KARACHI
The merger of Pakistan Telecommunication Company Limited and its cellular arm Ufone, which operates as a separate company, has entered final stages and the company is likely to make a formal announcement in the first week of July, independent sources have confirmed to Profit.
The Pakistani subsidiary of UAE-based Etisalat Group neither denied nor confirmed this development. “As a matter of principle, PTCL does not comment on market rumors,” the company’s spokesperson told Profit. The telecom regulator, too, said there was nothing official about this merger.
However, at least three independent sources confirmed that the merger process, which is part of PTCL’s ongoing restructuring program, is almost complete and the company is likely to make a formal announcement any time after Eid.
The local fixed-line, broadband giant had started restructuring early in 2016, which included merger of Ufone into PTCL to form a combined entity.
Speaking at the Management Association of Pakistan’s 18th convention in Karachi last year, PTCL’s President and Chief Executive Officer Dr Daniel Ritz spoke at length about how he was planning to restructure this mammoth organization.
“Let me be very clear, it [restructuring PTCL] is a long journey. There are no easy fixes, no shortcuts to revamping such a large organization,” Dr Ritz had said at that time. It was his first public talk on the topic since taking office in March, 2016.
The CEO was referring to the company’s decaying infrastructure, its large employee base, mostly untrained, and its ‘inconsistency’ to provide quality services, which resulted in customer complaints.
PTCL has more than 23,000 employees, over 400 telephone exchanges, 700,000 distribution points, and an optical fiber network of 38,000 kilometers, spread over the length and breadth of the country. As part of its restructuring, the company has been replacing old infrastructure with state-of-the-art equipment and giving uplift to the old government-style buildings by turning them in to smart-shops.
“The merger process is definitely going on for some time but it will not be complete till the Board of Directors approves it,” one official said on the condition of anonymity.
As a result of the merger, the company’s culture is likely to change while administrative costs will come down. For example, there will be one CEO for the combined entity, one head for all departments and so on. Most officials we spoke to hinted towards more layoffs but PTCL didn’t respond to our queries about this particular subject.
Market experts expect some layoffs through VSS, which is something the company has been doing for quite some time. Once a 60,000-strong company, PTCL has already reduced its workforce to about 23,000 as a result of its privatization. A couple of years ago, it set aside Rs8 billion in VSS costs for more layoffs.
As already covered by Profit in a previous report, Etisalat had sent Dr Ritz to consolidate its Pakistani businesses into a bigger telecom company, whereby Ufone and PTCL would be merged to form one company and would provide broadband, telephony, LDI and fiber to the home services.
