After almost 18 months the Competition Commission of Pakistan (CCP) has finally granted approval to the Pakistan Telecommunication Company Limited (PTCL) to acquire 100 pc shareholding of Telenor Pakistan (Pvt.) Ltd. and Orion Towers (Pvt.) Ltd.
The announcement made by CCP Chairman Dr. Kabir Ahmed Sidhu, Member Salman Amin, Shahzad Hussain, Registrar CCP and Head of Legal Ambreen Abbasi that the merger aims to enhance service quality, expand product offerings, and accelerate technological innovation, including the rollout of 5G.
While the detailed merger order has been placed at the website of the CCP but, many clauses including the business plan of the PTCL for the next five years and the reports of the Third-Party Reviewer (TPR) regarding proper implementation of the order will not be made public and remain confidential.
The CCP has claimed that the approval was subjected to extensive conditions designed to preserve competition and ensure non-discriminatory access and secure the pass-through of efficiencies to consumers.
The CCP conducted a comprehensive review of the merger transaction and review examined market structure, concentration levels, efficiencies, and potential competition risks.
Dr. Sidhu emphasised that the decision was delayed as it was one of the most complicated cases of the world and the Commission’s decision ensures a level playing field for all telecom operators and safeguards consumer interests.
“We studied various of international precedents, including orders from the United States, United Kingdom, and European Union, involving similar transactions before granting approval and this transaction was more complicated.” Chairman CCP added.
Senior Legal Advisor Ambreen Abbasi explained that the assessment considered possible lessening of competition in the relevant sub-markets, market shares, and efficiency claims.
She underlined that the merger was approved conditionally, with safeguards designed to prevent anti-competitive conduct.
The sub-markets of the telecom sector are –
- Retail Long Distance & International (LDI) Fixed Line Telecommunications Market
- Wholesale Domestic Leased Lines
- Wholesale IP Bandwidth Market
- Telecom Infrastructure Market
- Cellular Mobile Operators Market
- Individual Mobile/Fixed Interconnect Market
- Fixed Local Loop Market
The details of the ‘Retail Long Distance & International (LDI) Fixed Line Telecommunications Market’ –
| Market Players | Market Shares |
| PTCL | 32.67%* |
| TPLDI | 10.51% |
| MergeCo | 43.18% |
| CMPak LDI | 11.31 % |
| LinkDotNet | 30.06% |
| Multinet | 0.92% |
| Redtone | 1.15% |
| Wateen | 8.28% |
| Others | 4.27% |
There are two players in the wholesale IP Bandwidth Market- with PTCL having 64.5 percent market share and the Transworld Associates (TWA) has 35.5 percent market share.
While, Jazz will continue to be the largest Cellular Mobile Operators (CMO) with 43.1 percent market share the new merged company the Ufone and Telenor –Pakistan will have the market share of 32.8 pc and Zong will have 24.1 pc.
The key conditions imposed by the CCP over the PTCL includes establishment of separate management & governance for the PTCL and the merged entity that is the Ufone and Telenor –Pakistan.
The merged entity and the PTCL must maintain separate boards and independent management structures. The CEOs and senior management must meet strict competency and integrity requirements.
The other key condition set by the CCP for the merger was that ‘Etisalat shall ensure that both PTCL and the MergeCo are governed with professional competence and are steered towards sustained profitability over a reasonable period of time as committed in the Business Plan.
The CCP order had directed that an independent TPR has to be appointed to monitor compliance, audit transactions, and submit quarterly reports to CCP for five years.
The order prohibits cross subsidy between the PTCL and the new merged company, and there has to be no-discrimination regarding ‘Interconnection & Infrastructure Sharing’ between the merged company and other cellular mobile operators.
Regarding –‘Prohibition on Price Discrimination’ the CCP order has said, “PTCL shall seek PTA’s approval for its wholesale pricing structure in relation to IP Bandwidth service, LDI service, Domestic Leased Line services and telecom infrastructure services provided to PTA licensees as well as associated companies including MergeCo.
PTCL shall not set predatory retail prices.”
The order also has a ‘Divestiture Clause’ allowing the CCP to direct divestiture of assets or business segments in case of future violations.
However, in view of the traditional attitude of the PTCL and other corporate entities in the country any adverse action by the CCP and other regulators are challenged in the courts of law, thus delaying the implementation for a long period of time.
