CCP Completes Phase-II Review of PTCL’s Acquisition of Telenor Pakistan

The Competition Commission of Pakistan (CCP) has finalized all formalities for the Phase-II review of PTCL’s $400 million acquisition of Telenor Pakistan Pvt Ltd and Orion Towers Pvt Ltd. This transaction marks a significant milestone in Pakistan’s telecom sector, as it involves substantial vertical and horizontal market expansion.

CCP Completes Phase-II Review of PTCL’s Acquisition of Telenor Pakistan

The acquisition includes Telenor Pakistan’s mobile and broadband services and Orion Towers’ telecom infrastructure assets. This merger has drawn attention across the telecom industry due to its potential to reshape market dynamics. CCP officials are set to meet PTCL’s management next week to finalize details.

The merger was subject to a rigorous review process by the CCP, led by Chairman Dr. Kabir Ahmed Sidhu. The Commission conducted extensive hearings during September and October 2024, engaging with various stakeholders to evaluate the merger’s impact on market competition, efficiency, and consumer welfare.

Impact on Market Dynamics

The CCP analyzed the effects of the merger on several key telecom submarkets, including:

• Long Distance and International (LDI) services
• Local Loop Operators (LLO)
• Telecom Infrastructure
• Mobile Network Operators
• Domestic leased lines and IP bandwidth

The merger is poised to significantly alter market shares. For example:

• PTCL, which currently controls 50.5% of the retail LDI market, will expand its share to 61% post-merger.
• In mobile telecommunications, PTCL’s Ufone (12.4% market share) will merge with Telenor’s 24%, resulting in a combined 37% market share.
• PTCL will dominate wholesale IP bandwidth and domestic leased lines, controlling 68% and 42.7% of these markets, respectively.

Stakeholder Concerns

While PTCL asserts that the merger will drive investment, improve infrastructure, and enhance service quality, other industry players have raised concerns:

• Wateen Telecom: Warned of potential anti-competitive effects, especially in infrastructure markets like Long Haul IRU Services and Co-location Services. Wateen fears customer foreclosure, limiting access for competitors to essential services.
• Jazz (PMCL): Offered conditional support but called for regulatory measures to prevent consumer harm. Jazz highlighted potential dominance by PTCL in regions such as Azad Jammu and Kashmir and Gilgit-Baltistan, where market options are already limited.
• CM Pak (Zong): Raised concerns about spectrum concentration, noting that the merged entity could control up to 34.4% of the total spectrum in the retail mobile market. This could create an unfair advantage in coverage and service quality, particularly in underserved areas.

CCP’s Focus on Fair Competition

CCP Chairman Dr Sidhu emphasized that the Commission’s priority is to maintain market fairness and prevent anti-competitive outcomes. The CCP is evaluating the merger from both legal and economic perspectives, ensuring it aligns with consumer interests and the broader health of Pakistan’s telecom sector.

Potential Benefits and Challenges

While the merger will strengthen PTCL’s market position, it also offers opportunities for investment in digital infrastructure and expanded network coverage. The CCP’s final decision will balance these benefits against the need to preserve robust competition.

If approved with the necessary safeguards, this merger could mark a transformative moment for Pakistan’s telecom industry, fostering innovation while protecting consumer rights.

See Also: PTCL’s Acquisition of Telenor Pakistan Slated for Early 2025 as Financial Performance Soars