Regulation

Pakistan’s regulator OKs PTCL–Telenor merger

Pakistan’s regulator OKs PTCL–Telenor merger

The long-anticipated merger of Telenor Pakistan with Pakistan Telecomm­unication Company Ltd (PTCL) does now appear to be close to becoming a reality after it received the approval of The Pakistan Telecommunication Authority (PTA) late last week.

However the PTA’s approval has come with some strict conditions aimed at ensuring fair competition in the telecom sector, particularly given PTCL’s strong market position.

Strictly speaking, this is a merger involving Telenor Pakistan, Telenor LDI Company (TLDI) and Orion Towers, a tower business unit of Telenor.

According to Pakistan’s Dawn news service, the new entity, referred to by the PTA as the MergedCo, must maintain separate, detailed accounts for all business units. The regulator has also barred it from entering into agreements, directly or indirectly, or exclusive deals that would prevent other licensees from procuring bandwidth from PTCL to serve their own customers. In addition, all liabilities and obligations related to Telenor Pakistan, TLDI and Orion Towers will be assumed by PTCL. Introducing or modifying brand names will need the prior written approval of the PTA.

Discrimination on interconnection for local or international termination is not permitted, nor can pricing be used in a way that impedes or restricts other operators’ access to PTCL or MergedCo customers. No preferential treatment is to be given to the new company’s affiliates or subsidiaries.

Various forms of cross-subsidisation and predatory pricing are prohibited; transparent pricing structures for wholesale and retail services is another condition. 

Importantly too, the order also states that the merged company will be required to participate in upcoming spectrum auctions to enhance coverage and resolve capacity issues.

The PTA has also treated PTCL and its mobile arm Ufone as separate legal entities, barred any cross-subsidy between them and, again, requires the maintenance of separate accounts.

Mush of this follows the lead of the Competition Commission of Pakistan, which, as we reported in early October, approved the merger – but with some stringent conditions of its own.

The merged entity could boast around 70 million subscribers, making it the second-largest operator behind Jazz (which is estimated to have 74 million), and well ahead of Zong’s 52 million subscribers.



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