning trends. Revenue-based HHI jumps from 2,994 pre-merger to 3,514 post-merger, an increase of 520 points. Subscriber-based HHI rises even more dramatically, from 2,790 to 3,428, a 638-point increase signaling substantial concentration.
“The Commission concludes that the proposed merger is likely to create a dominant position in the retail mobile telecommunications market, carrying a risk of reducing competition,” the order states bluntly. While noting that dominance itself doesn’t violate competition law, the CCP emphasizes it “increases the risk of future market abuse and collusion.”
The oligopoly mathematics are stark. With only three significant players post-merger, economic theory suggests coordination becomes easier. Jazz and MergeCo together will control 72% of the market, creating dynamics where tacit collusion, aligning pricing and strategies without explicit agreements, becomes more viable. Zong, trapped at 26%, faces the prospect of becoming a perpetual third player unable to challenge the duopoly’s market power.
Yet the CCP also acknowledges countervailing pressures. Mobile Number Portability (MNP), which allows subscribers to switch operators without changing numbers, provides some demand-side constraint. Analysis of 2021-2024 porting data shows peak migration in 2022 with 725,191 port-outs across all operators, though activity has since declined. The Commission warns that “without sustained regulatory oversight, operators may adopt practices that could impede portability and erode pro-competitive effects.”
“We hope the MergeCo focuses towards a ServiceCo model like Jazz, where competitive advantage stems from innovative products and services rather than pricing strategies,” states, Kazim Mujtaba, President Jazz Consumer Division
Vertical integration fears
The Long Distance and International (LDI) market, covering both retail international calling and wholesale international incoming voice services, presents the merger’s most complex competitive concerns. Here, PTCL already dominates with 32.67% retail market share, while Telenor LDI holds a modest 15.61%. The combined entity’s 48.28% share isn’t dramatically concentrated by global standards, but vertical integration with mobile operations creates foreclosure risks.
Wateen Telecom, a major stakeholder opponent, argued forcefully that PTCL’s control over both upstream infrastructure (fiber networks, interconnection points) and downstream mobile operations (MergeCo’s 35% subscriber base) creates both input and customer foreclosure opportunities. “After being merged with Ufone, Telenor Pakistan will get tied to PTCL and will either no longer provide services to other LDI operators or will provide substantially less capacity,” Wateen submitted, warning of competitive exclusion.
The CCP found these concerns credible, adding, “PTCL has both the ability and incentive to pursue input foreclosure strategies, resulting in substantial lessening of competition. The Commission also believes PTCL has the ability and incentives to provide LDI services to MergeCo, which may result in total or partial customer foreclosure for other LDI service providers.”
PTCL’s historical conduct amplifies these worries. The Commission notes PTCL has “on quite a few occasions, been accused of engaging in anti-competitive practices,” lending empirical weight to foreclosure theories. With MergeCo’s entire LDI requirements likely met internally by PTCL, competitors like Wateen face losing access to approximately 35% of the potential customer base, an existential threat in an already challenging market.
The duopoly problem
The wholesale IP bandwidth market, providing internet connectivity capacity to retail ISPs and mobile operators, presents perhaps the clearest case of market power concerns. Pakistan Telecommunication Authority’s 2021 Significant Market Power (SMP) determination identified this as a duopoly, with PTCL holding 64.5% and Transworld Associates (TWA) controlling 35.5%.
The Commission’s analysis highlights the market dynamics. “TWA and PTCL have all the means to control their consumers as other operators have no choice but to acquire IP bandwidth services only from these two operators,” PTA observed. With Telenor Pakistan currently sourcing 100% of its IP bandwidth from PTCL since 2019, the merger transforms an arm’s-length commercial relationship into internal transfer pricing.
