Telecom firms fear negative impact on competition

Object to Telenor's acquisition; PTCL argues merger will not dominate market

ISLAMABAD:

Telecom operators Wateen and Jazz on Thursday voiced concern over the potential negative impact of Pakistan Telecommunication Company Limited's (PTCL) acquisition of 100% shareholding in Telenor Pakistan and Orion Towers, saying that the deal could distort market competition and skew spectrum allocation, strengthening PTCL's dominance in the industry.

The Competition Commission of Pakistan (CCP) conducted a hearing on the acquisition of 100% shareholding of Telenor Pakistan and Orion Towers.

During the proceedings, Wateen rejected the transaction and reiterated its objections to the merger, expressing concern about its potential negative impact on the competitive balance in the market.

Jazz emphasised the need for specific conditions, like those applied to the Warid merger, to be considered by the CCP. They called for regulations on interconnection and tariffs to ensure a level playing field for all cellular mobile operators.

Jazz External Legal Counsel Khalid Ibrahim highlighted the company's concerns about frequency allocation and pointed out that PTCL was already holding a strong position in upstream markets, including spectrum, infrastructure and IP bandwidth, which could further bolster its dominance post-merger.

CCP Chairman Dr Kabir Ahmed Sidhu asked PTCL questions regarding the thoroughness of their due diligence process and sought clarity on their evaluation methods during the transaction.

PTCL Senior Counsel Rahat Kaunain Hassan stated that the pre-merger application was focused on PTCL's acquisition of Telenor Pakistan.

After the acquisition, Telenor will become a subsidiary and PTCL will then proceed towards a more detailed amalgamation scheme. She indicated that more information would be provided later as the process evolves.

Hassan gave point-by-point responses to concerns raised by stakeholders like Wateen, Jazz and CM Pak. This included addressing issues related to market dynamics and the anticipated effects of the merger on competition.

Telenor Counsel Shabbir Harianawala reiterated the company's rationale for the merger, emphasising the transaction's alignment with Telenor's strategic plan and global objectives, including efficiency improvements and market positioning.

CCP Senior Legal Adviser Ambreen Abbasi highlighted the specific clauses in CCP's merger regulations along with the commission's mandate and scope in evaluating the proposed merger under the competition law.

PTCL presented data showing that the merger would not dominate the market post-transaction, with Jazz remaining the largest in terms of subscribers.

It argued that the merger would promote competition by narrowing the gap between the top players – from 12.37% to 0.35%, thereby fostering a more balanced market.

PTCL underscored that the definition of relevant markets follows Pakistan Telecommunication Authority (PTA) regulations, which involve detailed data analysis, transaction scope assessments and a methodology that considers practical indicators to define market boundaries.

PTCL and other parties discussed the potential risks of input and customer foreclosure. PTCL gave references of international cases, arguing that PTA's regulations minimise these risks and any claims of harm must be backed by substantial evidence, not just assumptions.

"PTCL is committed to complying with the forthcoming PTA Spectrum Sharing Framework, ensuring that any spectrum-sharing requests from new market entrants are handled fairly and without discrimination," it said.