Competition Commission of Pakistan approves PTCL’s acquisition of Telenor Pakistan with conditions

The Competition Commission of Pakistan (CCP) has approved Pakistan Telecommunications Limited’s (PTCL) acquisition of mobile carrier Telenor Pakistan and Orion Towers shareholdings, according to a press release issued on Wednesday.

According to the telecommunication company’s website, one of its subsidiaries is mobile carrier Ufone. As part of the deal, Telenor and Ufone will merge.

According to the press release, the merger was announced today at a press conference at the CCP’s head office. CCP Chairman Dr Kabir Ahmed Sidhu, CCP Registrar and Head of Legal Ambreen Abbasi and members Salman Amin and Shahzad Hussain shared the key highlights of the agreement.

“They explained that [the] CCP conducted a comprehensive review of the merger transaction,” the press release read. “The review examined market structure, concentration levels, efficiencies, and potential competition risks.”

Dr Sidhu emphasised that the commission’s decision “ensures a level playing field for all telecom operators and safeguards consumer interests”.

“The merger aims to enhance service quality, expand product offerings and accelerate technological innovation, including the rollout of 5G,” he was quoted as saying.

“The CCP [has] studied various international precedents, including orders from the United States, United Kingdom and European Union, involving similar transactions before granting approval.”

According to the press release, Abbasi explained that the assessment considered possibly lessening 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.

Some of the key conditions listed in the press release were:

• PTCL and the merged entity will maintain separate boards and independent management structures.
• Chief executive officers and senior management must meet strict competency and integrity requirements, with UAE-based telecom company Etisalat ensuring professional leadership.
• An independent third-party will monitor compliance, audit transactions, and submit quarterly reports to CCP for five years.
• Related party transactions and cross-subsidisation will be prohibited unless
  conducted competitively and at arm’s length.
• Non-discriminatory access will be applied to capacity and infrastructure for all operators. PTCL and MergeCo shall submit all its existing and future Reference Interconnect Offers (RIO) to the Pakistan Telecommunications Authority (PTA) for approval. PTCL shall offer interconnection to all operators in accordance with RIO as approved by the PTA.
• PTCL shall seek the PTA’s approval for its wholesale pricing structure in relation to IP Bandwidth, LDI, Domestic Leased Line and telecom infrastructure services provided to PTA licensees, as well as associated companies including MergeCo. PTCL shall not set predatory retail prices.
• Mandatory compliance will be ensured with service quality standards, innovation policies and PTA tariff approvals.
• PTCL and Telenor must demonstrate that claimed efficiencies are passed on to consumers through better services, pricing and infrastructure investments.
• The CCP reserves the right to direct divestiture of assets or business segments in case of future violations.

In the press release, Amin was quoted as saying that these conditions are specifically aimed at preventing favouritism, predatory pricing and barriers to market entry, while ensuring continued regulatory oversight by the CCP and PTA.

Last week, the CCP raised concerns over PTCL’s non-cooperation and delay in providing critical information for evaluating the merger, with the watchdog citing potential competition risks and warned of cross-subsidisation between PTCL and Ufone, both of which operate under joint management.