This creates opportunities for preferential treatment. “PTCL may grant preferential treatment to its wholly-owned subsidiary MergeCo by leveraging its control over essential IP bandwidth and fiber network infrastructure,” the CCP warns. “This could take various forms including discounted bandwidth rates, expedited service provisioning, or exclusive access to enhanced network capacities, enabling MergeCo to deliver more competitive retail services than rivals.”
Jazz and Zong, dependent on PTCL/TWA for wholesale bandwidth, face asymmetric disadvantages. The merged entity’s vertical integration means MergeCo potentially accesses bandwidth at cost while competitors pay market rates, creating margin differentials that compound over time.
The tower portfolio puzzle
The telecommunications infrastructure market reveals the transaction’s physical dimension. Post-merger, MergeCo will control approximately 17,000-24,000 cell sites (accounts vary between owned and leased sites), representing roughly 44% of Pakistan’s total tower infrastructure. Jazz operates about 15,500 sites (27.9%), while Zong maintains 15,239 (27.4%).
The immediate controversy concerns decommissioning. PTCL plans to reduce overlapping sites from the combined 24,000 to approximately 17,000 towers, optimizing the merged network. However, about 1,200 sites (5% of total) currently host “guest operators”, competitors renting space under infrastructure sharing agreements. Of these, approximately 500 sites (2% of total) face potential decommissioning.
This creates coverage gaps for competitors forced to vacate. While 2% seems minor, these sites often serve strategically important locations. The CCP notes that “procedural complexities” in establishing new sites exacerbate the problem, making it difficult for displaced operators to quickly secure alternative locations.
The regulatory response involves PTA’s Framework for Telecom Infrastructure Sharing (FTIS), issued in October 2023. However, the Commission observes the framework’s “recommendatory nature calls for continuous oversight in the form of enforceable obligations to prevent anti-competitive behavior.”
Real benefits or wishful thinking?
PTCL’s efficiency claims provided the crucial justification for merger approval despite concentration concerns. Under Pakistan’s Competition Act, mergers that substantially lessen competition may still be approved if efficiencies are merger-specific, verifiable, and passed on to consumers, the standard set by European Commission precedents.
The claimed synergies span multiple dimensions, each contributing to projected improvements.
With both entities tower sites merging into a single grid of approximately 17,000 optimized sites promises substantial operational savings. PTCL projects annual cost reductions from decommissioning redundant infrastructure and consolidating spectrum use. The combined entity will increase data speeds from Ufone’s 12 Mbps and Telenor’s 8 Mbps, eventually reaching parity with Jazz and Zong’s performance, representing a 3-4x improvement.
Telenor’s strength in rural and northern areas combines with Ufone’s urban and southern coverage to create a truly nationwide reach. Population coverage for voice services expands significantly for both customer bases, while data coverage improves through spectrum refarming and site optimization.
Beyond network costs, PTCL identifies multiple efficiency sources including optimized marketing efforts, IT systems and licensing consolidation, employment streamlining, enhanced vendor bargaining power, and spectrum consolidation.
Perhaps most critically for policy objectives, the merger positions MergeCo to participate meaningfully in Pakistan’s planned 2025 NGMS spectrum auction. The consolidated entity’s financial capacity and spectrum holdings make it a credible 5G deployer.
The combined network of physical stores nationwide improves accessibility for both brands’ customers. Spectrum efficiency gains promise better service quality, while consolidated operations enable investment in next-generation services.
Yet the Commission remained skeptical of taking these projections at face value. “While the Applicant’s submissions indicate the proposed transaction could generate significant efficiencies, these are neither assured nor independently verifiable in their current form,” the order states. “In the absence of binding commitments, projected coverage, quality, and capacity improvements remain aspirational and not verifiable for merger clearance purposes.”
PTCL’s conditional approach, investments subject to annual budgets, macroeconomic conditions, regulatory developments, and undefined spectrum auction terms, further undermined credibility.
The materialization of synergies typically requires a multi-year integration period. This window presents a strategic vulnerability: should Jazz, the market leader, intensify its customer acquisition and network expansion efforts, the anticipated benefits of the merger could be substantially diminished.
