Pakistan Telecommunication Company (PTCL), a unit of United Arab Emirate’s Etisalat, has submitted a takeover bid for rival mobile operator Warid Telecom, according to a filing with the Karachi stock exchange.
PTCL made the offer to acquire 100% of Warid on September 30 and it is valid for 30 days, the statement said, without giving the price offered or PTCL’s plans for the company.
Reuters reported in June that Warid had been put on the block in a sale likely to fetch up to $1 billion.
The sector has been ripe for consolidation as a troubled economy and stiff competition forced profit margins lower.
Buying Warid would make PTCL’s Pakistani mobile business subsidiary Ufone the country’s second-biggest mobile operator by subscriber base, although it is unlikely to be the only bidder.
In September, China Mobile’s subsidiary Zong said it was looking seriously at acquiring Warid, the fifth-biggest Pakistani mobile company. Warid was not immediately available for comment.
Vimpelcom’s subsidiary Mobilink was market leader with 36.7 million subscribers at the end of May, followed by Norwegian company Telenor’s 31.7 million, according to the Pakistan Telecommunications Authority (PTA), the industry regulator. China Mobile’s Zong had 20.2 million, ufone 23.9 million and Warid 12.5 million.
PTCL’s statement warned the bid for Warid was subject to regulatory approvals and could be complicated by a long-running dispute between Etisalat and Pakistan’s government.
Etisalat owned 90% of a consortium that paid $2.6 billion for a 26% stake in PTCL – Pakistan’s former monopoly landline operator – in 2006, giving the UAE firm a 23% holding.
But Etisalat still owes $800 million on the deal, which included transferring ownership of about 3,000 real estate properties to PTCL from the government.
Some of those properties remain in state hands and negotiations between the parties are thought to be ongoing.
Warid’s subscriber base has fallen by nearly a third from a 2008-9 peak of 17.9 million, while Zong is the fastest-growing operator, nearly doubling its customer base since 2010-11.
Pakistan is seen as an attractive market in the long term – only 70% of its 179 million people have a mobile subscription, while the country has yet to issue 3G licences.
An auction of the licences has been delayed since at least April 2012, but once awarded, 3G is expected to release pent-up demand for mobile data, boosting operators’ revenue.
“Buying Warid can be a good idea for China Mobile, especially when new customer acquisitions have become harder,” China Mobile said in September. “In the absence of organic growth, this is the only way to leapfrog established operators in terms of subscriber numbers .”
Published in The Express Tribune, October 2nd, 2013.