Amid controversy over swelling losses, Pakistan Telecommunication Company Limited (PTCL) is set to convince the regulator about its $1 billion investment plan in a bid to get approval for merger with Telenor.
A team of PTCL will present the company's case at a hearing to be held at the Competition Commission of Pakistan (CCP) on Wednesday. According to PTCL officials, the telecom firm had submitted an investment plan worth $1 billion to the CCP to pave the way for its merger with Telenor. However, according to the officials, the regulator raised questions about the investment plan and a PTCL team will respond to the queries at the hearing.
PTCL may get approval for the merger if it is able to convince the regulator about its settlement plan linked with $1 billion worth of investment. The merger application has been pending for the past almost one year as the PTCL management has yet to provide relevant documents to address queries. The CCP has sought timelines and details of areas where PTCL will make the proposed investment. IT minister earlier stated that the CCP was an independent institution and it would decide about the merger deal.
A senior IT ministry official pointed out that the issue of outstanding privatisation payments of $800 million had also remained unresolved. Though a settlement was reached between the previous government and the PTCL management for releasing $640 million, the company has not even provided that amount. There has been a dispute between the government of Pakistan and UAE-based Etisalat – the buyer of PTCL – over pieces of land. PTCL has started selling prime land, which it owns in Pakistan, despite no resolution of the row.
In a meeting held on Monday, the National Assembly Standing Committee on IT expressed dismay over the statements given by PTCL officials and warned them of action over the sale of land.
During the second phase of the review of merger application, the CCP sought details of PTCL's market position from the Pakistan Telecommunication Authority (PTA) to determine that the merger would not reduce competition or strengthen the dominant position of the parties concerned.
The documents submitted by the PTA showed that instead of responding to the objections made by the telecom regulator, the PTCL management challenged notices in the Sindh High Court. PTCL submitted an application for merger with Telenor Pakistan to the CCP on February 29, 2024 but there were flaws, which were rectified on March 6.
According to the biannual (July-December FY25) performance report released by the Central Monitoring Unit of the Ministry of Finance, PTCL registered a loss of Rs7.2 billion during the period, which took its accumulated losses to Rs43.6 billion. The report noted that PTCL had moved up the ranking of loss-making state-owned enterprises (SOEs), rising from 10th position in the first half of FY24 to seventh place in FY25.
The finance ministry warned that the proposed acquisition of Telenor by PTCL could further destabilise the group's finances, if not carefully managed. It added that the move could also result in hindering PTCL's digital transformation goals and limit its ability to invest in core growth areas over the coming years. It also highlighted PTCL's outstanding pension liabilities of Rs42.84 billion.
PTCL had posted a net profit of Rs20.78 billion in 2005-06 – the financial year when its management control was handed over to Etisalat. The UAE-based firm acquired a 26% stake whereas the government of Pakistan kept 62% shareholding. The remaining 12% shares are held by public investors through the stock market.
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