The bottom line
For PTCL shareholders, the transaction’s financial logic appears compelling. Topline Securities’ analysis projects incremental earnings per share contribution growing from Rs3.7 in Year 1 to Rs4.9 in Year 3, representing 32% growth as synergies materialize. Starting from an EBITDA base of Rs55 billion, the combined entity should reach Rs60.5 billion in Year 2 and Rs66.6 billion by Year 3, a 21% cumulative EBITDA expansion.
The valuation metrics underscore the bargain nature. At 2.25x EV/EBITDA versus the 5x fair value multiple for Pakistani telecommunications assets, PTCL acquired Telenor at a 55% discount. Using international comparable company analysis, where telecom operators trade at an average 6.67x EV/EBITDA with a 12.25% frontier market discount, suggests PTCL’s fair value per share exceeds Rs65, implying substantial upside from pre-deal levels.
The bargain purchase gain adds further value. With Telenor Pakistan’s balance sheet showing Rs160-170 billion in non-current assets against the Rs108 billion enterprise value, accounting rules likely require recognizing a sizeable gain, a non-cash boost to reported profitability that improves financial metrics.
Infrastructure assets provide tangible value. Telenor’s approximately 7,500 towers, compared to recent comparable transactions like Engro Holdings’ acquisition of Jazz towers at roughly Rs150,000 per tower, suggest the tower portfolio alone approximates the entire purchase consideration. This implies PTCL essentially acquired the operating telecommunications business, subscribers, spectrum rights, brand equity, at minimal or negative valuation, an extraordinary bargain reflecting Telenor’s forced seller position.
However, these rosy projections confront harsh realities documented in the CCP order and broader industry analysis. Pakistan’s telecommunications sector faces structural headwinds: industry revenue declining from $5.0 billion in 2016 to $3.4 billion in 2023 despite data consumption exploding 335%, an unprecedented inverse relationship between demand and revenue. Average revenue per user (ARPU) stands at $0.80 monthly, the world’s lowest, 90% below the global average of $8.00.
The tax and regulatory burden compounds operator distress. Pakistan leads globally with 34.5% total ICT taxation, while spectrum costs consume approximately 20% of operator revenue, double the sustainable 10% international benchmark. These structural factors constrain the extent to which merger efficiencies translate to improved financial performance.
Regulatory armor or paper tiger?
Understanding the approval requires examining the unprecedented 20 conditions the CCP imposed, which collectively represent one of the most comprehensive behavioral remedy package in Pakistani merger control history.
As per the CCP order, PTCL and MergeCo must maintain separate boards and independent management structures, with no overlapping positions. Any individual leaving a position in one entity faces a three-year cooling-off period before assuming board or management roles in the other. This aims to prevent coordination that could enable foreclosure or preferential treatment.
CEOs and senior management must possess demonstrable competence, extensive telecom and digital industry experience, proven turnaround expertise, and “impeccable integrity, honesty and reputation.” These qualifications apply mutatis mutandis to senior management across both entities, with E& required to ensure professional leadership.
Perhaps most significantly, an independent reviewer will be appointed for five years to monitor compliance, audit transactions, and submit quarterly reports to the CCP. The TPR must possess appropriate qualifications and telecom sector experience while maintaining absolute independence, no conflict of interest, remuneration that doesn’t impede effectiveness, and confidentiality obligations.
Cross-subsidization is prohibited unless conducted competitively at arm’s length. All related party transactions must be submitted to the TPR quarterly, with the independent auditor required to explicitly confirm whether transactions were arm’s length and whether substantial price differences existed versus market rates.
The most complex conditions govern interconnection and infrastructure sharing. PTCL and MergeCo must provide equal access to infrastructure capacity for all telecom operators. All Reference Interconnect Offers (RIO) require PTA approval, with PTCL offering interconnection to all operators per approved RIO. The entities cannot reduce interconnection circuits allocated to other operators without PTA approval, and pricing cannot be used to impede competitor access to MergeCo customers.
