Mobilink, Warid merger subject to govt approval: CEOs

LAHORE: The Competition Commission of Pakistan (CCP) has issued notices to Mobilink and Warid for not applying pre-merger application which was announced by the two on Thursday, November 26.
According to the copy available with The News, the CCP in the notification titled ‘Pre-Merger notification under competition Act 2010’, directed the telecos to file a pre-merge application with the commission.
The notification stated that it is mandatory requirement for all undertakings to file a pre-merger application with the commission under Section 11(2) of the Commission Act 2010 in respect of any intended merger/ acquisition of shares. The CCP advised them to submit pre-merger application under section 11 of the Act at the earliest convenience and seek the approval from the commission.
Both CEOs of Mobilink and Warid Jeffery Hedberg and Munir Farooqui said that the merger is conditional with the approvals from the government of Pakistan and all other regulatory authorities of the country. They said that the merger will be completed in six months period during which they will take approvals from the all authorities concerned.
In response to a query by The News, the CCP spokesperson confirmed that both operators did not submit any application for getting approval for the merger or intimate it about their prospective deal.
“The Competition Commission of Pakistan has not received application for clearance of the proposed merger. A notice has been sent to the parties directing them to file pre-merger application for the said merger as required under Section 11 of the Competition Act 2010. On receipt of the application, further action will be taken,” the reply of the CCP stated. Similarly, Pakistan Telecommunication Authority (PTA) Chairman Dr Ismail Shah, responding to a query of The News, said that “they [Mobilink and Warid] have yet to apply for it”. it”. The merger is subject to the approvals from the all authorities concern, he stated, adding that the PTA will look into the all the merger details before making any decision about it.
The merge seems to create monopoly in cellular services providing industry in Pakistan as the Telenor International, a Norway-based telecom company, has 33 percent of $2.38 billion worth shares in VimpleCom, a Russian cellular operator which owns Mobilink and after merger Warid too.
Hence, the three cellular operators will come under umbrella of a joint venture of two international companies which can disturb the competitive environment in the growing and flourishing telecom industry of Pakistan. They can evolve any strategy to out other two remaining players gradually or at least one smaller player.
VimpelCom had approximately 213 million subscribers by the end of June 2015. The telco operates in Russia, Italy, Algeria, Bangladesh, Pakistan, Ukraine, Kazakhstan, Kyrgyzstan, Uzbekistan, Armenia, Georgia, Tajikistan, Laos and Zimbabwe.
After merger, the total subscriber base of the Mobilink will cross 45 million while if the added the Telenor Pakistan subscribers in it than, it will cross over 78 million out of total 130 million cellular subscribers.
Recently, Telenor International has announced to sell its 33 percent stakes to VimpelCom by exploring all options to divest its shares in the Russian cellular service providing company.
However, VimpelCom on the Telenor International move cleared that it will keep forwarding with its recently announced new business strategy, with intention to work with Telenor to ensure a successful divestiture of their stake.
CEOs of Mobilink Jeffery Hedberg, talking about VimpelCom and Telenor International shares in the company, said that Board members of Mobilink and Telenor Pakistan asked to leave the Board meetings of the VimpelCom when the Board discussed the issues of two companies in their Board meetings. He said that it is very much clear at the Board level that both Mobilink and Telenor are in rigorous competition in Pakistan. The VimpeCom also has assured to maintain this competition to the CCP when it has acquired the Orascom – previous mother company of Mobilink.