PTCL’s Rs108b deal to reshape industry

Strategic synergies, challenges come to light as PTCL acquires Telenor Pakistan

KARACHI/ISLAMABAD:

In a groundbreaking development, Pakistan Telecommunication Company Limited (PTCL), a vital player in the country’s telecom sector, has entered into a Share Purchase Agreement with Telenor Pakistan BV to acquire a 100% stake in Telenor Pakistan (Pvt) Ltd. The deal, valued at Rs108 billion, aims to redefine the dynamics of the Pakistani telecom industry.

President and Group CEO of PTCL & PTML, Hatem Bamatraf, expressed confidence in the strategic synergies arising from this acquisition. Speaking at a media briefing in Islamabad, Bamatraf outlined the positive impact on customers and stakeholders, emphasising the combined entity’s commitment to excellence across all domains.

Bamatraf addressed concerns about the industry’s saturation, asserting that the current distribution of revenue among four operators jeopardises market sustainability. He highlighted the global trend of consolidation, arguing that Pakistan’s telecom landscape is better suited for three major players, a shift that echoes trends observed in Europe.

The PTCL CEO underscored the advantages for consumers, stating that the ultimate beneficiaries of this deal would be those seeking advanced technology, improved speed, 5G, and broader coverage. He also affirmed PTCL’s commitment to technological innovation, including a keen interest in 5G technology, advocating for favourable terms in the spectrum auction.

Highlighting the urgency of finalising the acquisition, Bamatraf underscored its pivotal role in bringing certainty to the economy and the telecom industry, crucial for all stakeholders. He positioned the deal as a catalyst for Pakistan’s digital transformation, asserting its importance in advancing the nation's technological infrastructure.

Mixed reactions from experts

While the acquisition has garnered support from industry leaders, concerns have been raised by telecom experts. Speaking to The Express Tribune, Parvez Iftikhar, a Telecom Expert, acknowledged the advantages of consolidation, citing increased infrastructure and spectrum availability. However, he also lamented the departure of Telenor, a major telecom player, attributing it to the challenge of low Average Revenue Per User (ARPU) in Pakistan.

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Alpha Beta Core Founder and CEO, Khurram Schehzad, spoke to Express Tribune and voiced concerns about flaws in the telecom framework, policy, and governance, pointing out the departure of a big player as evidence of systemic shortcomings. He advocated for market liberalisation, suggesting that government-owned PTCL should not be acquiring assets but promoting a market open economy.

Schehzad urged the government to encourage new players and foreign investors, expressing scepticism about PTCL’s capability to run Telenor efficiently. He emphasised the need for a policy to attract foreign investors and criticised the outflow of funds from the country due to the acquisition.

Positive outlook

In a meeting with a delegation, including heads of Telenor Etisalat Group, Caretaker Federal Minister for Information Technology and Telecommunication, Dr Umar Saif, expressed optimism about PTCL’s acquisition of Telenor operations. The minister highlighted the potential for strengthened digital connectivity and overall growth in the telecom sector.

Saif reaffirmed his commitment to enhancing telecom services, pledging to improve quality and accessibility across the country. He announced upcoming spectrum auctions, signalling the government’s dedication to fostering a dynamic and competitive telecom environment in Pakistan.

Industry leaders respond

Telenor Group CEO Sigve Brekke commented on the sale of their Pakistan operations, noting 18 successful years in the country. He expressed hopes that the industry, now reduced to three major players, would avoid further consolidation leading to a duopoly. Brekke anticipated synergies, improved speed, and quality, but also acknowledged the unfortunate departure of a top telecom company from Pakistan.

Hassan Nasir Jamy, Chairman PTCL Board, echoed Bamatraf’s sentiments, reinforcing the commitment to building a prosperous and digitally connected nation. He emphasised the acquisition’s role in supporting Pakistan’s digital transformation.

Published in The Express Tribune, December 15^th, 2023.

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