PTCL must seek PTA approval for wholesale pricing structures covering IP bandwidth services, LDI services, domestic leased lines, and telecom infrastructure services provided to PTA licensees and associated companies including MergeCo. This direct pricing regulation aims to prevent margin squeeze, charging high wholesale rates while offering low retail prices, that could foreclose competitors.
MergeCo must provide wholesale access to new Mobile Virtual Network Operators (MVNOs), including network access, call origination/termination, international roaming, and portability database access, on commercially fair and reasonable terms. This maintains market contestability even as facilities-based competition decreases from four to three operators.
Post-merger, PTCL and MergeCo must demonstrate claimed efficiencies are passed to consumers through competitive pricing, better services, and infrastructure investments. They must furnish comprehensive verifiable data to the TPR and Commission illustrating how efficiencies benefit consumers, not just shareholders.
Most dramatically, the CCP reserves explicit rights to direct divestiture of assets or business segments if future violations occur. This ultimate enforcement backstop provides regulatory deterrence while acknowledging that behavioral conditions may prove insufficient.
Critics question whether these conditions will prove enforceable. The Commission’s resource constraints, PTCL’s history of challenging regulatory orders in court, and the sheer complexity of monitoring compliance all suggest implementation challenges. The TPR’s effectiveness depends entirely on who is appointed, their actual independence, and whether the CCP vigorously backs their findings.
“It is a great development provided they are able to strictly follow all the conditions set by CCP. I am concerned that the follow-up, or the supervision part, of CCP may not be as robust as it should be, and with time it may even fade out. However, if that can be managed in letter and spirit, it can result in something very positive for the country,” remarked, Parvez Iftikhar, senior IT consultant and founding CEO of Pakistan’s Universal Service Fund.
The road ahead: three scenarios
Pakistan’s telecommunications future post-merger likely follows one of three trajectories, each with distinct implications for competition, investment, and consumer welfare.
Scenario one might be of a managed decline that sees the merger providing temporary relief, synergies materialize, costs decline, MergeCo survives, but fundamental structural problems remain unaddressed. Revenue continues declining or stagnates, infrastructure investment remains insufficient, and service quality improves marginally but lags regional peers. The 2025 spectrum auction proceeds with “moderately” lower reserve prices; some spectrum sells, but deployment remains limited and urban-focused. By 2028-2030, financial pressures force consideration of further consolidation, potentially reducing the market to two players.
Scenario two might be of a reform catalyst with the merger shocking policymakers into comprehensive reform. Tax rationalization reduces the 34.5% ICT burden to regional norms around 20-25%. Spectrum pricing adopts GSMA recommendations, significantly lower reserve prices, 20-year payment plans with moratoriums, and rupee denomination. Infrastructure sharing policies enable 30-40% cost reductions. These reforms create sustainable telecommunications economics, enabling genuine 5G deployment and narrowing the digital infrastructure gap with regional peers. This scenario requires political will currently absent given Pakistan’s fiscal crisis.
A third scenario might mimic what happened in Bangladesh. The merger proceeded but broader policy failures undermined benefits. The 2025 spectrum auction demands high reserve prices prioritizing government revenue over sector sustainability. Operators bid reluctantly, stretching finances. Spectrum is allocated but deployment stalls, fiber buildout too expensive, device penetration insufficient, business case doesn’t close. “5G” is announced but remains trials indefinitely, like Bangladesh’s three-year deadlock despite successful 2022 spectrum allocation. Operators’ financial positions weaken under spectrum debt service, eventually forcing distress restructuring or bailouts.
Current evidence suggests scenario one as most probable, with elements of scenario three emerging if auction pricing remains unrealistic. The CCP’s conditional approval provides necessary room for consolidation, but cannot substitute for comprehensive policy reform addressing the sector’s structural crisis.
