PTA approves PTCL-Telenor merger

The Pakistan Telecommunication Authority (PTA) has granted approval for merger between Pakistan Telecommunication Company Limited (PTCL) and Telenor with certain conditions to stop monopolistic practices.

With strict conditions, the PTA seeks to ensure that the new company could not exploit its dominating position.

Similar to the decision taken by the Competition Commission of Pakistan (CCP), the PTA has declared PTCL and Ufone as separate legal entities that cannot have any cross-subsidy and that they maintain separate accounts. Earlier, the CCP had raised a question that PTCL had been subsidising Ufone, which swallowed PTCL's revenue.

PTA on Thursday gave approval to the merger of Telenor Pakistan, Telenor LDI Company and Orion Towers that operates radio base towers of Telenor Pakistan with PTCL and called them notifying parties.

However, the new emerging telecom company – Ufone and Telenor Pakistan – was called MergeCo by the PTA.

The order was signed by PTA Chairman Major General (Retd) Hafeezur Rehman, Member Finance Muhammad Naveed and Member Compliance & Enforcement Dr Khawar Siddique Khokhar.

PTA said that the notifying parties and the MergeCo would have to maintain separate accounts for all their business units, with sufficient details as per standards.

Since PTCL is the largest telecom service provider, the PTA order stated that the company would not enter into agreements, directly or indirectly, or exclusive deals that would prevent other licensees from procuring bandwidth from PTCL for offering services to their own customers.

All the liabilities and obligations related to Telenor Pakistan, Telenor LDI and Orion Towers will be accepted by PTCL. The notifying parties and PTML/MergeCo, individually and collectively, shall not introduce or modify brand names without prior approval of the authority, it said.

PTCL and the MergeCo will not discriminate among other telecom operators related to interconnection of local and international termination and its pricing cannot be used in a manner to impede or restrict other operators' access to the customers of PTCL and the MergeCo, while no preferential treatment will be given by PTCL and the MergeCo to its affiliates and subsidiaries. PTA has prohibited cross-subsidisation between PTCL and the MergeCo, while maintaining transparent pricing structure for their wholesale and retail services.

PTCL shall not cross-subsidise its retail or downstream services through revenues derived from its upstream services or otherwise offer unreasonably low or predatory prices in any market with the intent or effect of foreclosing competition.

The order said PTML/Telenor Pakistan or MergeCo shall participate in the upcoming spectrum award to ensure coverage enhancement and resolve capacity issues at par with other operators and international best practices. PTCL and the MergeCo will not merge their networks, share spectrum and decommission any sites in Pakistan, AJK and G-B without prior approval of the PTA.

Currently, Pakistan's market has four cellular mobile operators, led by Jazz having total cellular mobile revenue of 43.6% and subscription base of 38.1%. Ufone is the smallest company in terms of revenue at 14.6% with subscriber base of 14%. However, the MergeCo is expected to have a revenue share of 31.7% and subscriber share of 35.3%, while the combined mobile broadband subscriber share of Telenor Pakistan and Ufone is 32.4%, showing a dominant position in the market.