LAHORE: VimpelCom, Global Telecom Holding (GTH), together with Warid Telecom Pakistan and Bank Alfalah (Dhabi Group shareholders), announced today the completion of the transaction to merge Pakistan Mobile Communications Limited (Mobilink) and Warid Telecom (Warid), creating Pakistan’s next generation digital telecommunications provider.
In a statement, VimpelCom said that over 50 million customers in Pakistan will benefit from high-speed mobile telecommunications and digital mobile network. “The combined Mobilink and Warid entity will be the leading telecommunications provider of 2G, 3G and LTE services in Pakistan, providing higher quality national voice and data coverage, faster downloads, and a wider portfolio of products and services,” the statement said.
“VimpelCom continues to make significant progress against its transformation program. This market consolidation represents a further step in our strategy to strengthen our position in the markets in which we operate,” said VimpelCom Chief Executive Officer Jean-Yves Charlier.
Mobilink and Warid will benefit from VimpelCom’s $1 billion investment into building one of the largest and most ambitious IT infrastructures in the industry.
VimpelCom, GTH and Dhabi Group announced the agreement to combine their Pakistan telecommunication businesses on 26 November, 2015. The completion of the transaction follows regulatory approval from all the relevant authorities and the subsequent exchange of shares. Mobilink has completed the acquisition of 100% of Warid’s shares, and the Dhabi Group Shareholders have acquired 15% of Mobilink’s shares.
With the completion of the merger transaction, Mobilink now enters the next major phase of its transformation and Chief Executive Officer Jeffrey Hedberg will hand over the CEO role of Mobilink and Warid to Aamir Ibrahim, currently Chief Commercial Officer and Deputy CEO of Mobilink.
Mobilink’s turnaround over the past two years has shown significant improvements in service revenue growth (from -5% to +12% year-on-year), ARPU (from -11% to +15% year-on-year) and increased EBITDA margins (from -3 p.p. to +4 p.p year-on-year).
The legal merger of the two companies, which will result in one merged legal entity having the same board, and management, is expected to be completed within approximately six months, subject to the fulfilment of the required legal processes in Pakistan. Mobilink and Warid will shortly file a petition to the Islamabad High Court in order to commence the process of legal merger.
As previously stated, the transaction is expected to create capex and opex synergies with a net present value of approximately $500 million with an annual run rate of well over $100 million of free cash flow improvements by the third year. The combined revenue of both companies for the 12 months to March 2016 was $1.4 billion.
Published in The Express Tribune, July 2nd, 2016.