PTCL Telenor Merger Can Be A Threat To The Telecom Competition

The Competition Commission of Pakistan (CCP) has conducted a preliminary investigation into PTCL proposed acquisition of Telenor Pakistan (Private) Limited and Orion Towers Private Limited. The investigation has raised concerns about the potential impact on competition within the telecommunications sector, suggesting that the merger could reduce consumer choice.

PTCL, a publicly listed company, offers a diverse range of telecommunications services throughout Pakistan, Azad Jammu & Kashmir (AJK), and Gilgit Baltistan (GB), including cellular mobile telephony, Wireless Local Loop, Direct-to-Home television, and financial services through its subsidiaries. Meanwhile, Telenor Pakistan and Orion Towers, both wholly-owned subsidiaries of M/s. Telenor Pakistan BV (TPBV), operates in the cellular mobile and related services sector in Pakistan, AJK, and GB.

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The investigation uncovered that PTCL has already been designated as a Significant Market Power (SMP) Operator in various critical markets by the PTA. Given these existing overlaps, the proposed merger between PTCL and Telenor Pakistan is poised to further diminish competition, particularly in markets with limited competitors. This reduction in competitive dynamics could have negative repercussions for consumers, potentially resulting in increased prices or a decline in the range and quality of services available. The CCP highlighted that, if the merger proceeds, it could curtail choice, options, and competition, especially in markets where competition is already sparse, leading to unfavorable outcomes for customers.

As per the CCP, the acquisition of M/s. Warid Telecom (Private) Limited by M/s. Pakistan Mobile Telecommunications Limited in 2016 led to a reduction in the number of network operators. Now, with the proposed merger, one out of the remaining four players in the industry could also be eliminated. The CCP expresses concern that this decrease in competition might result in increased prices or a decline in choice or quality for customers. Consequently, the transaction will undergo further scrutiny through an in-depth Phase-2 analysis, as stated by the CCP in a media release on Monday.

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Following PTCL’s announcement of its intention to acquire 100 percent shares of Telenor, the CCP launched an investigation into the proposed acquisition of M/s. Telenor Pakistan (Private) Limited (TP) and Orion Towers Private Limited (OT) by PTCL.

The preliminary findings of this investigation suggest that the merger could have a significant impact on competition within the telecommunications sector. It is important to note that the outcome of this investigation and subsequent analysis will be pivotal in shaping the regulatory response to the proposed merger. The focus will be on protecting consumer interests and fostering fair competition within the telecommunications industry.