PTCL's lapses stall $1 billion Ufone-Telenor merger

CCP cites missing investment plan, dominance concerns and history of anti-competitive practices

ISLAMABAD:

The Competition Commission of Pakistan (CCP) has revealed that lapses by Pakistan Telecommunication Company Limited (PTCL) have stalled the proposed $1 billion Ufone-Telenor merger.

In a presentation to the Senate Standing Committee on IT, the regulator said PTCL had once again failed to submit its $1 billion investment plan required to pave the way for the merger. The CCP noted that PTCL did not provide timely plans outlining efficiencies expected from the proposed deal.

The regulator further highlighted that PTCL has challenged most Pakistan Telecommunication Authority (PTA) regulations in court and obtained stay orders, including against the Significant Market Power (SMP) determination. As a result, Reference Interconnect Offer (RIO) approval from PTCL is not applicable, leaving PTA with no oversight on tariffs charged by PTCL to other telecom operators.

The CCP expressed concerns about "non-compliance with the Separate Accounting Requirement applicable to Ufone and PTCL," warning that this created a risk of cross-subsidisation. PTCL holds an LDI licence while Ufone has a CMO licence, yet both are under joint management, raising competition concerns. PTCL also delayed in providing information sought by the Commission.

Under Section 11(11) of the Competition Act, the CCP may prohibit such transactions or approve them with strict conditions, including legally enforceable agreements between undertakings. The Commission stressed that PTCL, a dominant player in both upstream and downstream segments of the telecom market, must not be allowed preferential treatment.

"PTCL abuses its dominant position," the CCP said, pointing to its history of collusion. It recalled that PTCL and 13 undertakings were penalised in the International Clearing House (ICH) case, where each LDI operator was fined. The order was upheld by the Competition Appellate Tribunal on August 11, 2025, with PTCL already paying Rs70 million in penalties.

The CCP also underscored that PTCL has been unable to run Ufone successfully, with the operator consistently reporting losses, necessitating close scrutiny of the merger.

While mergers in the telecom sector can drive growth, improve connectivity, and foster innovation, the CCP warned that the PTCL transaction, though potentially efficient, raised serious competition risks.

It cautioned that consolidation would strengthen PTCL's dominance, create a highly concentrated mobile player, and risk a Substantial Lessening of Competition (SLC). Such outcomes could increase entry barriers, reduce consumer choice, limit innovation, and prevent promised efficiencies from materialising.